Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 221)

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.

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 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.

Amgen, AbbVie ‘ahead of the crowd’ in fighting payers’ latest assault on copay coupons

Copay Coupon Sample
Copay coupons save patients money and help drugmakers steer scripts toward newer products or older ones facing new rivals. But because pharma does the steering, often toward drugs that actually cost more, payers hate them.
That is the copay coupon triangle, and there it has stood for years. But now, more than 40% of scripts for specialty drugs are paid for with those coupons—and the coupon battle is getting hotter than ever, with payers cracking down anew and pharma finding creative ways to thwart them.
The payers’ new weapon of choice is the “copay accumulator,” which prevents patients from applying copay coupons to their deductibles—and that, in turn, makes the drugs covered by those coupons less attractive. They’ve already taken a bite out of sales for some key products, pharma executives said during first-quarter earnings calls.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 220)

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.

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 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.

Trump’s Drug Blueprint Could Alter PBM Contracting

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With much fanfare, President Donald Trump’s administration recently released a 44-page blueprint for executive action on drug pricing titled American Patients First. The blueprint proposes steps to end drug manufacturers’ “gaming” of the regulatory process and to create incentives for pharmaceutical companies to lower list prices. The proposals regarding pharmacy benefit manager (PBM) firms, in particular, could affect drug costs covered by employer-sponsored group health plans.

The blueprint, however, also asks whether PBMs should be obligated to act solely in the interest of those for whom they manage drug benefits. If PBMs were identified as plan fiduciaries, they would be accountable for negotiating in the best interest of the plan and its members. This could certainly change the dynamics of current PBM relationships and, if adopted, keep PBMs from accepting certain types of payments from manufacturers that favor coverage of higher-cost drugs.

Tyrone’s Commentary:

For all intents and purposes, there are only two types of PBM business models; non-fiduciary and fiduciary. Don’t be fooled by labels such as pass-through, transparent, limited fiduciary (a new one) or others. I’m often asked what’s the difference between a transparent and fiduciary PBM. Here is the big difference. A fiduciary PBM is required to act in its clients’ best interest first for every action it takes on behalf of that client. In other words, the fiduciary PBM is contractually obligated to contain its clients cost. Any other PBM model regardless of what they tell you is not contractually obligated to contain costs. They are intentionally trying to avoid this responsibility so don’t let them off the hook!

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 219)

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.

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 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.

Appellate court kills Optum’s $6.7B pharmacy benefits management contract; orders rebid

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An appellate court has determined OptumRx’s bid did not conform to the bid solicitation, because it included language reserving the right to modify the financial terms of the deal to protect its profit if the state made changes to the plan design.

“Optum’s additional language … permitted it to ‘hedge’ its bid, thereby reducing its financial risk from adverse plan design changes,” the court said. “That set it apart from the other bidders who agreed to be bound by all of the terms of the bid solicitation.”

Tyrone’s Commentary:

I here it all the time from purchasers of PBM services; control the formulary, go for low net cost, not high rebates, work with a transparent PBM, or make sure the consulting firm isn’t being comped. Everyone knows these things are important, but the execution is usually poor. Furthermore, if the self-insured employer and its consultant aren’t informed or highly sophisticated it can lead to bad contract language that isn’t consistent with bid responses or permits the PBM to modify terms during the contract’s life, for instance. There are three parts to being an adept steward of a pharmacy benefit and they are not mutually exclusive. In other words, if you’re poor in any one of these areas it will hurt you in the other two.

1) Education. If only I had a nickle every time a consultant or HR executive said I don’t need any PBM education. That’s like LeBron James saying I don’t need to practice playing basketball. He’s the best in the world yet he still studies the game more than any other player! You may attend a webinar or two, read a blog post or chat with peers and I can tell you it still isn’t enough to beat non-fiduciary PBMs at their own game. Invest more time and money into becoming a better steward of pharmacy benefits. Incrementalism in this area will not be rewarded. The best proponent of transparency is informed and sophisticated purchasers of PBM services.

2) Procurement. Means the action of obtaining or procuring something. When obtaining PBM services, ideally it involves a reverse auction. The state of New Jersey ran a reverse auction but somehow Optum’s bid still squeeked through. My guess is that human interference got in the way, as it often does, with the real bid winner or the reverse auction was inherently flawed. Because one takes action on a problem doesn’t guarantee an optimal outcome. You can swing (act) at a 95 mph fastball but will miss (outcome) 99 out of a 100 times unless of course you’re a well-trained professional and student of the game. There are a lot of companies and consultants that procure PBM services who are missing a lot! One problem is a lack of accountability unlike standing in the batters box alone. It would be nice if self-insured employers had a stopgap like an appellate court to fall back on. Oh wait they do and they’re called benefits consultants.  
  
3) Vigorous Oversight. PBM performance should be monitored on an ongoing basis far beyond standard reports. The types of routine monitoring activities performed by the plan sponsor can vary based on past performance with the PBM or the nature of the services performed. The type and frequency of monitoring should be documented in the contract before it is executed. The plan sponsor should establish key performance metrics designed to measure PBM services. The PBM oversight program must also define what happens if the vendor’s performance is below the plan sponsor’s performance expectations. When noncompliant performance occurs, the plan sponsor should request a formal action plan defining specific activities to ensure performance meets the defined expectations. 

The state, meanwhile, argued Optum’s language was meaningless and didn’t affect the outcome of the auction. The three-person court invalidated the contract, saying its size, complexity and potential savings for the public aren’t a shield from this type of review.

“No savings can justify the impairment to the integrity of the bidding process caused by an irregular proceeding, the court said.

[Read More]

From $14000 to $8000 Overnight with Almost No Restrictions; Cholesterol Drug has Potential to Break Self-Insured Employers’ Bank

Amgen’s Repatha and Sanofi and Regeneron’s Praluent were approved in 2015 with blockbuster expectations. But the number of patients with high cholesterol and the $14,000 a year price tag of the drugs prompted heavy restrictions from PBMs.

In an attempt to juice sales, Sanofi and Regeneron substantially cut their drug’s net price for Express Scripts so it would reduce those restrictions. Back-slapping followed. But this is just a louder and bigger version of something that happens all of the time: an exchange of a bigger rebate for more favorable coverage.

Tyrone’s Commentary:

At first glance the drop in price appears to be a positive move and it could very well turn out that way. However, self-funded employers have to keep a keen eye on utilization. Express Scripts will remove almost all restrictions on the medicine and make it cheaper for patients, for instance. Plan sponsors need to understand the manufacturer-side revenue ESI is generating for itself and its affect on final plan cost. Furthermore, consider implementing your own step therapy or PA processes. Robust oversight on PBM performance is standing operating procedure, but especially important for expensive medications.

If demand increases, Express Scripts benefits from a handsome rebate, and rising drug costs will largely flow through to clients. The list price is staying the same, and the majority of consumers will still be exposed. A few more patients will get Praluent, which is a genuinely good thing. And a pantomime of a dialogue about lower list prices is better than nothing. But at the end of the day, nothing really changes.

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 218)

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.

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 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.

Longtime chief of pharmacy benefit manager trade group to step down

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Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, will step aside at the end of the year, after 15 years on the job, the trade group announced Monday morning. The news of Merritt’s departure comes as pharmacy benefit managers (PBM), which PCMA represents, feel increasing pressure from the government and private industry alike.

 
1) Government pressure: Health and Human Services Secretary Alex Azar and Food and Drug Administration Commissioner Scott Gottlieb, MD, have each delivered incisive speeches with strong words directed at health plans and PBMs, criticizing a lack of transparency around their drug pricing and rebating contracts.
Tyrone’s Commentary:  The winds of change have begun to blow.
 
2) Industry pressure: While PBMs are pushed by the government on one front, they’re fighting a second front with private industry, enduring criticism from the pharmaceutical industry and a series of major mergers with insurers. St. Louis–based insurer Cigna announced plans in March to buy Express Scripts for about $52 billion, after CVS Health announced plans in December to buy insurer Aetna.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 217)

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.

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 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.