Large Employer Groups Push Back on Non-Fiduciary PBMs and Win Big!

“We’re looking at PBM contracting differently than we have in the past because I don’t want to control just what we spend on drugs. I’m trying to control my overall health care spending,” says Erik A. Sossa, PepsiCo’s vice president of global benefits and wellness.

Pepsi is one of the eight companies in the contract. Others include Chevron, ExxonMobil, Sodexo, Solvay USA, and Yum! Brands. The remaining two have declined to be publicly identified, says Sossa.

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“To change the nature of how we contracted with PBMs, we needed to take rebates off the table,” Sossa explains. “Instead, we negotiated with Express Scripts from the acquisition cost, net of rebates and net of the average wholesale price.” In other words, the contract is built around Express Scripts’ actual cost of medications. “We pay what Express Scripts pays for drugs,” he says. “That’s the starting point that we haven’t seen in other contracts with PBMs—at least not yet.”

The employers and Express Scripts also agreed to the clinical and financial guarantees. “Rather than chasing rebates or price, we wanted to change the motivation and the nature of the partnership with our PBM,” says Sossa.

Tyrone’s Commentary:

Given the projected growth of both traditional and specialty pharmacy costs, employers must be better educated when working directly with its PBM. The companies referenced in this article understand radical transparency is key to lower drug prices. Accounting for the PBMs take home is paramount to achieving any reasonable level of transparency. Do you understand this or are you still putting the most emphasis on AWP discount and rebate guarantees? Ongoing education in the PBM space improves appropriate use of prescription drugs and eliminates wasteful spending. Employers, large and small, should strive for a relationship that provides the best outcomes and lowest net cost – that starts with education.

In negotiating financial performance guarantees based on per-member-per-month spending levels, the employers agreed to a two-sided risk contract with Express Scripts. If costs are lower than an agreed-upon amount based on what the employers spent on pharmacy benefits in 2018, then the employers pay Express Scripts a bonus. If costs are above the baseline, the employers pay less.

When negotiating the contract terms, Express Scripts worked out the details with each of the eight companies separately, says Snezana Mahon, the PBM’s vice president of clinical programs. “We agreed on the risk parameters client by client, and the outcomes we agreed to achieve are based on the specific needs of each client’s population, meaning we are customizing this program to the plan.”

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Don’t Miss 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 streams in the PBM Industry
  • How to calculate the EACD or earnings after cash disbursements
  • Basic to intermediate level PBM terminologies
  • Pros and cons of PBM price benchmarks
  • Cost-containment strategies to implement today
 
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.

Patient Assistance Programs: A Shield from High Cost or Trampoline for Abuse?

Patient Assistance Programs (PAPs) operated by pharmaceutical manufacturers, nonprofit organizations, and government entities are designed to relieve financial pressures by helping those in need obtain their medications. Currently, there are over 350 programs and companies covering more than 4000 drugs.

Figure 1.

Patient assistance generally comes in 2 forms:

    1. Copayment assistance: These programs help reduce the patient’s OOP responsibility, including coinsurance and deductible support, depending on treatment setting.
Clogged Artery
  1. Replacement drugs: The hospital pharmacy provides the prescription medication to the patient for free, and the drug manufacturer replaces the product back to the provider at no cost.

One of the challenges in securing PAP aid is proactively monitoring changes in patient eligibility and documentation requirements. Most PAPs require an application, yet no 2 programs are the same, and the amount of information required varies.

Tyrone’s Commentary:

Two examples of caution when it comes to PAPs. First, some programs provide assistance for the purchase of high-cost drugs that have no generic equivalents or close therapeutic substitutes. In such cases, assistance programs can expand access to therapies that represent the standard of care but can also promote use among patients who do not place a high value on the health benefits associated with these therapies.

Patient-assistance programs may lead to higher drug prices as a result of the interplay between patient demand and prices. Economic theory predicts that if patient demand becomes less sensitive to prices, manufacturers of on-patent drugs will respond by setting higher prices. Despite these two downsides PAPs have more pros than cons.

Some programs require detailed medical and financial information (see figure 1), and others ask for very little. In addition, although all require a physician’s signature, some programs require the doctor to complete a portion of the form, and others only need a signed prescription.

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