Friday, February 15, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 258)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.



How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Thursday, February 14, 2019

A Closer Look into the Popular Pricing Benchmark, Average Wholesale Price (AWP)



Average Wholesale Price (AWP) is a list price that is used as a basis for reimbursement to pharmacies for drug ingredient cost.  AWP as a drug pricing benchmark has come under scrutiny, as it doesn’t reflect what is actually paid for drugs and is often referred to as a “sticker price.”1  Wolters Kluwer Clinical Drug Information (WKCDI) publishes AWP prices via its Medi-Span® Price Rx® drug pricing tool and makes the following assessment2:

“Despite its name or possible use as an index, the AWP published by WKCDI is not an “average” of actual wholesale prices. It is not derived from, does not reflect, and should not be assumed to represent, either (i) the actual prices paid for drug products in transactions between wholesalers (meant to include any party that buys drug products directly from a manufacturer) and their customers, or (ii) any discounts, rebates or other price reductions that wholesalers may offer to their customers in connection with those transactions. In fact, a wholesaler or other direct purchaser from a pharmaceutical manufacturer may agree to sell its drug product to one or more of its customers at a price that is on its face or effectively different than the AWP published by WKCDI. “

The 2018 PBMI Trends in Drug Benefit Design Report, based on a survey of drug benefit leaders responsible for managing the prescription drug benefit for their organization, provided the Average AWP discount based on dispensing channel (e.g. Retail 30, Retail 90, Mail Order and Specialty).  The survey results showed that for generic drugs average AWP discounts ranged from 56% 
at retail 30 to 63% for mail order. Discounts on brand-name drugs were much lower with averages between 19% and 25% depending on channel.” 3

This data provides valuable insight into recent trends in AWP discount averages and ranges amongst stakeholders across the industry.  Although AWP isn’t the only pricing benchmark available, it is currently the most widely utilized for price discounts for brand drugs and generic drugs until generics are eligible for MAC pricing.  

A Chart of Common Drug Pricing Terms4

Click to Enlarge

1.AMCP Guide to Pharmaceutical Payment Methods, 2009 Update (Version 2.0). (2009). Journal of Managed Care Pharmacy,15(6 Supp A), 1-62. doi:10.18553/jmcp.2009.15.s6-a.1


3.  PBMI 2018 Trends in Drug Benefit Design Report

4. https://www.kff.org/medicaid/issue-brief/paying-for-prescribed-drugs-in-medicaid-current-policy-and-upcoming-changes/

Thursday, February 7, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 257)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.



How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Wednesday, February 6, 2019

Ohio's State Auditor Just Released its Full Report on PBM Transparency and You Won't Believe Your Eyes


Radical transparency in pharmacy benefits management 
starts with training and education. Click here to begin yours.
Back in August Ohio released a partial report summarizing its assessment of their PBMs' financial performance. The results sent shock waves throughout the industry. I'm not sensationalizing. Now the full report has been released. If this report doesn't change how you manage pharmacy benefits nothing will.  Here were my comments around that initial report.

Tyrone's Commentary:

On the heels of terminating two large PBM contracts, the State Auditor of Ohio released this bombshell report detailing the financials which prompted terminating said contracts. Why do you think Chase Bank, Amazon and Berkshire Hathaway have taken matters into their own hands? Self-insured employers must first make sure all vendors and advisers interests are perfectly aligned to theirs. Second, get self-educated AND (not or) hire an expert with a proven track record whose interests too are perfectly aligned. I can assure you these qualifications makes the list of qualified candidates much smaller than you think. The bottom line - trailing public entities in how you manage pharmacy benefits is no longer sustainable.

In a nutshell, Ohio's Pharmacy Benefit Managers (PBMs) charged the state a “spread” of more than 31 percent for generic drugs – nearly four times as much as the previously reported average spread across all drugs, according to a new report by Ohio Auditor of State Dave Yost.

An analysis conducted by Auditor Yost’s staff found PBMs collected $208 million in fees on generic Medicaid prescriptions, or 31.4 percent of the $662.7 million paid by managed care plans on generics during the one-year period April 1, 2017 through March 31, 2018.

[Click Here To Download the Full Report]