Thursday, December 31, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 346)

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.

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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Wednesday, December 30, 2020

Study Finds Non-Fiduciary PBMs are Draining Florida’s Medicaid Funds

A study exploring Florida’s prescription drug costs through the Medicaid program found that pharmacy benefit managers (PBMs) profited $89 million dollars, mostly from a spread pricing contract scheme that charges the state higher cost than will be disbursed to the pharmacist.
Click to Learn More

Florida’s Medicaid program is contracted out to private healthcare companies like CVS Caremark, Humana, etc. Those private companies then take Medicaid dollars and draw up contracts with pharmacies around the state. PBMs play the role of negotiating drug prices between pharmacy suppliers and payers; they have an outsize stake in what consumers pay for their prescription drugs.

PBMs in Florida operate in 2 ways depending on the county – pass-through or spread. Pass-through pricing reimburses pharmacists the cost of the drug, while PBMs take a small fee. Spread, on the other hand, reimburses a pharmacy a different amount for the drugs than what it charges the state. Kevin Duane of SPAR (Small business Pharmacies Aligned for Reform) who finds it “indefensible” that the PBMs under pass-through contracts filled 2 million more prescriptions and made tens of millions of dollars less than those under spread contracts.

Commissioned by the state Agency for Healthcare Administration (AHCA), the study found that spread pricing contracts pay pharmacists less in reimbursement and keep, on average, 9.5% of the transaction, whereas pass-through models take a $1.45 administration fee and reimburse pharmacists the full cost.

<<Continue Reading >>

Tuesday, December 29, 2020

Internal Email Shows Big Three PBM Was Overcharging – And Knew It

Starting with its predecessor, a company called Catamaran that OptumRx acquired, the PBM administered prescription drugs for workers injured on the job. In all, OptumRx overcharged the bureau on more than 1.3 million claims for generic medications, the lawsuit says.

The contract, in effect from mid-2009 until the fall of 2018, called for the PBM to charge the lowest of four potential prices for generic drugs, including a measure from the Centers for Medicare and Medicaid known as the Federal Upper Limit, or FUL for short. But in a series of May 2015 emails marked as "confidential," John Spankroy, Director of Public Sector Account Management for Catamaran, said the Federal Upper Limit was never applied, despite the contract.

Click to Read Article

Tyrone's Commentary:

How does this go on for nearly a decade? Pharmacy Benefit Managers will provide transparency and
disclosure to a level demanded by the competitive market and generally rely on the demands of prospective clients for disclosure in negotiating their contracts. The best proponent of transparency is informed and sophisticated purchasers of PBM services. The purchaser needs 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. Assessing transparency is done more effectively by a trained-eye with personal knowledge of the purchaser’s benefit and disclosure goals. The reason plan sponsors are overcharged is due to a gap you have in one or more of these areas:

1. Information Symmetry
2. PBM Industry Training
3. Lack of understanding in pharmacy benefit design or plan goals

Far too many brokers, PBM consultants, CFOs and HR executives are unfamiliar with the phrase "lesser of logic." Worse yet, when given pricing sources such as AWP minus, MAC, U&C and Copayment 99% of  decision-makers, who select a PBM vendor, can't accurately calculate their own cost with lesser of logic. That's why something like this can go on for a decade. It really just makes me sick to my stomach. It's time to move on from the PBM, large or small, that puts profits over doing the right thing for their clients. Find a PBM partner who proactively corrects these "mistakes" for no other reason than it's the right thing to do.

He told Susan McCreight, Senior Director of Public Sector Account Management, "Per BWC contract we are supposed to be using pricing logic that includes lower of FUL for generics. None of the BWC price schedules has FUL as a cost source." In a separate email, Spankroy told Bryce Owens, the Illinois-based PBM's manager for pricing and analytics, "We do not see FUL included as a cost source option." Spankroy also acknowledged: "BWC is not aware of this (yet)."

Monday, December 28, 2020

[Free Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

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.

Thursday, December 24, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 345)

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.

 
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.
 

Tuesday, December 22, 2020

Tuesday Tip of the Week: Commercial Employers Pay More Than Public Sector Employers in Spread Pricing

Are you able to spot the areas non-fiduciary Pharmacy Benefit Managers hide cash flow from self-insured employers?


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 non-fiduciary PBMs to achieve spreads as high as $50 on a single prescription from commercial employers. The state of Ohio is suing a PBM for spreads averaging just $5.71. 

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 standard request they put the pen where their mouth is.  If your PBM resists ask yourself, "what are they hiding?" You now know at least part of the answer.

Friday, December 18, 2020

Self-Funded Employers: Your Generic Dispense Rate (GDR) Should be 90% or Higher

Most consumers and employers alike are unhappy about the cost of drug prices. In 2016, the U.S. spent $450 billion on prescription drug costs, and spending is projected to increase to $610 billion by 2021. Even though 90 percent of prescriptions filled in the U.S. are for generic medications, brand-name medications account for 74 percent of spending on medications in the U.S. Generics save Americans billions every year. In fact, generics saved U.S. consumers $253 billion in 2017 and over $1 trillion in the past decade.

FAST FACTS: GENERIC AND BRAND-NAME MEDICATIONS

  • All brand and generic medications go through FDA approval to show the medications are safe
    and effective before sale in the U.S.
  • Not all medications have generic versions.
  • A brand medication is the “innovator” or pioneer, and gets patent and exclusivity protection so generics can’t compete right away.
  • Generic medications must meet the same quality, strength, and purity standards as brands, so they have the same benefits and effects.
  • Generics must have the same strength, dose, route of administration, and active ingredient(s) as the brand
  • Brands and generics don’t look exactly alike (color, size, shape, packaging), but they work the same.
  • Generic medications cost a lot less than brand names.

What are generic drugs?

Generic medications are a chemical copy of the original brand, with the same active ingredients. Generics are also available at a lower cost than brand-name medications. In fact, generic drugs cost 85 percent less than the brand version on average.

FDA gives patent and exclusivity protection to brand manufacturers to allow them to profit from their innovation and research for several years. During this time, no generics can compete with the brand. Once the patent has expired, generics can enter the market through a shortened FDA approval process. Generic medications need to meet the same quality, safety, and effectiveness standards as brands.

Tyrone's Commentary:

The generic dispensing ratio (GDR) or the number of generic fills divided by the total number of prescriptions is a standard performance metric on which pharmacy benefit designs and their managers are routinely evaluated. For every 1% increase in GDR a plan realizes a 1.5% - 2% reduction in net cost. For this reason, no plan should have a GDR less than 89% unless efficiency (i.e. eliminating wasteful spending) isn't the #1 goal. 

Are generic drugs always safe to take?

Yes. Generic medications must meet the same quality standards for approval by the FDA as brand-name medications. Generics have to prove they are bioequivalent to the brand version. Bioequivalence means the generic works the same way and provides the same benefits.

It’s the FDA’s job to monitor drug safety. They inspect over 3000 drug manufacturer facilities around the globe every year. The FDA also monitors generic medication safety after drug approval. If the FDA discovers problems with safety or quality, a recall is issued for the affected medication to keep the public safe. For example, if there are reports of a medication causing side effects, or adverse reactions, FDA investigates and acts when needed.

You may have heard about different blood pressure medications being recalled, as well as and the heartburn medication Zantac. These medications had trace amounts of cancer-causing impurities. FDA issued recalls on these medications to remove them from the market. FDA also increased safety checks to prevent contamination problems in the future.

Is there a difference between a generic and name-brand version of a drug?

Generic medications go through testing for quality, strength, purity, and potency to show effectiveness before approval by FDA. They must have the same active ingredient and provide the same benefits. There are a few differences, however. Generic and brand medications don’t look the same. Generics may have slightly different inactive ingredients (fillers, binders, flavors, etc.). These don’t affect how the medicine works.

<<Continue Reading>>

Thursday, December 17, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 344)

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.

 
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, December 15, 2020

Tuesday Tip of the Week: The Untold Truth How Non-Fiduciary PBMs Make Money [Volume 153]

If the tables were turned and someone I didn't know came to me with a proposition, even one that was appealing, I would be hesitant because I would be wondering - what's the catch? What does this guy know that I don't?

Don't hesitate. I do own a PBM. I did work for one of the Big Five pharmaceutical firms negotiating rebate contracts with PBMs. And if that's not enough I also owned a mail-order pharmacy. Simply put, I have access to a side of the business that likely do not. I open up the black box. Take 30 minutes of your time to watch the webinar.


Who Should Watch:

• HR Managers & Executives

• Agents, Brokers & Consultants

• Insurance Executives

• Benefits Specialists

• CFOs

• Controllers and Directors of Finance

In return, I disclose critical information that has been traditionally withheld from self-funded employers and their advisers. I share this knowledge so that you have an opportunity to cut your PBM service costs, by as much as 50%, without reducing benefits or shifting costs to employees.

Thursday, December 10, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 343)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Wednesday, December 9, 2020

What is a Copay Accumulator Program and How Does It Work?

A copay accumulator – or accumulator adjustment program – is a strategy used by insurance companies and Pharmacy Benefits Managers (PBMs) that stop manufacturer copay assistance coupons from counting towards two things: 1) the deductible and 2) the maximum out-of-pocket spending. What does this mean? 

Previously, a person could receive financial assistance from companies that make a drug, and that would count towards their deductible and/or out-of-pocket costs, depending upon the insurance plan. Pharmaceutical companies often provide financial assistance (such as a co-pay card) to help underinsured individuals afford expensive medications. This means that the person paying for the drug would end up saving money, often thousands of dollars. 

Why Is This an Issue? 

As the AIDS Institute explains it, “ … the trend in health insurance benefit design is to shift more of the cost of health care to patients through high deductibles and coinsurance rates …In order to afford the medicine they need, patients increasingly rely on manufacturer copay assistance.” 


Tyrone's Commentary:  

Blanket statements like, "with copay accumulators, the individuals who need assistance the most will be unable to receive it, and will end up paying more for their treatments" are misleading. In many cases, the patients pay less than what was intended by the benefit design. But, if there was no actual out-of-pocket why should it [copay assistance] count toward the deductible? It seems no one will be happy until employers are on the hook for 100% of the cost.

As a copay program provider, TrialCard believes accumulators have a negative effect on a pharmaceutical manufacturer’s ability to deliver patient assistance for high-cost specialty medications, many of which do not have generic alternatives.

“We’ve been educating employer groups on the impact of copay accumulators beyond just financial savings tools and have analyzed their effects on employee productivity and long-term healthcare costs,” Zemcik explained. “Our role as a copay program provider working on behalf of our manufacturer clients is to help design their programs in a way that’s going to best address all of the complex issues.”

Thursday, December 3, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 342)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, December 1, 2020

Tuesday Tip of the Week: 3 Ways for Employers and HR Pros to Know If They Have Selected the Right Insurance Broker for Pharmacy Benefits

About 15% of employers change brokers each year and likely double that stay with their broker even though they are not satisfied with the ROI. At the point when you consider the effect of the Covid-19 pandemic on staff, HR groups need now, like never before, to know their employee benefit brokers are genuine advocates and fully aligned in accomplishing HR goals. Here are three tips for employers and HR professionals to help pick the right insurance broker for pharmacy benefits.

1. Broker relies on technology.

Requests for proposals (RFPs) are often cumbersome and time-consuming, which is why organizations must leverage an RFP tool to streamline the response process. Certainly, there are lots of RFP tools and resources available. But, when people talk about investing in an RFP tool, generally they mean RFP software. Cloud-based RFP software solutions eliminate inefficiency in the RFP process by centralizing response content and automating scoring. Manual RFP response processes are time consuming and costly. As digital transformation brings efficiency to the proposal review process, opportunities for automation are plentiful. When considering the best insurance broker for you, it’s wise to explore how RFP automation can be incorporated into your process. 

2. Ask about conflict of interests.

If you're reading this and work in HR or finance for a self-funded employer, never retain the services of a broker or PBM consultant who benefits when your pharmacy costs increase. Should you do so, be sure to have signed a conflict of interest disclosure form.

  • Do you have the expertise within your company to evaluate PBM contract language? 
  • Do you have the skillset to design a pharmacy benefit plan? Or do you need additional training in pharmacy benefits management? 
  • Do you have the expertise and resources to manage the plan design or do you need to build in the incentives for the PBM to manage your program? 
  • How do you want to be involved in the management of the plan after it is set up? 

A potential or actual conflict of interest exists when commitments and obligations are likely to be compromised by the broker's other material interests, or relationships (especially economic), particularly if those interests or commitments are not disclosed. In other words, hire consultants not because you lack the requisite knowledge to design or manage the pharmacy benefit plan in-house, but because you lack the time or human capital to go it alone. 

Find Out More

3. Check the credentials.

Many employers, unions, and government agencies pay large consultancies and brokerage firms to help them avoid overpaying for pharmacy services. So then how does this keep happening? There are a number of reasons including misaligned incentives, inefficient procurement and overall lack of a pharmacy benefits strategy just to name a few. But, the primary reason is without question a wholesale lack of education around pharmacy benefits management in general. It is education which leads employers to leveraging the four pillars to better PBM performance. When you hear an insurance broker say, "I know just enough about pharmacy benefits to be dangerous" run for the hills!

Education is key to use of lowest net cost drugs in pharmacy benefit plans. Only the most sophisticated purchasers of PBM services will have the knowledge and confidence to bind lowest net costs for prescription drugs into contract language and benefit design. Hence, your competitive advantage includes executing good analysis of the correct information then deciding what all of this suggests for your organization. Those who seize the chance and develop a good plan that may reasonably be accomplished have a higher probability of getting to lowest net cost. 

Monday, November 30, 2020

Ohio Requesting Bids for Administrator to Oversee its Pharmacy Benefit Program

The Ohio Department of Medicaid on Thursday started the process of hiring a private administrator to oversee its $3 billion pharmacy benefit program. The department requested proposals for a pharmacy operational support vendor to help design its program and provide financial oversight once it's up and running. Medicaid created the new post as part of a broader overhaul of its managed care program. 

Find Out More

In addition to rebidding contracts with private managed care organizations that oversee the program, the state agency is also replacing five pharmacy benefit managers hired by those private organizations to process claims with one company hired by the state and monitored by the administrator. The added oversight comes after a report showed PBMs billed the state far more than they paid pharmacists and kept the difference, allowing them to receive $224 million in one year — an amount generated by PBMs charging three to six times the standard rate, according to an independent analysis.

Tyrone's Commentary:  

Your pharmacy benefit manager owes you nothing. In its most simplistic form it is merely a facilitator of goods and services. At best, it is your adviser offering suitable goods and services but not necessarily the best goods or services. To owe its client something, the PBM would have to act as a fiduciary. Have you noticed how often PBMs get sued but rarely lose in court? Employers believe that PBMs owe it something the courts say otherwise. You see non-fiduciary PBMs generally rely on the demands of its clients for how much cost savings they will provide. Moreover, non-fiduciary PBMs provide disclosure of important contract details to a level demanded by the competitive market. In other words, non-fiduciary PBMs have learned how to leverage the purchasing power of the unsophisticated plan sponsor to their financial advantage. The truth is most, if not all, of the excessive costs embedded in non-fiduciary PBM service agreements can be eliminated if stakeholders (HR execs, CFOs, benefits consultants, brokers etc...) concern themselves more with self-education and accountability and less with self-preservation. If I here one more time "no one has ever been fired for hiring Express Scripts"😕. The state of Ohio was humbled and now has a plan to win full disclosure and eliminate overpayments to non-fiduciary PBMs. You could establish a POSV or just hire a fiduciary-model PBM and achieve two aims at once - eliminate PBM overpayments and do away with duplicative consulting fees. What is your pharmacy benefits management strategy?

“The POSV (pharmacy operational support vendor) will ensure monetary incentives are properly and fairly aligned, eliminate self-dealing and steering, and monitor and close potential pricing or rebate loopholes,” said Medicaid Director Maureen Corcoran. "In short, the POSV ensures that the fox is no longer guarding the chicken coop.” The administer will operate independently from the pharmacy benefit manager, providing oversight and ensuring pharmacists are paid accurately for the prescriptions they fill.

<<Continue Reading>>

Saturday, November 28, 2020

[Free Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

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, November 27, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 341)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, November 24, 2020

Tuesday Tip of the Week: Non-Fiduciary PBM Rent-Seeking Behavior Eliminates Their Price Advantage

Rent-seeking is a term economists use to describe an organization's ability to generate above average economic returns without providing any relative incremental value. Wikipedia may explain it a bit better.

Wikipedia Definition

The simplest definition of rent-seeking is to expend resources in order to gain wealth by increasing one's share of currently existing wealth instead of trying to create wealth. Since resources are expended but no new wealth is created, the net effect of rent-seeking is to reduce total social wealth. It is important to distinguish between profit-seeking and rent-seeking. 

Profit-seeking is the creation of wealth, while rent-seeking is the use of social institutions such as the power of government to redistribute wealth among different groups without creating new wealth. Rent-seeking generally implies extraction of uncompensated value from others without making any contribution to productivity. 

The origin of the term refers to gaining control of land or other pre-existing natural resources. In a modern economy, a more common example of rent-seeking would be political lobbying to obtain government benefits/subsidies or to impose burdensome regulations on competitors in order to increase market share.

Studies of rent-seeking focus on efforts to capture special monopoly privileges such as manipulating government regulation of free enterprise competition. The term monopoly privilege rent-seeking is an often-used label for this particular type of rent-seeking. Often-cited examples include a lobby that seeks tariff protection, quotas, subsidies, or extension of copyright law.

How do traditional and pass-through PBMs employ a rent-seeking methodology?

Generating more than $400 billion annually, the PBM industry offers an extraordinarily valuable service, providing pharmacy benefits to nearly 250 million Americans. Unfortunately, very few people outside of the industry fully understand how it makes its money.  

PBM clients include, but are not limited to, commercial and public sector employers, unions, health plans and health systems just to name a few. All of the different PBM business models will profess how much money they can help plan sponsors save or that they are the most effective at improving your pharmacy benefit plan. However, very few of them share how much revenue they retain. In other words, disclose their management fees. 
 
Only two PBM business models will share their management fee - fiduciary or radically transparent PBM models. I mean, who are we kidding?  Traditional, pass-through, and transparent PBM business models are for the most part the same. Do any of them reveal how much money they are being paid for their services?  

Think about this for a second. Contracts between pharmacy benefit managers and pharmaceutical manufacturers and pharmacies are pretty much set in stone. Unless a PBM significantly outperforms its contract, the terms between the PBM and manufacturer or rebate aggregator will not change until the contract ends. 

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Friday, November 20, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 340)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Thursday, November 12, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 339)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, November 10, 2020

Tuesday Tip of the Week: Specialty Drug Utilization Management Three Things to Know

DUM or drug utilization management in specialty pharmacy helps to maximize efficiency. That employers don't engage in wasteful spending and the right drug, at the right time gets in the hands of the right person. It likewise encourages digital monitoring of the member's drug therapy in the past, the now and in the future. Here are three imperatives around specialty drug therapy to consider while designing a pharmacy benefit plan:

Imperative 1: Mandate Comprehensive Solutions to Improve Health Outcomes

Specialty pharmacies use medication therapy management (MTM) to coordinate comprehensive care for patients and improve health outcomes. MTM employs a range of clinical tools to improve outcomes and promote value, including therapeutically focused clinical assessments, validated quality of life measures, detailed medication reconciliation, monitoring adverse effects, connecting patients to educational resources, peer-based support programs, and access to need-based financial resources reducing barriers to care. Specialty pharmacies provide patient level support reducing health system and therapy complexity by explaining benefits and coverage, coordinating the best site of care for injected or infused medication, providing drug administration training, adherence support, and resources empowering patients to independently manage complex, persistent treatment plans.   

Imperative 2: Evaluate Parity in Pricing for Specialty Drugs

When a specialty medication is parity priced, the drug is the same price regardless of the dose prescribed. For instance, Pomalyst is manufactured in 1 mg, 2 mg, 3 mg, and 4 mg strengths. It is the same price for 1 mg as it is for a 4 mg dose. It is prescribed once per day. QD (qd or q.d.) is once a day; q.d. stands for "quaque die" (which means, in Latin, once a day). BID (or bid or b.i.d) is two times a day ; b.i.d. stands for "bis in die" (in Latin, twice a day). There is no therapeutic benefit for someone to take four 1 mg tablets as opposed to one 4 mg tablet, and yet this is something we see when repricing pharmacy claims files today. Imbruvica and Afinitor are other examples where these cases do not involve changing the drug nor changing the dose. Changing parity priced dosing can save $400K-$500K on a single prescription for a single patient.

Click to Learn More

Imperative 3: Take a proactive approach to prior authorizations.

I've been fortunate enough to be a "fly on the wall" listening to the leadership teams of several national specialty pharmacies. And while they preach case management and patient care as the priority if you listen carefully what they really want first and foremost is volume or more prescriptions. I am asking self-funded employers a simple yet very important question. Does it make sense to have the same entity manage and approve specialty Rx claims when that entity stands to benefit when these claims are approved? If 85% or more of PAs are getting approved you might be a victim of rubber-stamping which leads to what? You guessed it - wateful spending. Just because you have a PA or step therapy program doesn't mean it is efficient. Consider carving out the prior authorization process or use prior authorizations with a dollar limit. The goal is not to create disruption but to review the clinical appropriateness of any dose increases, for example. 

In conclusion, PBMs will generally manage costs to a level demanded by clients when negotiating their contracts. The best proponent of radical transparency or lowest net Rx cost is informed and sophisticated purchasers of PBM services. In other words, the more you know the less you pay without any reduction in member experience or outcomes.

Thursday, November 5, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 338)

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.


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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, November 3, 2020

Tuesday Tip of the Week: Three Myths about PBM Pricing Every Employer-Sponsored Plan Should Know

Employer-sponsored plans that prioritize price risk poor clinical outcomes and higher overall costs in their pharmacy programs. Equal focus on all four pharmacy cost drivers will always produce the best results. Price is just one indicator of pharmacy benefits management program success, but it is one that can also hide problems. 

On the positive side, lower spend can be the result of better product mix and efficient drug utilization driven by improved formulary management. Here are three myths that have developed in the market and reasons why placing equal emphasis on each of the four pharmacy cost drivers will generate greater value at a lower cost over the long term.

1. Rebates are one of the Top 2 factors in lowering employer-sponsored pharmacy benefit plan costs.” The employer faces a double whammy on rebates: (1) rebates may be kept by the PBM (2) rebates are offered only on expensive drugs. Almost without exception the most heavily advertised and rebated drugs have therapeutic alternatives which cost up to 90% less than the rebated products. An employer may think it need not worry about this structure since it receives 90%+ of the rebates. Are there other fees paid to the PBM by the manufacturer that are relabeled and therefore are no longer considered a “rebate”? Does the employer even have access to the right information to make these decisions?

2. Pass-through and Transparent PBM business models provide similar levels of transparency and price. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser to their financial advantage. Consequently, pass-through and so called transparent PBM business models don't let you in on what their management fee amounts to. That is a big big problem. Unlike admin fees, management fees are not easily quantifiable primarily because non-fiduciary PBMs don't want employer-sponsors to know just how much their fees are contributing to your costs. The full-disclosure and fiduciary-model PBM will disclose to self-insured employers their management fee or the part of negotiated discounts it will keep. The lower this fee the less employers pay plain and simple. A reasonable PBM management fee bends the cost trend whilst delivering similar levels of service and outcomes. 


3. Benefit design is less important than pricing guarantees such as AWP discounts and rebates. Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I've not taken a poll so I don't know the reason. Maybe it is because some believe benefit design doesn't have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it. In pharmacy cost drivers, price is 1A and benefit design is 1B. Benefit design includes but is not limited to elements such as formulary, network configuration and member cost-sharing arrangements. Aside from copayments and deductibles (cost-sharing) most plan sponsors know little else about their benefit design and have left it up to the PBM to decide. When the PBM is non-fiduciary that could lead to significant overpayments.

There are a lot of bad actors [not just PBMs] in the benefits industry using employers' bank accounts as their personal ATM. Much can be done by non-fiduciary PBMs to improve the level of transparency provided to purchasers of PBM services. Without a trained-eye reviewing PBM contracts, most companies are at the mercy of PBMs who are essentially given a blank check. I'm not taking purchasers of PBM services off the hook either. Continuous learning is essential to running an efficient and cost-effective pharmacy benefit management program.

Thursday, October 29, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 337)

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.
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.


Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.


-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Wednesday, October 28, 2020

[Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

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.

Tuesday, October 27, 2020

Tuesday Tip of the Week: Factor Benefit Design into your PBM Scorecard (Rerun)

Factor in the actual benefit design, not questions about benefit design, into your PBM scorecard. At a minimum, it should be the same form the PBM uses to set your group up in the back-office. Sometimes even the PBM's benefit design form excludes important details, such as DAW codes, so be careful. If important information is missing get it included especially when that information contributes to your cost. 

Click to Learn More

Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I've not taken a poll so I don't know the reason. Maybe it is because some believe benefit design doesn't have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it.

Don't put 50 questions in a RFP around benefit design where important details get lost in translation. Instead, get a copy of a signature ready benefit design and score it as part of the PBMs proposal. Here are some weights I recommend applying to each scorecard:

Contract - 40%

Benefit Design - 25%

References - 10%

Questionnaire - 5%

Reverse Auction - 15% 

Finalist Presentation - 5%

In pharmacy cost drivers, price is 1A and benefit design is 1B. Aside from copayments and deductibles (cost sharing) most plan sponsors know little else about their benefit design and have left it up to the PBM to decide. When the PBM is non-fiduciary that could lead to significant overpayments.