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

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.



How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
 

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.

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.

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

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

Tyrone’s Commentary:

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

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

Continue Reading >>

Specialty Generic and Biosimilar Drug Pipeline Update

Courtesy of our friends over at Ventegra.











References for Pipeline

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

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

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


Here is what some participants have said about the webinar:

“Thank you Tyrone. Nice job, good information.” David Stoots, AVP

“Thank you! Awesome presentation.” Mallory Nelson, PharmD

“Thank you Tyrone for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners on the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist

 

A snapshot of what you will learn during this 30-minute webinar:

  • Hidden cash flows in the PBM Industry such as formulary steering, rebate masking, and differential pricing 
  • How to calculate the cost of pharmacy benefit manager services
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) vs. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold
 
Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135  
866-499-1940 Ext. 201


P.S.  Yes, it’s recorded. I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready.

Generic Drug Pipeline Update

Courtesy of our friends over at Ventegra.

References for Pipeline

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

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

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

Tyrone’s Commentary:

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

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

Source:  https://www.drugchannels.net

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

Continue Reading >>

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 295)

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 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.

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.

OptumRx overcharged Ohio BWC by millions, Attorney General says

OptumRx caused millions of dollars worth of excessive costs for prescription drugs used through the Ohio Bureau of Workers’ Compensation, claims a new court filing by Ohio Attorney General Dave Yost’s. After months of mediation with the PBM failed to resolve the legal dispute, Yost’s office filed an updated complaint Friday saying OptumRx “overcharged millions” by levying excessive costs for drugs prescribed through the Ohio Bureau of Workers’ Compensation. 

OptumRx breached its contract by not living up to its obligation to give the state the best available rate, Yost’s office says. The lawsuit contends that OptumRx charged Ohio more so it could offer other clients lower costs. 

Tyrone’s Commentary:

Dumb money is what I call it when a plan sponsor enters into an agreement with a less than radically transparent pharmacy benefit manager. Average purchasers of PBM services are often shoved under the “dumb money” umbrella. If you fall into this category, try not to take offense. The terms “dumb money” and “smart money” were coined by the financial media, not to insult anyone’s intelligence, but to describe different groups of plan sponsors.

Dumb money allows for overpayments to PBMs which smart money does not permit. Smart money covers the overhead. Dumb money pays for bloated payrolls, corporate jets and most important inefficient PBM business operations. How can dumb money become smart money? You start with education as the state of Ohio has done.  

During an RFP or other competitive bidding process, a sophisticated purchaser of PBM services considers contract nomenclature as the most important factor in evaluating PBM proposals. Dumb money is looking for the best optics (i.e. proposed savings, highest AWP discounts, or biggest rebate etc..). If you don’t have a contract scorecard now is the time to start. Be careful though with whom you allow to score PBM contract language. You could make this PBM sales executive a very happy camper.

Andrew Krejci, spokesman for OptumRx, said in a statement: “We are honored to have delivered access to more affordable prescription medications for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers. We believe these allegations are without merit, and will vigorously defend ourselves.” Optum’s contract with the bureau was not renewed when it expired on October 31, 2018.

Continue Reading >> 

A Prominent Attorney and Advocate for PBM Transparency Says State Medicaid Plan Hemorrhaging Money

Click to Learn More

A national drug-pricing consultant says that despite implementing a new pricing system and other efforts to rein in pharmacy middlemen, Ohio’s Medicaid program continues “hemorrhaging” tax dollars.

“You are hemorrhaging money right now,” Linda Cahn, a critic of pharmacy benefit managers, or PBMs, told the Joint Medicaid Oversight Commission on Thursday.

PBMs hired to oversee the $3 billion-a-year drug program have contracts that allow them to increase profits rather than keeping costs down, she said. The profits are largely hidden and come from rebates from drug manufacturers, manipulating drug costs, self-dealing with affiliated pharmacies and other loopholes, she said.

Tyrone’s Commentary:

The three most important aspects of winning radical transparency from a non-fiduciary PBM, in this order, are:

1) Internal PBM Expertise
2) Contract Nomenclature
3) Benefit Design

#2 and #3 above suffer when purchasers of PBM services lack the requisite knowledge and resources to achieve radical transparency in their PBM relationship. Most plan sponsors don’t know what they don’t know. If a state with unlimited resources requires help in all likelihood so do you.

“There are so many problems here, you have to write a contract that addresses all of them, and you have to bring in people who know enough about this to help the Medicaid division do that …it’s a very complex industry,” Cahn said.

“If you address all of the problems, you will dramatically, dramatically reduce your cost and end up with far better coverage.”

Continue Reading >>

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 294)

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 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.

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.