Thursday, September 19, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 285)

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, September 18, 2019

Special Report: Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans

A non-fiduciary PBM would prefer that its clients not know just how much revenue or hidden cash flow it generates as a service fee. There are three primary methods in which a non-fiduciary PBM will look to drive revenue. The three primary methods are: spreads, rebates and benefit design. Spreads and rebates are much talked about benefit design not so much at least not where overpayments are concerned.

Usually, the benefits design conversation is about keeping employees happy or limiting disruption to their benefits experience. It's an appropriate conversation to have but certainly not the only one to be had around benefit design. If an employer closes off spread and rebate overpayments to a non-fiduciary PBM, sure enough the non-fiduciary PBM will look to make up for that lost revenue in the benefit design.

The Pacific Business Group on Health commissioned an excellent report, "Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans" which you must read. Here are a couple of recommendations from that report.
Source:  Pacific Business Group on Health

Image result for whack a mole
Non-fiduciary PBMs are good at this game!
I had this discussion with a seasoned benefits consultant who couldn't believe that this actually happens. That a PBM would poorly design a pharmacy benefit plan so to protect its revenue. He was surprised to learn that a PBM would take this route to protect its margins. I was taken aback that he was clueless to this ballooning tactic.

A good benefit design is one that is both cost-effective and gets medically appropriate drugs in the hands of patients. Cost-effectiveness is the act of saving money by making a product or performing an activity in a better way. It is easy for a PBM to get a medically appropriate drug in the hands of a patient yet that drug may not be cost-effective, for example.

One last word on #10 above. If your finance or accounting teams have not been properly trained, preferably by someone with PBM insider experience, then they too will leave money on the table. It's a game of whack-a-mole with big stakes. Without training from a PBM insider, a non-fiduciary PBM will always beat you at that game.

Download Full Report >>

Tuesday, September 17, 2019

Oncologists Getting 6% of Drug Price Is 'Financial Conflict'

"No one is immune from monetary temptation. We have a system that rewards oncologists and their chemotherapy offices with more money for giving more expensive chemo. This has to change," said Vincent Rajkumar, MD, a professor of medicine and a hematologist/oncologist at the Mayo Clinic, Rochester, Minnesota. "Last week a myeloma patient told me his oncologist had switched him from Zoledronic acid (ZA) to a 'new, easier' option: denosumab. A recent @ASCO guideline in @JCO_ASCO said both were options. ZA is ~$70; Denosumab is ~$2000. The oncologist gets 6% of the drug he/she chooses."

Distorted Model

Drugs that are administered by infusion or injection in physician offices and in hospital outpatient departments are covered by Medicare Part B, as are certain products furnished by suppliers. Under the current system, oncology practices must buy the chemotherapy drugs up front. The cost for drugs may vary; in the United States, Medicare reimburses costs on the basis of the average sales price (ASP) plus 6%. The 6% is meant to cover any variation in the acquisition price, as well as overhead.

Image result for asp pricing model
Source:  Academy of Managed Care Pharmacy
Tyrone's Commentary:

A big chunk of overpayments made by self-funded employers to PBMs can be eliminated by uncovering the most important objective of the PBM. Is their primary objective to make money or to help clients? Yes, you can still make money and put clients first. There are PBMs telling clients that therapeutic substitution is a bad thing. In other words, PBMs who engage in therapeutic substitution programs do it only to drive rebates for themselves. The truth is some do and some don't. More important, is the PBM's primary objective this ultimately drives financial and sometimes clinical decisions. Avoid the "Happy Ears" syndrome and trust your PBM training and education not what the PBM tells you. This story highlights why therapeutic substitution programs are a valuable drug utilization management tool when used appropriately. It is applicable to both the pharmacy and medical drug spend categories. By the way, how much time are you allocating to monitoring the medical drug spend outside of reviewing standard reports? If the answer is little to none you might want to take a serious look. You will likely discover gross overpayments.

As Rajkumar noted in his Twitter thread, that means that providers will be paid more money for prescribing a more costly medication, even if a less costly and equally effective alternative is available — such as the case he highlighted with the myeloma patient being prescribed denosumab (Xgeva, Amgen) in place of zoledronic acid.

Continue Reading >>

Thursday, September 12, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 284)

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.

Monday, September 9, 2019

Site of Care Management: Administering specialty drugs outside hospitals could save $4 billion

Image result for drug costs by site of care
Source: www.slideshare.net
Administering pricey specialty drugs in doctors' offices and patients' homes instead of hospitals could reduce drug costs by $4 billion a year for insurance plans, according to a study from insurance giant UnitedHealth Group.

The study released Monday comes as specialty drugs for chronic conditions such as cancer have eaten up a large portion of drug spending costs. UnitedHealth said that changing the location of administering specialty drugs to outside the hospital could save $16,000 to $37,000 in savings per patient.

“Compared to independent physician offices, hospitals charge more for specialty drugs and their administration, whether treatment takes place in a hospital facility or in a hospital-owned physician practice,” the study said.

Download Full Report >>

Thursday, September 5, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 283)

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, September 4, 2019

Opinion Editorial: A reckoning is coming for non-fiduciary PBMs

Earlier this month, a Medicare recipient with drug coverage filled a prescription at a Concord branch of a major pharmacy chain. The pharmacist, one of many with heart, soul and concern for customers, ran the numbers and pointed out that it would be $80 cheaper if the patient paid for the drug out-of-pocket instead of using her insurance co-pay.

Until recently, pharmacists were banned from alerting customers to such savings by contracts with pharmacy benefit management companies. Untold millions were secretly siphoned away from unwitting patients by the legal, but deceitful, tactic.

A bill passed by Congress last year freed pharmacies from PBM gag orders.“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket,” Sen. Susan Collins of Maine, a sponsor of the bill, told colleagues.

“Clawbacks” earned by overcharging patients are just one of the sins of an industry that evolved in the 1990s as middlemen between pharmaceutical manufacturers, insurers, employers and plan beneficiaries. They have become, it seems, akin to lampreys, the parasitic eel-like fish with rasping mouths that attach to their piscine victims and suck their blood, weakening but not killing them.

Tyrone's Commentary:

A non-fiduciary PBM salesperson,
click here to wipe that smile off his face.
There are a lot of bad actors in the PBM industry and I mean a lot. Much can be done by non-fiduciary PBMs to improve the level of transparency provided to purchasers of PBM services. For instance, most PBMs consider themselves transparent when they disclose, in contracts, their cash flows. The problem here is twofold. Without a trained-eye reviewing the contracts, most companies don't recognize the "hidden" cash flow streams embedded in contract language. Second, the exact amounts of cash flow to non-fiduciary PBMs aren't disclosed. Any PBM that doesn't disclose its service fee (admin fee + undisclosed cash flow amounts) falls short of providing any reasonable definition of transparency to its clients. I'm not taking purchasers off the hook either you need to get smarter about how you procure and manage pharmacy benefits. The more sophisticated you are as a purchaser of PBM services the less one overpays.

With all this being said, I'm convinced that PBMs are low hanging fruit. It's easy to put most of the blame on us for high Rx costs. Afterall, purchasers and their agents have a direct line to us whether by phone or email. In most cases, no such direct line exists between self-funded employers, their agents and pharmaceutical manufacturers. The research is clear drugmakers keep 70% of Rx profits, pharmacies 15% and PBMs 5%. Also, if I'm being honest most purchasers of PBM services don't know enough about the industry to negotiate a fair and transparent deal for themselves. Twenty-years experience in HR, finance or as a broker will only get you in more trouble unless you've had extensive and formal PBM training from an insider. Even with formal training the road to radical transparency can still be tough. Brokers and consultants must balance the needs of their clients with those of the organization and themselves personally, for example. Additionally, staying current with pharmacy benefits acumen is a lifelong journey not a one-off. 

In summary, there is enough blame to go around for all stakeholders including PBMs. Without high pharmacy benefits management acumen and negotiating skills, you stand little chance of eliminating overpayments to a non-fiduciary PBM. It requires supreme confidence and moxy to stay true to your convictions. That confidence stems from education. Non-fiduciary PBM salespeople have been trained to push you off your spot. Simply put, control what you can control and let the chips fall where they may.


Now several states, including Ohio, have gone to court to recover money needlessly paid to PBMs, who kept the bulk of the money spent by customers its contracts kept in the dark. A study of 9.5 million prescription drug claims by researchers at the University of Southern California found that “2.2 million – or 23 percent – overpaid for their prescription because their co-pay was more than the cost of the drug.”

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