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.

 

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.

Of the health care initiatives large employers participating in the National Business Group on Health’s (NBGH) latest Health Care Strategy and Plan Design Survey cited, implementing virtual solutions (51%) and developing a more focused strategy to address high-cost claims (39%) were at the top of the list.

The cost of specialty medical treatments is escalating at an unsustainable rate—typically a double digit percent increase year-over-year. Even worse, large employers with self-funded plans are footing the bill for newer high-cost treatments, some in the millions per treatment. Employers have many concerns related to high-cost treatments: the million-dollar price tags and the speed at which the treatments come to market, which can call into question the rigor and timeline of clinical trials.

What’s more, an increasing focus of the research and development pipeline is on treatments for narrow subsets of patient populations with rare diseases—making this an exciting time in health care when patients with certain illnesses, sometimes terminal, are able to receive treatments or even be cured, the report notes.

Large Employers’ Top Health Care Initiatives, 2020

However, as a result of the pipeline of treatments for rare diseases, large employers are increasingly focused on the impact of even one or two cases on their overall annual health care budgets. For example, Zolgensma, a one-time injection to treat spinal muscular atrophy in young pediatric patients, was launched in May at a $2.1M price tag, sending employers into action mode to uncover ways to finance such therapies.

In 2019, about one-quarter of employers are delaying the inclusion of new treatments from their formulary at launch (e.g., for 6 months) to enable the pharmacy benefit manager (PBM) or health plan to better determine the treatment’s efficacy and safety. The other two options—stop-loss insurance and outcomes-based contracting—aren’t as popular an approach, but are being considered heavily for 2021/2022.

In 2018, a majority (56%) of large employers voiced skepticism about the proposed health plan–PBM mergers. Specifically, they were unsure if these newly formed relationships would lower cost, improve quality and curate a better consumer experience. As a followup to that survey question, this year’s survey dove into whether employers are “voting with their feet” by going out to bid in direct result of mergers between health plans and PBMs.

The survey finds 16% of surveyed employers are issuing a request-for-proposal (RFP) due to health plan–PBM mergers. Another 30% are considering doing so in 2021-2022. These numbers are an indication that consolidation is having a profound effect on the health care industry, which could result in a plan change—health plan or PBM—for a number of employers, the report says.

The full report is only available to NBGH members, but an executive summary of the findings is available here.

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.

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.

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.

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.

A year after calling proposals allowing Americans to import cheaper drugs from Canada a “gimmick,” Health and Human Services Secretary Alex Azar said the federal government is “open for business” on such a strategy.

Azar announced a preliminary plan Wednesday to allow Americans to import certain lower-cost drugs from Canada. Insulin and other biological drugs, controlled substances and intravenous drugs would not be included. The plan relies on states to come up with proposals for safe importation and submit them for federal approval.

Tyrone’s Commentary:

Drug Utilization is more complicated than just the days supply or units being dispensed. Utilization also considers the sites or channels (i.e. retail, specialty etc.) from which prescription drugs are being dispensed and that is just for starters. I would also argue drug utilization is measured, at least in part, by the country from which prescription drugs are procured. If you are self-funded employer and aren’t at least considering Canada as an alternative source from which to procure prescription drugs, what are you waiting for?
    
Under a second option, manufacturers could import versions of FDA-approved drugs from foreign countries and sell them at a lower cost than the same U.S. versions. This appears to be a way drugmakers could avoid some of the contracts they have with drug middlemen, known as pharmacy benefit managers.

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In a 2018 survey of large employers, 80% identified SpRx costs as a top 3 driver of healthcare costs, and 26% said it was their greatest healthcare cost driver, up substantially from 6% in 2014. Needless to say, employers are concerned about the rapid growth of specialty pharmaceutical (SpRx) expenditures. 

Employers have acted to constrain SpRx expenditures. Those offering high-deductible health plans (HDHPs) have combined medical and pharmacy plan deductibles into one, thereby shifting initial payment for prescriptions to enrollees until they reach the deductible limit. 

Some employers have added pharmacy benefit management features, including utilization management, use of a SpRx vendor, and the addition of a SpRx tier in formularies. Others have excluded many SpRx products from medical plan coverage, thereby shifting greater oversight of SpRx use to pharmacy benefits.

Takeaway Points

Pharmacy benefit managers are offering co-pay accumulator adjustment programs (CAAPs) to counter pharmaceutical company co-pay assistance subsidies for enrollees receiving specialty medications, although the impact of these programs on medication adherence is unknown.

• In this analysis, implementation of a CAAP was associated with significant reductions in autoimmune specialty drug adherence.
• Risk of treatment discontinuation was significantly higher following CAAP implementation.
• Use of specialty drugs included on the preventive drug list, which eliminates co-payments, was not affected by the CAAP.
• Further analysis is needed to evaluate the implications for subsequent healthcare utilization and costs.

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.

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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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.

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.

DIR fees are fees that pharmacy benefits managers (PBM) assess on pharmacies for purportedly failing to meet quality measures that many pharmacies believe are arbitrary, anti-competitive and unlawful. With the exclusion of pharmacy direct and indirect remuneration (DIR) fee reform from the recent Centers for Medicaid and Medicare (CMS) drug pricing rule, members of Congress and pharmacy groups are urging the Trump administration to reconsider.

For example, AIDS Healthcare Foundation (AHF), which operates specialty pharmacies in a dozen states that serve the needs of HIV and AIDS patients, signed on to a letter to key members of the United States Senate Finance Committee asking that they include pharmacy DIR fee reform (Direct and Indirect Remuneration) in the Senate’s pending package of drug pricing legislation.

Tyrone’s Commentary:

Much like CMS, many self-insured plan sponsors have turned a blind-eye to DIR Fees. And yes, it is not just public plans who are targeted with DIR Fees. Commercial plans to pay these fees many just aren’t aware. The point of DIR fees, whether anyone wants to admit it or not, is to reduce ingredient costs for the PBM. The problem for self-insured plan sponsors is that this reduction in ingredient cost happens after the claim has been adjudicated. 

Aren’t plan sponsors supposed to know the actual acquisition cost (AAC) of the drugs they pay for? The degree to which a PBM provides disclosure to a plan sponsor largely depends on how sophisticated a plan sponsor is or isn’t on the ins and outs of the pharmacy benefits industry. In addition, how well your steering committee negotiates will play a significant role in how much transparency your company will achieve. A high level of both PBM industry knowledge and negotiating skills drives down costs.  

For instance, a non-fiduciary PBM submits a strong price proposal which no radically transparent PBM can match. What the proposal doesn’t disclose are the hundreds of thousands of dollars the non-fiduciary PBM is collecting for DIR Fees. When a plan sponsor doesn’t benefit from this lower cost, it is the height of self-dealing on the part of the non-fiduciary PBM. Shame on any self-funded plan sponsor who doesn’t address this very important issue in a request for proposal.

In their letter, the groups note that “…DIR fees on pharmacies participating in Part D grew by 45,000 percent between 2010 and 2017,” and that the “…increase is unacceptable and unsustainable and it creates uncertainly not only for community pharmacies, but also for the patients who rely on Part D prescription drugs.”