Monday, February 25, 2019

How to Save $1.6 Million Bucks: 5 Tips for Cutting Specialty Pharmacy Costs

The trend for specialty drug costs is 14% increase every year to 2025. Worse yet, there is a good chance plan sponsors are significantly overpaying for specialty medications. Don't fret, there is good news. You have an opportunity to bend the specialty pharmacy cost trend. Consider this recent case study:

Reviewing a high-cost case, one of TransparentRx's Certified Pharmacy Benefits Specialist and clinical pharmacist identified an unusually high payment for a specialty pharmacy drug. The CPBS notified the client and consulted on appropriate pricing. It was discovered that although the client had performed a medical necessity review, the cost of the drug was not reviewed because an existing discount was already in place. We were able to negotiate with the provider and win both retrospective and future pricing at the CPBS’s suggested cost. Total Annual Savings: $1,623,427.

It is true this is an extreme example yet at the same time it is certainly not unique. The following tips can help brokers, plan administrators and case managers identify and fix overpayments for specialty pharmaceuticals:

Take a proactive approach to prior authorizations.

I've been fortunate enough to be a "fly on the wall" listening to the leadership teams of several national specialty pharmacies. And while they preach case management and patient care as the priority if you listen carefully what they really want first and foremost is volume or more prescriptions. I am asking self-funded employers a simple yet very important question. Does it make sense to have the same entity manage and approve specialty Rx claims when that entity stands to benefit when these claims are approved?

If 90% or more of PAs are getting approved you might be a victim of rubber-stamping which leads to what? You guessed it - higher costs. Just because you have a PA or step therapy program doesn't mean it is efficient. Consider carving out the prior authorization process or at a minimum taking a more hands on approach.

Crosswalk “J” Codes to National Drug Codes (NDCs) to identify specialty pharmacy drugs.

J codes are Healthcare Common Procedure Coding System (HCPCS) Level II and mainly used in infusions, injections, and supply codes. J codes apply to drugs that are administered other than orally, typically indicating injection or intravenous delivery. An NDC is a unique 10-digit, three-segment number that serves as a universal product identifier for human drugs in the U.S. The code is present on all nonprescription (OTC) and prescription medication packages and inserts.

If a medication is paid for under the medical benefit, the claims use J codes — they are part of the Healthcare Common Procedure Coding System (HCPCS) — and J codes are blunt instruments compared with NDC codes. There’s often a lag in assigning J codes, so new drugs may share an “unlisted” designation for months. Brand and generic drugs share a J code, and package size is not included. If you need to track medication use and cost, J code data will give you a fuzzy picture; the NDC codes, a high-resolution one.

Thursday, February 21, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 259)

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.

Tuesday, February 19, 2019

How Self-Funded Employers Leave Employees Holding the Bag: The Copay Clawback Phenomenon:

The retail cost of Sprintec is $10.04 but OptumRx required the pharmacy to collect $50 from the patient. OptumRx contributed nothing for the drug but collected the additional $38.35 clawback from the pharmacy, almost four times the retail cost of Sprintec. An unnamed pharmacist provided the claim information

Watch this short video for a demonstration on how clawbacks work.




This billing practice is known as a “clawback” and you may have no idea it’s happening because pharmacists aren't yet allowed in many states to tell you under a gag order in place that restricts pharmacists from telling patients they are being overcharged. These clawback monies are a contributing factor to significant overpayment for pharmacy benefits management services.

Clawback revenue also plays a big role in the unchecked service fees to non-fiduciary PBMs who rely on them to cover overhead. For self-insured employers, it’s all about the contract so if you enter into an agreement with a PBM that does not drive radical transparency you leave employees holding the bag.

[Download the Full White Paper]

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]