Thursday, April 30, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 311)

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, April 29, 2020

Formulary Exclusions are Gaining Popularity

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Jeenal Patel, PharmD, BCGP, a formulary manager for WellDyne, said pharmacy benefit managers (PBMs) and employers are increasingly turning to formulary exclusions to control the rising cost of drugs.

Tyrone's Commentary:

The human resources department should anticipate some backlash from employees when formulary exclusions are adopted to help manage costs. The frustration associated with formulary exclusions can be alleviated by communicating the benefits to employees before adoption. Use multiple mediums to communicate with employees such as welcome letters, mobile notifications, member portal inbox messages, and SPDs, for example. If executed properly, formulary exclusions work without sacrificing patient outcomes. The good news is employees are smart and usually make the adjustment within 90 days or so.  

Formulary exclusions are gaining popularity as a means of managing the type and cost of medications used. “Many times when you have an excluded or not-covered product, it’s perceived to be a stronger deterrent to usage versus having the product placed on a higher tier, controlled by prior authorization or step therapy,” Patel said.

Even in the specialty arena, we’re starting to see limited drugs available on formulary for narrow therapeutic areas and unique oncology indications, for example. We’re seeing decreased redundancy across the board in broader categories, such as psoriasis and arthritis,” Patel said. PBMs are finding exclusions “one of the more attractive ways to lower costs” and develop a more competitive pricing landscape, she said.

Continue Reading >>

Tuesday, April 28, 2020

Tuesday Tip of the Week: You Should Not Pay a PBM for Your Own Claims Data

Last week's tip centered around accepting nothing less than full disclosure from a PBM. Along those same lines are data rights. With data rights, it's important to consider a proper balance between the PBM and the plan sponsor. Few issues strike at the core of PBM profitability as much as do those related to rights in claims data. 

The competitive advantage represented by industry know-how, trade secrets, or unique benefit designs is translatable directly into profits. Non-fiduciary PBMs go to great lengths to protect whatever competitive advantage is attained. 

In PBM contracting, competitive advantage can easily evolve into misaligned incentives. PBM autonomy of critical claims data, manufacturer rebates, or benefit design procedures can eliminate effective performance measurement. Here is an example of a trap you don't want to find yourself in.

CLICK TO ENLARGE
The balancing of a plan sponsor's rights in accessing valuable claims information and know-how and the PBM's need to hide cash flows is dictacted, in large part, by the pharmacy services agreement. The contract nomenclature, and the clauses it prescribes, must provide a mechanism by which a proper balance between radical transparency and reasonable profits to the PBM may be struck. 

Plan sponsors should not have to pay for their own data. If a PBM suggests it is their policy, it is a money grab nothing more. That cost and service should be built into their administartive fee. Oh wait, did you agree to the $0 admin fee and $0 dispensing fee? If yes, then this is the price you might pay in exchange for the artifically low administrative fees.

A radically transparent or fiduciary-model PBM makes money just one way - the administrative fee. When the administrative fee is artificially low (less than $4 per claim) the likelihood of your PBM being radically transparent is slim to none. In some form, it is generating huge overpayments or mark ups via hidden cash flow.

Thursday, April 23, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 310)

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, April 21, 2020

Tuesday Tip of the Week: A PBM Proposing Anything Short of Full Disclosure is a Non-Starter

If you are unable to win full disclosure from a PBM, just walk away. Don't be swayed by the PBM proposal with the biggest AWP discounts, rebate guarantees or low dispensing fees and even lower admin fees. There is a price to pay later if you choose to believe the optics in any proposal that doesn't include full disclosure. A person who follows my newsletter and works for a large pharmaceutical manufacturer wrote this to me in an email not to long ago.

"Super commentary about the State of Ohio. We have had numberous debates internally about how purchasers are asking for transparency vs just the lowest price. Contract nomenclature often obscures the real price. We get asked often about direct contracting between manufacturer and employer. Lots of barriers but conceptually something that needs to be considered and they [employers] are not asking for a lower net price vs the PBM...just better optics!"

In 2018, Ohio's Attorney General, Dave Yost, learned PBMs earned nearly $225 million through spread pricing between April 2017 and March 2018 while operating in Ohio Medicaid. As a result, the state canceled all PBM contracts in Medicaid that used spread pricing.

AG Yost announced a four-part proposal and called for quick action from the state’s legislature to shine a bright light on PBM contracts and cut down on hidden cash flows. Yost’s proposal calls for:

1) Drug purchases in the state to be conducted under a master PBM contract that is administered by a single contact point

2) Ohio’s Auditor of State to have full power to review all PBM contracts, purchases and payments

3) The state to prohibit nondisclosure agreements on drug pricing

4) PBMs must be fiduciaries

The truth does not reveal itself simply because a PBM says it is transparent or pass-through. Non-fiduciary PBMs know what you want to see in proposals and hide what you need to see in them. The spreadsheet can be a distraction if you allow it to be. As a self-funded employer, your truth lies in the PBM contract language.

The thing is, assessing PBM transparency is more effectively done by a trained eye. Someone who knows the ins and outs of PBM revenue models, contract loopholes and has personal knowledge of the employer's plan goals. Most employers don't know what they don't know so check the ego at the door.

Friday, April 17, 2020

What is the CPBS credential? A Podcast with Dr. Erin L. Albert

Here are just a few of the questions I answer during the 26-minute Edutainer podcast.

1. Tyrone - how did you get to where you are today in your career?
2What is the CPBS, and how did it get started?
3. How is the CPBS structured? How long does it take to complete?
4. Is it a one and done certificate, or an ongoing renewable certification? If so, how often do you have to re-certify?
5. Who is the CPBS certification designed for?
6. What does your company do beyond the certification?
7. Why or how do you think your area of work is going to change in light of the COVID-19 pandemic?
8. Tell us how to connect with you and your company best.

Click below to listen in or here for student testimonials.


Thursday, April 16, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 309)

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, April 14, 2020

Tuesday Tip of the Week: Who is Watching the Watcher?

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.
  1. Do you have the expertise within your company to evaluate PBM contract language? 
  2. Do you have the skillset to design a pharmacy benefit plan? Or do you need additional training in pharmacy benefits management
  3. 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? 
  4. How do you want to be involved in the management of the plan after it is set up? 
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. Plan sponsors might be surprised to learn that many so called advisers know little more than they do or worse have misaligned incentives. Who is watching the watcher?

Monday, April 13, 2020

How the Pharmacy Benefit Management Industry is Reacting to COVID-19

Milliman is closely monitoring information as it is released by PBMs in their response to the COVID-19 outbreak in the United States and abroad. The interventions put into place serve to mitigate the administrative strain placed on providers, ensure adequate supply and access to medications for members, and support the continuation of business amid a time of great uncertainty.

Milliman's analysis of the information led to three categories where for most of the change across the PBM industry: pharmacy management, patient access, and supply chain. This discussion highlights actions PBMs are taking across these segments and the potential effects on plan sponsors and members.
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Although the responses were meant to be pragmatic, a major factor that has not been addressed is whether or not these strategies will add cost for plan sponsors, increase drug trend, exhaust the supply of certain pharmaceutical products, or override the plan provisions that sponsors had intentionally built into their programs to manage cost and care.

Continue Reading >>

Thursday, April 9, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 308)

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, April 7, 2020

Tuesday Tip of the Week: One Year PBM Service Agreements are not a Fail-Safe

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Clogged Artery
An alarming trend is taking shape in the service agreements between PBMs and plan sponsors. Ten years ago it was commonplace for pharmacy services agreements to have 3-5 year terms. That was at a time when prescription drug costs were an afterthought. Very few buyers of PBM services were concerned enough about the lack of transparency in PBM contracts to worry themselves about the terms. Who can blame them with pharmacy accounting for only 5% to 10% of total health care spend. The cost to large employers amounted to a rounding error.

Source:  https://www.ahip.org/health-care-dollar/

That was the past and oh how times have changed. Today, it is not uncommon for pharmacy to account for 35% or more of total healthcare spend. In fact, AHIP (America's Health Insurance Plan's) in a 2017 data brief disclosed for the first time ever that prescription drug costs consumed the largest proportion of dollars spent on health care premiums, with 22 cents out of every dollar going to medication costs.

How have many brokers and benefits consultants decided to attack a lack of transparency in PBM contracts? They are getting into one year deals. I have to admit if you are going to enter into a bad deal it may as well be a short one. A better approach is to enter into a radically transparent deal for 2-3 years working alongside the PBM to improve performance.

I'm well aware it's easier said than done. It requires a trained-eye and skilled negotiation to win radical transparency for plan sponsors. The alternative though is one year deals and having to renegotiate the contract for the next year a couple of months post-implementation!

Short terms for leasing an office space or even an automobile works in the buyers favor. But the PBM industry is far more complicated. It doesn't give you much time to negotiate a more transparent deal and so the poor process just repeats itself. For example, how often do you see terms for PBM services being negotiated after the PBM has been notified it is the winner? The PBM knows it is the winner, go-live is 45 days away yet you expect radical transparency and lower costs Y/Y. Get real.

The reward for short one-year deals is more opacity one year after the next with you scrambling to find a new vendor or getting a better deal. One year deals are not a fail-safe. They are a path to least resistance.  

Thursday, April 2, 2020

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 307)

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.