On Dec. 11, New York State Governor Andrew Cuomo signed Senate Bill 3346-B, requiring contracts between pharmacy benefit managers (PBMs) and pharmacies (or pharmacies’ contracting agents) to include a mechanism for appeals for contract disputes relating to multi-source generic drug pricing.

Pharmacy benefit management contracts must include the following provisions regarding appeals:

The right for a pharmacy to appeal for 30 days following an initial claim submitted for payment;
a telephone number through which a network pharmacy may contact the PBM for the purpose of filing an appeal and an electronic mail address of the individual who is responsible for processing appeals;

• The PBM must send an email acknowledging receipt of the appeal and respond in an email to the pharmacy (and/or the pharmacy’s contracting agent) filing the appeal within seven business days indicating its determination. If the appeal is determined to be valid, the maximum allowable cost for the drug shall be adjusted for the appealing pharmacy effective as of the date of the original claim for payment. The PBM must require the appealing pharmacy to reverse and rebill the claim in question in order to obtain the corrected reimbursement;
• If an update to the maximum allowable cost is warranted, the PBM or covered entity shall adjust the maximum allowable cost of the drug effective for all similarly situated pharmacies in its network in NY State on the date the appeal was determined to be valid; and
• If an appeal is denied, the PBM must identify the national drug code of a therapeutically equivalent drug, as determined by the federal Food and Drug Administration, that is available for purchase by pharmacies in NY State from wholesalers registered under NY law at a price which is equal to or less than the maximum allowable cost for that drug as determined by the PBM.

Senate Bill 3346-B will be codified as NY Public Health Law § 280–A and takes effect March 10, 2016.

By  Serj Mooradian

Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

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A new survey report from the Pharmacy Benefit Management Institute (PBMI) finds that the use of pharmacy deductibles and annual out-of-pocket limits is rapidly rising among employers. But as plan sponsors look for ways to manage mounting drug costs, the report identifies several opportunities to improve cost management and/or clinical management without having to shift additional costs to members.

According to PBMI’s 2015-2016 Prescription Drug Benefit Cost and Plan Design Report, sponsored by Takeda Pharmaceuticals USA, Inc., 36% of employers reported having a prescription drug benefit deductible in 2015, compared with only 14% the year before. Plan sponsors are also shifting more costs to members through annual out-of-pocket limits, which were used by 33% of employers in 2015, up from 18% in the prior year’s survey. The survey results are based on the responses of 302 U.S. employers representing 16.3 million lives.

Sharon Frazee, Ph.D., vice president of research and education at PBMI, says the 22-percentage-point jump in deductible use is particularly “striking” given that deductibles have historically been much more common in the medical benefit, but not surprising since employers want to continue to provide an affordable benefit without raising premiums. “Consumers are not accustomed to this, and it’ll be interesting to see what happens as far as member satisfaction and in terms of clinical impact,” she suggests to DBN.

Meanwhile, several opportunities exist for greater plan sponsor adoption of utilization management tools such as reference-based pricing, pill-splitting and step therapy, observes PBMI. “Step therapy is really one of the bread-and-butter kinds of things for cost management and it’s something I think most consumers are used to, but it’s only used by 60% of smaller employers,” Frazee points out, referring to the 155 survey respondents with 5,000 or fewer covered lives. By comparison, nearly 80% of larger employers reported using step therapy in 2015. And reference-based pricing was used by only 11% of employers overall, compared with 12% the year before.

Tyrone’s Comment:  For those organizations seeking to lower pharmacy benefit service costs, reference pricing is one of the most overlooked tools. Every week I publish a list of prescription drugs and their true acquisition costs along with reference pricing instructions. It is a simple and inexpensive way to conduct effective data-mining without the huge overhead associated with big data analytics software. Companies willing to allocate 8 hours, per month, for reference pricing analysis can realize a significant reduction in PBM service costs seemingly overnight. Managing pharmacy related costs is no longer just an HR responsibility; it is a fiduciary one.    

The report also identified opportunities to squeeze out additional savings through pharmacy network innovation. For example, 29% of respondents in 2015 report using a preferred pharmacy network, while only 13% were using a limited network (i.e., eliminating at least one major pharmacy chain). Meanwhile, 60% of employers offer a 90-day-at-retail option, but only about one-third of them require that members obtain their 90-day supply of maintenance medications from a limited network pharmacy.

SOURCE: The Pharmacy Benefit Management Institute 2015-2016 Prescription Drug Benefit Cost and Plan Design Report, sponsored by Takeda Pharmaceuticals USA, Inc. Click here to download the report.

Providers of prescription drug discount cards have increased their efforts to reach out to employers, despite the Affordable Care Act’s or PPACA promise to decrease the ranks of the uninsured or those most likely to use the pharmacy discount cards.

Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

What are those clever drug companies up to? Plenty, I learned, recently browsing the website of Medical Marketing & Media, the trade pub that keeps healthcare marketers up-to-date on selling drugs, heart stents, and just about every other product the medical industrial complex dreams up. I spotted an e-book that answered my question. Called “Pathway to Specialty Access,” the book is a primer on how to market those new and very expensive specialty drugs like the hepatitis C medicine Sovaldi, which costs $84,000 for a course of treatment.

The 10-page “book” sponsored by TrialCard, a vendor of co-pay cards and vouchers, promises insights into “Patient access needs and hurdles along the specialty drug pathway, supplemented by trends, data and insights on this shifting market.”  It’s not just an interesting read for snoopy reporters but it’s a cautionary tale for journos and the public about future health system costs and how patients are manipulated in the quest for even greater profits.

The tip-off for what this itty-bitty volume can do for a drug maker comes in this statement:

“Clearly there is a vast undermet need for greater access to specialty medications and better support services for patients. The answer, for pharma, surely lies in an integrated, coordinated patient-centric approach.”

In other words, pharma can and should, the book advises, hold patients’ hands from the time of diagnosis through the process of buying and paying for one of these uber-expensive medicines, and make sure the patient stays on the drug regimen. That’s the name of the game in the drug biz. Long-term use equals more drugs sold equals more profits.

Clever drug companies have amassed an arsenal of strategies for getting more drugs into the hands of patients through speaking fees to doctors who prescribe the drugs, sponsorship of medical education programs, and very effective detailing or selling in the doc’s office to push the latest and greatest.

This time, though, the strategy is aimed at the patient’s pocket book, and the new world of specialty drugs opens up a box of possibilities for expanding their co-pay programs in which the drug company pays a significant portion of the cost-sharing an insurer requires. Pollpeter told me, “when a co-pay is optimized for the patients, they stay on the drug longer.”

How do these programs work? 

Manufacturer Drug Coupon Example

There’s the basic coupon, which doctors and druggists sometimes hand out, or patients can find them online. The industry calls them “pay-no-more” cards, telling patients they will pay no more than, say, $50 for their prescription. Discounts vary by therapeutic class with some drugs carrying larger discounts than others. Some work like loyalty programs. A patient can get a certain number of drugs for free after they’ve bought so many. That’s sort of like accumulating points for a free massage at a nail salon.

Then there are e-vouchers in which a prescription is sent from the pharmacist through a switch vendor that may provide other financial support to the patient. The drug maker works with the vendor to establish how much of the required cost sharing it will pay as well as other rules for the transaction. Both the rules and amounts the drug maker pays vary by the class of drugs. “The patient is blinded to the e-voucher,” Pollpeter says. “But they are happier when they see a lower copay.”

What’s wrong with this?

It seems like a win-win for the patient and the drug company, right?  The patient pays less out of pocket—sometimes a lot less. In one example, the e-book notes that a patient’s out-of-pocket spending for specialty drugs for MS and rheumatoid arthritis can be as little as $5 a script. The manufacturer reaps more sales because patients are less likely to abandon therapy. But there’s one significant downside. High drug prices are still with us. “Coupons shield consumers from the true cost of medications and are less likely to make decisions based on the true cost of the drug,” says Troy Filipek, an actuary with the consulting firm Milliman.

“There’s nothing transparent about any of this,” says John Rother, the CEO of the National Coalition on Health Care whose project the Campaign for Sustainable Rx Pricing has helped raise public awareness of the skyrocketing cost of medicines. “Effectively these programs raise overall costs in the name of protecting patients, but for everyone else they raise costs and therefore premiums. It obscures the fundamental issue of unsustainable pricing for many pharmaceuticals.”

By Trudy Lieberman

Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Anthem vs Express Scripts

Indianapolis-based health insurer Anthem Inc. wants $3 billion a year more in savings on drugs from Express Scripts Holding Co., and is threatening to ditch the company in a move that would depose the pharmacy benefit manager as the country’s biggest.

The insurer, which contracts with Express Scripts to manage prescription drug costs for its members, believes the pharmacy manager should be passing along about $3 billion a year more in the savings it negotiates from drug companies, CEO Joseph Swedish told investors Tuesday at the J.P. Morgan Health Care Conference.

Express Scripts disputed Swedish’s description of the terms between the two companies, and the $3 billion figure.

“We are entitled to improved pharmaceutical pricing that equates to an annual value capture of more than $3 billion,” Swedish said at the San Francisco meeting. “To be clear, this is the amount by which we would be overpaying for pharmaceuticals on an annual basis.” Much of those savings would be passed on to clients, he said.

Tyrone’s Comment:  $3 billion is an overreach but still doesn’t negate the fact that Anthem, without question, is overpaying.  The amount is likely closer to $1 billion per an analysis of their 10-Qs over a three year span.  The worst part is Anthem sold their PBM business to Express Scripts in 2009!   Here’s my point.  If Anthem is significantly overpaying then so are you.  Fight back with full audit rights, market check and clawback language in your contracts.  This is only one step in the process of eliminating overpayments, but a very important one.  If you follow my blog or have read my white papers you know the other steps.

Anthem and Express Scripts have an unusual arrangement that stems from Anthem’s sale of its pharmacy-benefits business to Express Scripts in 2009. The insurer is entitled to periodic reviews of how much it pays for drugs, a process the companies last went through in 2012. They haven’t yet reached a deal on the most recent talks.

‘In good faith’

Express Scripts said that Anthem was mischaracterizing the situation.

“Express Scripts has consistently acted in good faith and is in full compliance with the terms of its agreement,” said Brian Henry, a spokesman for the company. “While the contract calls for good faith negotiations regarding a pricing review, it does not mandate specific price adjustments. Furthermore, Anthem is not entitled to $3 billion.” He said the company valued its relationship with Anthem.

The two may be running out of time. “We have a very involved dispute resolution process in the contract that has been fully exhausted,” Thomas Zielinski, Anthem’s general counsel, said Tuesday after the investor presentation. “That said, we remain in dialogue.” He said Anthem took the dispute public because the company wasn’t getting the savings it needed to offer more competitive products, such as Medicare drug plans.

Express Scripts shares fell 3.1 percent, to $82.92 each, in trading after the market closed.

Pharmacy benefit managers, led by Express Scripts, have helped force much of the current debate around drug prices in the U.S. They’ve succeeded in wringing steep discounts on expensive therapies by excluding some treatments unless their makers offer better prices. In 2014, Express Scripts said it would block Gilead Sciences Inc.’s hepatitis C treatment Harvoni from its main list of covered drugs in favor of a competing treatment from AbbVie Inc. The resulting price war led to discount from the drugs’ list prices that were worth thousands of dollars per patient.

The benefit to Anthem could ultimately be at least $600 million, partly because the savings would result in lower rates that would help the insurer attract and keep customers. Yet, Anthem, if it does drop the company, doesn’t have many options to turn to. Consolidation in the industry has led to just two other major players: CVS Health Corp., and OptumRx, a unit of Anthem competitor UnitedHealth Group Inc.

Click here to read more.

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Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.