Wednesday, June 26, 2019

AARP Report: Specialty Drug Prices Soar to Nearly $79,000 per Year

"If these trends continue, older Americans will be unable to afford the specialty prescription drugs that they need, leading to poorer health outcomes and higher health care costs in the future,” says the report, authored by Leigh Purvis, director of health services research at the AARP Public Policy Institute, and Stephen W. Schondelmeyer of the University of Minnesota's PRIME Institute.


Source: AARP/Health Affairs, July 2018
The report on 2017 specialty drug prices is the latest in a series of AARP studies tracking the changes in prescription drug price changes that began in 2004. These findings come as AARP continues its Stop Rx Greed campaign, which calls on state and federal lawmakers to lower prescription drug prices.

Seven Ways to Bend the Specialty Rx Cost Trend:

1) Carve-Out Specialty Pharmacy
2) Carve-Out Manufacturer Revenue
3) Institute a Partial-Fill Program
4) Negotiate Better Contracts
5) Outsource Prior Authorization
6) Restrict Access
7) Address Poor Medication Adherence 

Patients generally have either a flat copay as their portion of prescription drug costs or coinsurance, where they pay a percentage of the retail price of the medication. Out-of-pocket costs for specialty drugs, Purvis says, typically require coinsurance and that can mean thousands of dollars. “Medicare Part D coinsurance can get as high as 33 percent,” Purvis adds.

The $78,781 annual average cost for one of these medicines is more than three times the median income for Medicare beneficiaries ($26,200), the report found, and $20,000 more than the median income for all U.S. households ($60,336). “As you look at these prices and they are higher than what people make in a year, how in any way, shape or form is that affordable?” Purvis says.

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Friday, June 21, 2019

Another opaque PBM contract bites the dust

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In December 2018, Connecticut's state comptroller’s office issued a request for proposal for a new state pharmacy benefits agreement that aimed to increase transparency and eliminate “hidden wealth exchanges” between pharmacy benefit managers and drug manufacturers. A newly inked prescription drug contract between Connecticut Comptroller Kevin Lembo and CVS Caremark could save the state tens of millions of dollars a year.

Lembo, whose office administers health care and prescription benefits for more than 200,000 public employees, retirees, and their dependents, said in a news release that the “broken national model for pharmaceutical pricing” has allowed pharmacy benefit managers to “operate in the shadows,” keeping employers and patients in the dark about where their money is going.

Lembo said the state is seeking a “new paradigm in pharmacy benefit contracting” that will clearly outline administrative fees per drug in order to put an end to “hidden incentives that put drug profitability above the state plan and patients. We are putting every bidder on notice that the state of Connecticut is calling the shots on prescription drug costs and quality,” he said.
  • Transparency will be increased by requiring that the entirety of all drug manufacturer payments to the pharmacy benefit manager be provided to the state, and the state will only pay the amount the pharmacy benefit manager paid each pharmacy for the cost of filling prescriptions. 
  • PBMs will be required to provide “frequent data feeds” to disclose all net costs “post manufacturer rebate,” so that the state has full information on the actual cost of medication. The data requirements will be subject to audits in order to verify compliance.
  • New pricing models call for drug costs guaranteed by pharmacy benefit managers to be based on a per-patient or per-unit basis, rather than a discount off of the “average wholesale price.”
  • PBMs are required to conduct annual market checks to ensure the state plan is getting the best market pricing.
  • Drug rebates to be provided to consumers at the pharmacy counter, and requires pharmacy benefit managers to offer a reduced generic copay to consumers if a lower-cost therapeutically equivalent alternative is available (this requirement will block pharmacy benefit managers from the “troubling practice” of offering lower copays for more expensive drugs over generic ones).
The new contract is expected to shave 10 percent off the state’s prescription drug costs. Those fluctuate from year to year. Under the terms of the deal, CVS will also be required to disclose to the state all drug manufacturer payments it receives for those covered by the state plan.

Tuesday, June 18, 2019

Could proposed rebate rule be a once-in-a-generation opportunity to reset our system to work better?

No chance! I'm usually supportive of just about everything that comes out of Eli Lilly's camp. If you know my story then you also know I got my start in the pharmaceutical industry with Eli Lilly as a drug sales rep. David Ricks commentary is self-serving and a power play. There is nothing more a CEO from a drugmaker would love than to remove PBMs from the negotiating table.

Point-of-sale rebates might lower drug costs but any lost revenue, by non-fiduciary PBMs or health plans, will be shifted elsewhere. The CBO (Congressional Budget Office) happens to agree by predicting the rebate rule would allow pharmaceutical companies to offer discounts 15% smaller than their current rebates. If so, this could cause patient premiums and federal spending to rise.

Watch the video, "How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Reducing Member Benefit Level". The problem isn't rebates that's like saying money is evil. It is that non-fiduciary PBMs aren't returning all of the rebate dollars back to plan sponsors. Don't blame rebates blame the decision-makers.

Commentary by David Ricks, Eli Lilly CEO

While Washington debates whether the “rebate rule” proposed by the administration would cause federal spending to rise, too many are forgetting the people it would help.
Like the woman in Iowa who takes Humalog insulin. Her Medicare Part D plan requires her to pay $193 per prescription — which she sometimes has to carry as a balance on her credit card. But under the administration’s rebate rule, her cost would drop by two-thirds — to $64.

The rebate rule would convert rebates on brand-name prescription drugs — paid by pharmaceutical companies to health insurance plans — into upfront discounts — shared directly with patients at the pharmacy. The rule affects seniors and low-income Americans in privately run Medicare and Medicaid plans, but the administration wants Congress to extend the same protection to all Americans with private insurance.

This is the quickest way to lower consumers’ out-of-pocket costs for medicines — by billions each year. It’s also a once-in-a-generation opportunity to reset our system to work better, for all patients.

[Read More]

Friday, June 14, 2019

Ohio Cancels Bad PBM Contracts and Quickly Gets a Better Deal

Medicaid managed-care provider CareSource last week announced that it had inked a new contract with pharmacy-benefit giant Express Scripts that CareSource said would bring groundbreaking transparency to Ohio’s billion dollar Medicaid drug marketplace. But the contract itself is secret.

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That has some experts questioning whether there still will be room for the kinds of non-transparent behavior blamed for costing taxpayers billions nationwide. The price of prescription drugs is the fastest-growing part of the health-care sector, and critics have blamed pharmacy middlemen such as Express Scripts, CVS Caremark and OptumRx for part of that rapid rise.

Tyrone's Commentary:

Personally, I don't mind so much that the contracts are being kept secret even though it is Medicaid. The most important point is that the contracts are now radically transparent - hopefully. Let's not play "move the goalpost" once all the hidden cash flows have been eliminated. If radical transparency is the goal and you win continue monitoring the PBMs performance but move some of that focus to improving patient outcomes. For those of you who said it [radical transparency with the big 3] can't be done here's mud in your eye. Radical transparency can be won with PBMs. Purchasers of PBM services need only to be relentless in their pursuit of it. Part of that pursuit requires stakeholders to get more sophisticated in how they deal with non-fiduciary PBMs. Ohio did and it appears they are winning.

The critics say the pharmacy benefit managers used secrecy to raise prices and boost profits while the PBMs say they’re saving consumers money. Duh!

Thursday, June 13, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 272)

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.

Friday, June 7, 2019

Massachusetts Health Policy Commission report: Non-fiduciary PBMs are driving up health care costs

Drug benefit managers are increasingly profiting off pharmacies and insurers, according to a new state report, driving up the state spending on health care. The report, issued Wednesday by the Massachusetts Health Policy Commission, focuses on the pharmacy benefit managers (PBMs), which negotiate rebates to drug manufacturers and payments to pharmacies on behalf of insurers.

Pharmacy benefit managers can negotiate on behalf of several insurers at once, leveraging their size to drive down the price of drugs. The practice consolidates insurer bargaining power with a few entities, so that insurers aren’t tasked with negotiating the price of every drug with every pharmaceutical company individually.

Tyrone's Commentary:

The most important point made in this entire report is this, "Despite the focus, the commission said it lacks transparency into how PBMs conduct business. To figure out how much money PBMs are making." Think about this for a second. How in the world can you say you've won a transparent much less fair deal with your PBM when you don't even know how much you are paying the PBM vendor? Here is the truth if as a CFO or HR Executive you fall short of knowing how much your company pays a PBM for the services it was hired to perform then you fail in your fiduciary responsibility. Relying heavily on your broker or consultant to help make the decision? This too could be a failure in your fiduciary responsibility. Benefits brokers and consultants are not equal in the services they deliver. Like PBMs, some put the needs of their clients above their own and others do not simple as that. Take a peek at the comment (image below) from an anonymous poster who if I had to guess is a benefits broker themselves. The comment was made in response to this post (Top 7 Reasons the PBM Industry is Ripe for Disruption).

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In Massachusetts, the MassHealth Medicaid fee-for-service (FFS) reimbursement for most drugs is the acquisition cost of a drug plus a dispensing fee of $10.02. But these requirements do not apply to MCOs; therefore, PBMs can used spread pricing in MassHealth MCO contracts.

The pricing differences for generic drugs between the MassHealth FFS and MCO programs are significant. Looking at data from the fourth quarter of 2018, MCO prices were higher than 42% of FFS prices for unique drugs.

On average, an MCO price exceeded an FFS price by $15.97, despite being a less-expensive drug than the FFS prices for 58% of unique drugs. In fact, MCO prices exceeded the FFS price by at least $10 for nearly 25% of unique drugs and $50 higher for 10% of unique drugs.

[Read More]

Thursday, June 6, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 271)

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, June 4, 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  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135  
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.

Monday, June 3, 2019

CVS's Push Into Your Doctor's Office

Drug-pipeline-FINAL
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Over the entrance of what looks like a regular, aging CVS drugstore outside Houston, a billowing blue banner announces “HealthHUB Come Inside!”The HealthHUB section at the far end goes far beyond what you’d find at a typical walk-in clinic. They offer testing and treatment for chronic conditions, and boast four consultation rooms equipped with exam chairs and retinal cameras for diabetes screening. Video screens display prices for popular services: Today’s rates are $100 for diabetic retinopathy imaging and $89 for a cholesterol screening.

Tyrone's Commentary:

I wrote about this back in December. Non-fiduciary PBMs hidden cash flows aren't so hidden any longer so how will they continue to grow revenues? One answer, shift lost retail prescription drug revenue to the medical Rx spend. When you see inflated AWP discounts over 20% for retail brand and 25% for mail brand then something stinks (if not on a cost plus model). If these discounts are accurate then costs likely have been shifted elsewhere. Pharmacies simply don't make any money at these price points. But, take a look at prescription drug costs on the medical spend, for example, and you might discover the non-fiduciary PBMs who either own or are owned by an insurance carrier are printing money. They have taken a loss on the retail side only to double-up on the medical Rx spend. Buyer beware. 

Employees from the Texas Department of Transportation get full physicals here. At the pharmacy adjacent to the HealthHUB, pharmacist Alex Ybarra counsels patients in a private office as part of the new high-touch approach; the previous day, she spent an hour advising a senior who needed help measuring the effect of his six diabetes medications on his blood sugar.

The HealthHUB is Jacqueline Haynes’s destination for wellness. She was given a blood test for hypertension by a nurse practitioner, who wrote a prescription for beta-blocker Bystolic that Haynes filled at the pharmacy, steps away. She credits the full-time dietitian with helping her shed 72 pounds since January. “That brings my weight to 167.7,” says Haynes, who frequents a CVS “gentle yoga” class on Tuesdays. “I was addicted to avocados and chocolate. He got me eating healthy by doing things like substituting low-cal cacao nibs when I craved candy bars.”

[Read More]