Tuesday, December 31, 2019

Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans; Special Report (Rerun)

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 readHere 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 >>

Monday, December 30, 2019

Wasteful Spending: Check out the price tags on combination prescription drugs

The price of generic version of Zegerid, which is manufactured by Dr. Reddy's Laboratories, is significantly higher than the sum of the prices of its main ingredients: omeprazole and sodium bicarbonate. When bought separately, the two individual drugs would cost about $34 for a three-month supply with a coupon.

Zegerid is what's known as a combination drug — a medication that combines two or more existing drugs — into a single pill or product. While they are convenient for consumers, the price tag of the products contributes to wasteful spending and the high cost of health care in America.

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Marketing Pitch by Horizon Pharmaceuticals
Tyrone's Commentary:

Duexis and Vimovo cost employers as much as $2900 each time they are dispensed despite ingredient costs of less than $50 when the drugs are split and taken individually. There are many more examples but the point is these drugs contribute to high healthcare cost. Make sure your formulary is designed with cost-effectiveness as the primary goal to avoid wasteful spending.

"We're not talking about transformative new therapies," said Dr. Chana Sacks, an internist and medical researcher at Massachusetts General Hospital in Boston. "We're talking about very small tweaks to medicines that we have been using for these very reasons for years." Sacks authored a 2018 study on the subject that found that brand-name combination drugs cost Medicare $925 million more in 2016 than their generic components.

In one example from the study, Merck's Fosamax Plus D had a list price of $39.05 per pill, while its generic components, Alendronate (used to prevent and treat certain types of bone loss) and vitamin D3, cost $1.25. And for Bausch Health Companies Inc., the manufacturer of Zegerid, the list price sits at $86.29 per pill, versus 47 cents for omeprazole (generic Prilosec) and sodium bicarbonate (baking soda).

Continue Reading >>

Sunday, December 29, 2019

BCBS of Tennessee will stop reimbursing providers for certain specialty drugs typically administered in a doctor's office or hospital setting

Some providers who infuse specialty drugs say a new policy from Tennessee's largest health insurance company could cause them to end the service, threatening their practice and forcing patients to find a new place to receive their life-changing drug infusions.

Image result for site of care management
Source: International Federation Employee Benefit Plans 
Starting Jan. 1, BlueCross BlueShield of Tennessee will stop reimbursing providers for certain specialty drugs typically administered in a doctor's office or hospital setting. These expensive medications are used to treat conditions ranging from autoimmune disorders — such as rheumatoid arthritis, Crohn's disease and ulcerative colitis — to some types of cancer and eye conditions. The change doesn't affect drugs patients inject or take on their own.

Tyrone's Commentary:

Site of care optimization simply means having a strategy to seek out and promote the most economical and clinically effective place to deliver care for a particular patient. While this may prove bothersome to some patients and physicians, you can't have it both ways. Whomever covers the largest share of the drug cost should have the most say so in the locations from which these drugs are dispensed (as long as the decision doesn't risk the patient's safety or outcomes). Site of care management is good for self-funded employers. Since they cover most of the drug costs, its only right these employers have the final say so in where high cost drugs are dispensed. I don't walk into my friends' homes go into the refrigerator and put my feet on their sofas. You know why? I don't pay their mortgages.

Providers will instead be required to obtain those drugs through a specialty pharmacy in BlueCross BlueShield's preferred network. The move is the insurer's attempt to slow the skyrocketing cost of specialty pharmaceuticals, which account for only 1% of prescriptions but almost half of the company's prescription costs, according to company spokesman Roy Vaughn.

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Saturday, December 28, 2019

Feds Finally Release Proposed Drug Importation Policies

At the end of July 2019, the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) jointly published the Safe Importation Action Plan, which outlined the Trump Administration’s two-part plan to allow foreign prescription drugs to be imported into the United States in an effort to reduce drug prices.

The first pathway (Pathway One) for prescription drug importation is being implemented under a statutory provision in the Federal Food, Drug, and Cosmetic Act (FD&C Act) that has been in place since 2003 – Section 804 of the FD&C Act, which is codified at 21 U.S.C. § 384.

However, no previous HHS Secretary has been willing to certify, as required by the law, that drug importation would “pose no additional risk to the public’s health and safety” and would “result in a significant reduction in the cost of covered products to the American consumer.” (And although such a certification has not yet been provided to Congress, HHS indicates that it will take that step if and when the new proposed rule is finalized.)

Image result for drug importation from canada

Because of that existing law, FDA refers to the proposed programs that may be authorized by the agency as “Section 804 Importation Programs.” In a press conference before the release of the two documents on December 18th, Secretary Azar indicated that states such as Colorado, Florida, Maine, New Hampshire, Vermont, and Michigan have expressed interest in setting up their own importation programs.

We know that Florida submitted a plan to HHS in August 2019 even before the federal government had made any detailed proposals under Section 804. Colorado expects to submit its plan to HHS by January 15, 2020, and, under a state law, Maine has until May 1, 2020, to submit its importation plan for federal review.

FDA released the Notice of Proposed Rulemaking (NPRM) for Pathway One in order authorize imports of eligible prescription drugs from Canada on December 18, 2019, as noted above. The proposed rule would create a new Part 251 in Title 21 of the Code of Federal Regulations (CFR) pursuant to the authorities available in Section 804 of the FD&C Act.

Accordingly, some of the requirements included in the NPRM come directly from the language of the statute, while others are being proposed pursuant to the discretion granted to the HHS Secretary to require any other elements in a foreign importation plan as he deems necessary to protect the public health.

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Friday, December 27, 2019

U.S. Pharmacy Reimbursement and Distribution System (Rerun)

Are you able to spot the areas traditional Pharmacy Benefit Managers hide cash flow from third-party payers (i.e. employers)?
Click to Enlarge
Here are just three areas traditional PBMs hide cash flow from unsuspecting third-party payers.  A third-party payer may include an employer, insurer, HMO, union and others. 

1.  Contractual Relationship - this is #1 because it permits or makes possible revenue to the PBM that is not transparent.  Fee-for-service, shared [risk] savings and capitated contracts often lead to excessive overpayments.   

2.  Share of Rebates -  often times the share is too low.  Payers should receive 100% of all rebates and/or any incentives earned due to their prescription drug purchases. Typically, rebate payments amount to $2.00 - $3.00 per script.  

3.  Ingredient Costs - in many cases the amount is too high.  A payer should always remunerate to the PBM the exact amount reimbursed to network pharmacies for the same dispensed prescription medication(s).  A difference in these payments is referred to as a spread.  It is not uncommon for traditional PBMs to realize spreads as high as $25 on a single prescription!

I won't waste time discussing transparent and/or pass-through pharmacy benefit managers because all PBMs will communicate in one way or another that they're fully transparent and pass-through.  Not that they're wrong, but it depends upon how one defines transparency.  The definition is ambiguous at best.  However, there is no ambiguity in the definition for fiduciary.

For clarification purposes, I must distinguish between traditional and fiduciary pharmacy benefit managers.  It is simple; a fiduciary PBM must [legally] put its clients' interest before their own and a traditional PBM does not. 


If your PBM promises full transparency and pass-through yet has not agreed to a fiduciary role request they put the pen where their mouth is.  If your PBM resists ask yourself, "what are they hiding?"  You now know the answer...

Thursday, December 26, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 298)

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, December 23, 2019

Doctors Prescribe More of a Drug If They Receive Money from a Pharma Company Tied to It

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Learn More
Pharmaceutical companies have paid doctors billions of dollars for consulting, promotional talks, meals and more. A new ProPublica analysis finds doctors who received payments linked to specific drugs prescribed more of those drugs.

Doctors who receive money from drugmakers related to a specific drug prescribe that drug more heavily than doctors without such financial ties, a new ProPublica analysis found. The pattern is consistent for almost all of the most widely prescribed brand-name drugs in Medicare, including drugs that treat diabetes, asthma and more.

Tyrone's Commentary:

My pharmaceutical career began as a drug sales rep for Eli Lilly and Company in 2002. Detailing is a marketing technique used by pharmaceutical companies whereby drug sales reps educate a physician about a drugmaker's products in hopes that the physician will prescribe the company’s products more often. 

Detailing is not a perfect concept. I would say, however, detailing is a necessary sub-step in the continuum of care. I recall several times when a new product hit the market and the physician had not even heard of it. I was his/her first introduction to the new product. These were products for which some of their patients would benefit from right away. 

It is when less costly therapeutic alternatives are not prescribed in favor of more costly prescription drugs I have a problem. At Lilly my first product was Actos an oral anti-diabetic for type 2 diabetes. My message to physicians was to use it as a second line agent after a patient failed on Metformin or Sulfonylurea. Because Actos was a branded product and much more expensive than Metformin, this was the right thing to do and proof detailing can be positive.

A cost-effective formulary takes precedence over physician detailing so much of the criticism is misdirected. If you want to prevent drugs from being prescribed, which have lower cost therapeutic alternatives, tighten up your benefit design.   

The financial interactions include payments for delivering promotional talks, consulting and receiving sponsored meals and travel. The 50 drugs in the analysis include many popular and expensive ones. Thirty-eight of the drugs have yearly costs exceeding $1,000 per patient, and many topped the list that are most costly for the Medicare Part D drug program.

Continue Reading >>

Thursday, December 19, 2019

Express Scripts to handle drug rebate negotiations, on the pharmacy benefit, for Prime Therapeutics

Express Scripts to handle drug rebate negotiations, on the pharmacy benefit, for Prime Therapeutics.
Cigna’s Express Scripts pharmacy benefit management unit and a PBM owned by 18 Blue Cross and Blue Shield plans have joined forces to tame drug costs for a massive client list that covers 100 million people.

In an announcement Thursday night, Express Scripts and Prime Therapeutics said their new three-year collaboration is “designed to deliver more affordable care for clients and their members by enhancing pharmacy networks and pharmaceutical manufacturer value.”

The collaboration will allow Prime’s member Blue Cross health plans to gain leverage through Express Scripts’ buying clout and large pharmacy network. Express Scripts will handle negotiations for drugs on the pharmacy benefit.

Source: Becker's Hospital Review
Tyrone's Commentary:

This collaboration is a prelude to a complete acquisition of Prime. It's smart to take baby steps which permits the attention to die down and to keep the regulators at bay for a while. This will allow ESI to win even larger discounts from drugmakers. Let's hope they pass these savings back to their clients without punishing independent pharmacies.

Read More >>

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 297)

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, December 16, 2019

Researchers find surgery for blocked arteries is often unnecessary

Image result for blocked artery
Clogged Artery
New research indicates that heart disease patients with blocked coronary arteries who received only drug therapy did not have more heart attacks or die more frequently than individuals who also received bypass surgery or stents. The findings, presented at the annual meeting of the American Heart Association on Saturday, held true for individuals with several severely blocked coronary arteries. Stenting and bypass procedures were helpful for some patients with angina, however.

Tyrone's Commentary:

When properly prescribed and administered, prescription drugs are a cost offset opportunity

The more than 5,100 participants were followed for a median of 3.5 years. There were 145 deaths in the group that was randomized to receive stents or bypass in addition to medical therapy, compared with 144 among those who received medication alone. Additionally, there were 276 heart attacks in the stent and bypass group, vs. 314 in the medication group, a difference that was not considered significant.

Glenn Levine, MD, director of cardiac care at Baylor College of Medicine in Houston and a member of the guidelines committee of the American Heart Association, said the trial is "extraordinarily important" and the results will be incorporated into treatment guidelines.

Continue Reading >>

Thursday, December 12, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 296)

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, December 10, 2019

Geesh! UnitedHealth's Optum paying $300 million for Diplomat specialty pharmacy

As part of the deal announced Monday, Minnetonka-based UnitedHealth also would assume the debt of Diplomat Pharmacy Inc., which analysts said is valued at about $540 million. The acquisition price of $4 per share is roughly a 30% discount to Diplomat's market value on Friday, and the acquired company's stock traded down sharply on Monday.

Tyrone's Commentary:

I wrote about Diplomat's demise just four weeks ago in my blog post, "Holy cow! Diplomat Pharmacy is a shell of its former self." This was a fire sale $300M plus $400M in debt for a company which did over $5B in annual revenue. I hate to see them go it makes it tougher to compete with the Big Three. But, victory will be even sweeter when they [Big Three] are eventually humbled. Let this serve as a warning to those seeking to enter the PBM market. It is not nearly as easy as you think it is.


Image result for pbm rankings by size"

Diplomat has a track record of providing specialty pharmacy and infusion services, analysts said, but ran into trouble developing a pharmaceutical benefits management (PBM) business. Diplomat was founded in 1975 and employs about 2,200 people. The company operates in 50 states and dispensed 918,000 prescriptions last year, generating annual revenue of $5.5 billion. But Diplomat saw a net loss of $302 million last year due in part to client losses in the PBM business.

Continue Reading >>

Specialty Generic and Biosimilar Drug Pipeline Update

Courtesy of our friends over at Ventegra.













References for Pipeline

 Manufacturer websites/press releases 
• Biopharmcatalyst.com/calendars/FDA-calendar 
• AMCP 2019 annual meeting presentation 
• AMCP website 
• Asembia Specialty Pharmacy Summit 2019 
• FiercePharma/fiercebiotech.com 
• www.centerforbiosimilars.com 
• https://biosimilarsrr.com/us-biosimilar-filings/ 
• Clinicaltrials.gov 
   - Subscription required 
   - Pharmacist’s Letter

Saturday, December 7, 2019

PBM 101 Webinar: How to Slash PBM Service Fees, up to 50%, Without Reducing Benefits or Shifting Costs to Employees

How many businesses do you know will voluntarily cut their revenues in half? This is the reason non-fiduciary pharmacy benefit managers are reluctant to offer radical transparency. Instead, they opt for hidden cash flow opportunities to foster growth. 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 the cost of pharmacy benefit manager services
  • 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.

Friday, December 6, 2019

Generic Drug Pipeline Update

Courtesy of our friends over at Ventegra.


References for Pipeline

 Manufacturer websites/press releases 
• Biopharmcatalyst.com/calendars/FDA-calendar 
• AMCP 2019 annual meeting presentation 
• AMCP website 
• Asembia Specialty Pharmacy Summit 2019 
• FiercePharma/fiercebiotech.com 
• www.centerforbiosimilars.com 
• https://biosimilarsrr.com/us-biosimilar-filings/ 
• Clinicaltrials.gov 
   - Subscription required 
   - Pharmacist’s Letter

Wednesday, December 4, 2019

In 2020, Optum To Provide More Than 50% Of UnitedHealth’s Total Company Earnings

The rapid growth of UnitedHealth Group’s Optum health care services unit will contribute more than 50% of the company’s earnings in 2020, executives disclosed Tuesday.

Tyrone's Commentary:

I've noticed a growing trend whereby non-fiduciary PBMs are offering $0 admin and/or $0 dispensing fees in their proposals. Additionally, these non-fiduciary PBMs are proposing a pass-through or transparent pricing model as requested by the broker or plan sponsor. How can a PBM be transparent or pass-through if there is no admin fee? How are they making money otherwise? Any reasonable definition of transparency requires that a plan sponsor know how much revenue a PBM is keeping for itself and the source of those revenues on a client specific basis.

UnitedHealth chief executive David Wichmann vowed at the start of the company’s annual investor day to continue the momentum and growth of the nation’s largest health insurer at a cumulative annual earnings growth rate of 13% to 16%. This means that the Optum unit will contribute more than 50% of total company earnings.


Source:  https://www.drugchannels.net
Optum will generate $112 billion in revenues in 2020, Wichmann said. UnitedHealth Group’s revenues will surpass $260 billion next year, the company has said. “With more than 50% of our earnings coming from Optum in 2020, it’s a good time to reflect on the accelerating impact diversification has had on the capacities of UnitedHealth Group, now a broad-based, health care company still in its formative stages of development,” Wichmann told the investor day attendees.

Continue Reading >>