Thursday, May 30, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 270)

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, May 29, 2019

Good Options To Help Self-Insured Employers Improve PBM Contracting Efficiency

When a prescription drug is dispensed at the pharmacy counter, patients pay cost sharing to the pharmacy, which usually consists of a fixed payment (copayment) or percentage of the drug’s list price (coinsurance), with the cost-sharing varying by the drug’s formulary tier placement). Employers, through their contracted insurance carriers, pay the pharmacy the amounts determined to them by their PBMs.
Click to Learn More

Many employers do not pay administrative services fees to PBMs, but simply pay prescription drug claims and receive monthly manufacturer rebates passed through by PBMs. The contracts between employers and PBMs usually specify certain savings guarantees (based on list prices) but often limit the employers’ right to audit. At the end of each fiscal period, PBMs send reports to employers showing that the contractually specified savings guarantees have been honored, and sometimes that additional savings (again based on list prices) have been achieved.

Tyrone's Commentary:

This is a great article which was originally written on healthaffairs.org. It is factually accurate and offers some good tips for self-insured employers. One thing (well two things but more on that later) in the article really bugs me. The article touches on it but doesn't go into a deep dive. That is holding employers and consultants more accountable when it comes to being a more sophisticated purchaser of pharmacy benefits. Non-fiduciary PBMs won't willingly forgo profits that are driven largely by hidden cash flows. You must demand they do it and that starts with education. With education comes more confidence then, eventually, an unwillingness to accept the status quo. Oh before I forget...the other thing which bugged me about the article is I wish they would have at least sited this blog in the article. Some of the strategies discussed in the original article can be found right here in this blog and no where else. Bummer! 

This seemingly convenient and advantageous contractual arrangement (from the employers’ perspective) deprives employers of the ability to completely understand the drug benefit design, evaluate the efficiency of their drug utilization, and assess the PBM’s performance. For example, employers may not know that reclassifying some drugs as generic (or branded) can have important implications for their costs or that their employees may have been steered to utilize expensive drugs when cheaper generics are available. This inefficient contractual arrangement leads to overutilization of expensive drugs, higher patient cost sharing, and higher employer spending on drugs.

[Read More]

Tuesday, May 28, 2019

Kentucky Report: "Opening the Black Box" Reveals Non-Fiduciary PBMs Took Home $123 Million From Spread Pricing

A long-awaited state report appears to confirm legislators' suspicions that pharmacy benefit managers or PBMs are reaping big profits from Kentucky Medicaid dollars. Called "Opening the Black Box," Kentucky's report released in February shows payments to PBMs grew over the past year, even as lawmakers increased scrutiny and passed legislation demanding more transparency about prescription drug costs.

Spread by Pharmacy Type

Last year, pharmacy benefit managers, or PBMs, took in $123 million through a practice known as "spread pricing," the difference between what the pharmacy benefit company pays the pharmacist and what it bills the state Medicaid program, according to the report.

Tyrone's Commentary:

This should sever as a warning to all self-insured employers. Despite Kentucky's best efforts to reduce PBM service fees, payments to PBMs grew year-over-year. Even as lawmakers increased scrutiny and passed legislation demanding more transparency, non-fiduciary PBMs still increased the amount of revenue they took in! If a state with unlimited resources can't stem PBM service fees, how does a commercial employer even stand a chance? Here's the answer. Do business with a fiduciary-model PBM. While the answer may seem self-serving it isn't. There are just too many loopholes, from which a non-fiduciary PBM can benefit, for even the sharpest consultant, HR Executive or CFO to close. Leave just one loophole open and you will bleed out. 

Kentucky's Eight (8) Recommendations:

1)  Mandate pass-through contracting for all MCO-PBM contracts for pharmacy.

2)  Remove all DIR fees including transactional fees, in-network fees, GER and BER fees.

3)  Evaluate the implementation of a pricing methodology to managed care Medicaid pharmacy. Using a similar lesser of logic methodology, medications would be reimbursed the same as Kentucky’s fee-for-service population.

[Read Full Report]

Monday, May 27, 2019

Sweeping Health Care Legislation Proposal Calls for Disclosure of Perks and Fees Paid to Health Benefits Brokers

Health benefits brokers would have to reveal the fees and other enticements they’ve received from the insurance industry under bipartisan legislation proposed Thursday in the U.S. Senate. The brokers are supposed to independently help employers select benefits for their workers. Similar proposals have been submitted in the past but this one has legs. Business Value Awareness in the health care industry is at an all time high.

ProPublica investigation in February found that the insurance industry often uses undisclosed money and gifts to influence which plans the brokers favor. The payments and perks include healthy commissions, six-figure bonuses and exotic island vacations. Critics call the compensation a “classic conflict of interest” that drives up costs.

Tyrone's Commentary:

Let me start with TransparentRx's position on brokerage fees. Yes, some PBMs too are willing to pay hefty fees to win business. Any fees we pay to a brokerage must be disclosed (not in the fine print) to the plan sponsor. This is a requirement of the fidudiary standard we offer to every client. I suspect this is part of the reason why we aren't yet a half billion dollar company but I digress. I've personally had conversations with leadership at several health benefits brokerage firms on this very topic. For some of these leaders, their conscience is getting the better of them. This is good news for the industry as a whole. They want more disclosure. They want more transparency for their clients. Ideally, more disclosure leads to lower fees for plan sponsors. I don't necessarily believe that a brokergage firm has to give up revenue for disclosure. The value proposition, however, must change. As a health benefits brokers value proposition begins to take shape, it is important to compare it against your competitors' value proposition, or at least your best estimate of what those value propostions are. This is different from and far more challenging than merely comparing service offerings and fees. The same can't be said for carriers. It was a carrier when an executive at a large brokerage firm shared with me their desire for more disclosure and transparency only for the carrier to push back saying, "why...we are making a lot of money." Unfortuntately, this is how a large part of business gets done in healthcare - you scratch my back and I'll scratch yours.

ProPublica’s findings prompted Sen. Lamar Alexander, R-Tenn., chairman of the Health, Education, Labor and Pensions Committee, and Sen. Patty Murray, D-Wash., the committee’s ranking minority member, to include new requirements for brokers in a sweeping health care legislation proposal. The draft bill, known as the Lower Health Care Costs Act, also takes on surprise medical bills, high drug prices and public health problems among other issues.

[Read More]

Thursday, May 23, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 269)

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, May 22, 2019

Elimination of PBM Gag Clauses Allow Independent Pharmacies to Save Patients Money on Prescription Drugs

The CBS 11 Dallas Fort Worth news team asked local pharmacists to ring up the prices of commonly used medications, first, with a popular insurance plan, then the same drug for someone without insurance. Here are two examples of real cases where insured patients paid more.

1) Valacyclovir is a common anti-viral drug used to treat cold sores, chicken pox and shingles. The copay amount with a popular insurance plan is $50, but if you never told the pharmacist you had insurance, the drug would cost $26.67 out of pocket.

2) Armour-throid, used to treat an under-active thyroid, has a copay cost of $150 with a common insurance plan. Without insurance the price is $39.21, a difference of more than $110.

This billing practice is known as a “clawback” and you may have no idea it’s happening. These clawback monies are a contributing factor to significant overpayment for pharmacy benefits management services.

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


While pharmacists have known about this price discrepancy for years, in many cases they have been prevented from telling their customers. Gag clauses in contracts made by insurers and pharmacy benefit managers (PBMs) often prevented pharmacists from discussing alternative price options with their customers. However, last year the federal government made these gag clauses illegal.

Monday, May 20, 2019

Top 7 Reasons the PBM Industry is Ripe for Disruption

1.  Uncertainty Over Regulation

Federal and State governments are now keenly aware of the self-dealing which takes place in PBM arrangements. Ohio’s Attorney General, Dave Yost, is continuing to wage war on non-fiduciary PBMs or pharmacy benefit managers. You might remember him from an earlier blog post when he served as Ohio's State Auditor.

AG Yost just announced a four-part proposal and called for quick action from the state’s legislature to shine a bright light on PBM contracts and cut down on hidden cash flows. Yost’s proposal calls for:

Image result for disruption
  • Drug purchases in the state to be conducted under a master PBM contract that is administered by a single contact point
  • Ohio’s Auditor of State to have full power to review all PBM contracts, purchases and payments
  • PBMs to operate as fiduciaries, uh-oh!
  • The state to prohibit nondisclosure agreements on drug pricing.
Last summer, in his previous role as state auditor, Yost learned PBMs earned nearly $225 million through spread pricing between April 2017 and March 2018 while operating in Ohio Medicaid. As a result, the state canceled all PBM contracts in Medicaid that used spread pricing.

2. Power is Consolidated

One of the important signs that an industry could be disrupted is imbalance, or dominance by one side of the economic equation. Oligopolies, where a few companies have consolidated vast amounts of the market share either on the supply or demand side, are often good candidates. Make no mistake about it ESI, Caremark and Optum is an oligopoly.

Monday, May 13, 2019

Here's one reason why prescription drug prices are so high: the fix is in!

Some say it might be the biggest price-fixing scheme in U.S. business history. More than 40 states filed a 500-page lawsuit accusing generic drug makers of a massive, systematic conspiracy to bilk consumers out of billions of dollars. For example, text messages implicate at least three companies: Heritage, Aurobindo and Teva, the world's largest generic drug maker. The national accounts manager at Heritage wrote:
Click to Learn More

A.S.: "We are raising the price right now — just letting you know, Teva says they will follow"

A.S.: "Aurobindo agrees too"

A corporate account representative from Citron answered:

KA: "...we are def [initely] in to raise pricing ... are doing this immediately"

The Heritage executive responded:

AS: "We are raising our customers 200% over current market price."

Congress established the current generic industry in 1984 to push prices down. The idea was that once patents on brand name drugs expired, generic makers would compete to make drugs more affordable. But 1,215 generics, many of them the most prescribed drugs, jumped on average more than 400 percent in a single year.


Connecticut has been examining the generic drug industry for almost five years. Last night, 60 minutes gave us a peek inside the investigation. Two relentless attorneys built the cases the state attorney general calls the most egregious examples of corporate greed he has ever seen.

[Read More]

Thursday, May 9, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 268)

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, May 8, 2019

"The Big Payback" Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

How many businesses do you know want to cut their revenues in half? That's why traditional pharmacy benefit managers don't offer radical transparency and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?

Here is what some participants have said about the webinar.

"Thank you Tyrone. Nice job, good information." David Stoots, AVP

"Thank you! Awesome presentation." Mallory Nelson, PharmD

"Thank you Tyrone for this informative meeting." David Wachtel, VP

"...Great presentation! I had our two partners on the presentation as well. Very informative." Nolan Waterfall, Agent/Benefits Specialist

A snapshot of what you will learn during this 30 minute webinar:
  • Hidden cash flows in the PBM Industry such as formulary steering, rebate masking and differential pricing 
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) vs. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold

Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
866-499-1940 Ext. 201


P.S.  Yes, it's recorded. I know you're busy ... so register now and we'll send you the link to the session recording as soon as it's ready.

Thursday, May 2, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 267)

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.