Friday, October 25, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 290)

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, October 23, 2019

New York Firefighters Association Cracks Down on Non-Fiduciary Pharmacy Benefit Managers

The 18,000 hardworking men and women represented by the New York Professional Fire Fighters Association work in departments across New York State and respond to more than a million calls each year, ranging from structure fires to multi-vehicle accidents and medical emergencies. Like all workers, these brave men and women feel the squeeze of rising health-care costs and the dangerous spike in prescription drugs.
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As a result, the New York State Professional Firefighters Association is urging Gov. Cuomo to immediately sign a bill that has passed both houses of the state Legislature that would prevent pharmacy benefit managers (PBMs) from using “utilization management” tools, such as step therapy and therapeutic (non-medical) switching programs, when used properly deliver the most cost-effective access to prescription drugs for diseases related to pain management and cancer.

Tyrone's Commentary:

Big mistake on the part of the firefighters association to say the least. For starters, a recent state Senate committee investigation found that a “lack of transparency” and weak oversight allowed PBMs to “engage in self-dealing to the detriment of consumers across New York State” without transparency or proper oversight. Second, CMS recently expanded step therapy so is CMS wrong? If I didn't know any better I would swear NY is stuck in a time warp insofar as managing pharmacy benefits.

If your wisdom tooth hurts every time you brush one doesn't stop brushing that eventually leads to more pain. You get the dang tooth pulled problem solved! The New York State Professional Firefighters Association is advocating to just stop brushing. Work with me here before you begin to pass judgment. You see PBMs generally rely on the demands of its clients for how much transparency they will provide. 

The contract was opaque and due to the association's lack of sophistication it couldn't see it. It would be nice if every PBM offered a fiduciary standard but they don't. Non-fiduciary PBMs are not contractually obligated to put its clients interests over their own no matter what the sales pitch or one-pager tells you. 

Eliminating drug utilization management tools, such as step therapy, will only serve to increase prescription drug costs for firefighters and other workers. Education is the solution to the problem. Get the darn wisdom tooth pulled! 

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Tuesday, October 22, 2019

Prime Therapeutics Study: Number of 'Drug Super Spenders' Grew 63% In 3 Years

"Super Spenders" or people who spend more than $250,000 on prescription drugs each year is a small subset; of the over 17 million people that were included in the study, just 4,869 were super spenders for the year 2018, spending over $2 billion on drugs. But that group grew 63% from under 3,000 people in 2016 and accounted for an increase in spending of $795 million from 2016.

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There's a reason so many rare disease drugs are emerging; traditional drug spending is trending down. Drugs that treat common diseases are increasingly available in cheaper generic forms. That means that pharmaceutical companies have to rely on the price of specialty drugs to avoid losing money. For example, sales of autoimmune drugs grew by 23% in 2017, according to a different study by Prime.

Tyrone's Commentary:

In specialty pharmacy benefits management (SPBM), 70% of the initial prescriptions written are the right drug. By right, I mean the most cost-effective. It is the other 30% of prescriptions, written by doctors and authorized by PBMs, where the opportunity costs are hidden. Not that these specialty drugs are wrong or bad for the patient they just aren't always the most cost-effective. Three essential considerations in specialty pharmacy benefits management are:

1) Clinical Appropriateness
2) Price or Reimbursement
3) Drug Mix

I cannot stress enough how important it is, for self-funded employers, to have systems in place to execute on those three considerations independent of your PBM's reporting. This is especially true if the PBM is non-fiduciary and/or owns the specialty pharmacy. Moreover, continuous monitoring of the specialty pharmacy benefit on the medical side is just as important as it is on the pharmacy benefit. Medical Benefit Drug Claims or MBDCs are being reimbursed while going largely unchecked.

"There are very few true generic specialty drugs," Dr. Jonathan Gavras, Prime's chief medical officer, said. "The good news is these drugs are effective." More than half of the money spent on drugs is spent on specialty drugs, which are being developed much quicker than traditional medicines. For example, 59 drugs were approved in 2018. Of those, 34 were drugs that treated rare diseases. Not all specialty drugs cost hundreds of thousands of dollars, but most drugs that cost that much are considered specialty.

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Friday, October 18, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 289)

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, October 17, 2019

Wasteful Spending in Healthcare Estimated at $760B to $935B

Waste accounts for about 25% of U.S. healthcare spending, new research in JAMA indicates. Reducing spending in the second-highest wasteful category [pricing failure] poses daunting challenges because of the rising prices of pharmaceuticals, the researchers wrote. "New high-cost specialty drugs, which will soon exceed 50% of pharmaceutical spending, are raising new questions about how to maintain affordability."

This topic has thus received considerable attention from policy makers, and numerous proposals are currently under consideration. The researchers say strategies to ease cost pressure in pharmaceuticals include increasing market competition, importing drugs from countries with lower medication prices, and reforming price transparency.

Tyrone's Commentary:

Ohio's Medicaid Director, Maureen Corcoran, said, "Have we saved the state money? That wasn’t the point. The point was transparency and so that we could continue to work on necessary changes in an educated way.” This was in response to a question from a reporter about Ohio's new prescription drug pricing system. Radical transparency is tough to come by when purchasers don't fully understand key pricing benchmarks and how they play in PBM service agreements. At the end of the day, success in eliminating overpayments to non-fiduciary PBMs is relative to the purchaser's level of sophistication.
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The JAMA researchers generated several key data points:

  • Annual wasteful spending on healthcare is estimated from $760 billion to $935 billion.
  • Interventions to reduce waste in the six IOM categories would result in annual savings from $191 billion to $282 billion.
  • The annual cost of wasteful spending from administrative complexity accounts for the highest category of waste, estimated at $265.6 billion.
  • The annual cost of waste from pricing failure is estimated from $230.7 billion to $240.5 billion.
  • The annual cost of waste from failure of care delivery is estimated from $102.4 billion to $165.7 billion.
  • The annual cost of waste from overtreatment or low-value care is estimated from $75.7 billion to $101.2 billion.
  • The annual cost of waste from fraud and abuse is estimated from $58.5 billion to $83.9 billion.
  • The annual cost of waste from failure of care coordination is estimated from $27.2 billion to $78.2 billion.

The impact of likely interventions to reduce wasteful spending are significant but limited, the researchers wrote.

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Monday, October 14, 2019

Michigan wants to save $40 million by cutting non-fiduciary PBMs out of Medicaid

Michigan is the latest among state Medicaid programs to back away from pharmacy benefit managers (PBMs), choosing instead to enable fee for service drug payments billed to Michigan’s health department through a single, state-contracted PBM.

Michigan’s Department of Health and Human Services (MDHHS) announced that the state will eliminate its outpatient prescription drug coverage as a Medicaid health plan (MHP) benefit. Instead, these drugs will fall under a fee for service Medicaid model starting December 1, 2019.

This means that pharmacies and providers will instead bill prescriptions directly to the state’s PBMs at the point of sale. Previously, Medicaid health plans covered prescription drugs. There are several benefits to a PBM carve-out chief among them include:


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I'm often asked, "Tyrone why do you do this offer advice which might hurt your business?" The short answer is it doesn't hurt my business. My business is predicated on doing what is in the best interest of our clients first. Sometimes these decisions involve lower revenues to TransparentRx. Other times it means more revenue because we don't have to deceive our clients or tell half-truths to grow.

Continue Reading >>

Friday, October 11, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 288)

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, October 10, 2019

Courts Look Closely at the Contractual Relationship Between Plan Sponsor and PBM

In re Express Scripts/Anthem ERISA Litig., 285 F. Supp. 3d 655 (S.D.N.Y. 2018), the district court concluded that pricing provisions in the relevant PBM agreement did not give the PBM discretion over pricing, as the plaintiffs alleged.
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Under the provisions, the health benefits provider contracting with the PBM could perform a periodic market analysis to test whether the PBM was providing “competitive benchmark pricing” to the health benefits provider. If the analysis revealed that pricing was not competitive, the PBM was obligated to negotiate in good faith over new pricing.

The court rejected the plaintiffs’ argument that the PBM’s ability to set pricing pursuant to its own interpretation of “competitive benchmark pricing” amounted to discretion over pricing, concluding that the PBM was only executing the PBM agreement’s pricing scheme.

Tyrone's Commentary:

Why do plan sponsors continue to have their hats handed to them by non-fiduciary PBMs? For starters, your approach is wrong! The court wrote and I quote, "the PBM was only executing the PBM agreement’s pricing scheme." In layman's terms, the court is saying it is a lack of education which allows these pricing schemes to prevail and it [court] will not bail you out for being uneducated. In response to Ohio's new approach to managing drug costs, Ohio's Medicaid Director, Maureen Corcoran, recently said, "Have we saved the state money? That wasn’t the point. The point was transparency and so that we could continue to work on necessary changes in an educated way." Transparency starts with the contract language folks not price quotes. Win radical transparency first then lower prices follow. Ohio finally gets this do you? Here is my final point. The best driver of lowest net cost is being a highly educated purchaser of PBM servicesPurchasers need to understand not only what they want to achieve in their relationship with their PBM but also the competitive market and their ability to drive disclosure of details on services important to them. 

Similarly, the court rejected the plaintiffs’ argument that the PBM’s ability to maximize the spread between the prices it paid and the amounts it billed to insurance companies and insureds made it a fiduciary, again noting that the PBM agreement contemplated such activity and did not require the PBM to pass on savings to participants.

Continue Reading >>

Thursday, October 3, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 287)

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, October 1, 2019

New prescription drug pricing system reins in non-fiduciary pharmacy benefit managers

It took hundreds of millions of dollars wasted, but the state of Ohio finally gets it. Before I address what "it" is allow me to revisit a blog I wrote just yesterday. The timing of that blog couldn't have been any better.

In the blog I wrote, "Many purchasers (plan sponsors and their advisers) select the PBM vendor who puts the lowest price on the table. Lowest price involves several variables including admin fees, rebate guarantees, AWP discounts and most important contract language. The problem is plan sponsors are putting a premium on the "numbers" and largely discounting the contract language."

Seasoned executives or brokers can be seduced into placing more emphasis on the spreadsheet instead of the contract language. For example, price quotes are simply an estimate of what the plan sponsor would have spent had the historical utilization matched that of the proposing PBM (a lot in this sentence). Furthermore, the future actual cost is unknown. As a result, the plan sponsor’s PBM contract is the most important tool to address the actual level of spend - not cost projections.

Then today I come across an article in the Columbus Dispatch in which the state of Ohio's Medicaid Director, Maureen Corcoran, says this in response to a question posed by a reporter...

“Have we saved the state money? That wasn’t the point. The point was transparency and so that we could continue to work on” necessary changes “in an educated way.”

Maureen stated exactly what I've been preaching for the past seven years! Yet, very smart people, from the CFO down, are having trouble grasping this approach. I'm often asked, "Tyrone, tell me again why the proposal with the lowest cost isn't necessarily the lowest cost?" The simple answer is the contract language sets the foundation for all of the financials - not the other way around.

It is through continuous PBM education you become a more sophisticated purchaser of pharmacy benefits which inevitably leads to radical transparency in your PBM relationship(s).

Continue Reading >>