Yearly Archives: 2020

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 339)

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.
 
 
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.

Tuesday Tip of the Week: Specialty Drug Utilization Management Three Things to Know

DUM or drug utilization management in specialty pharmacy helps to maximize efficiency. That employers don’t engage in wasteful spending and the right drug, at the right time gets in the hands of the right person. It likewise encourages digital monitoring of the member’s drug therapy in the past, the now and in the future. Here are three imperatives around specialty drug therapy to consider while designing a pharmacy benefit plan:

Imperative 1: Mandate Comprehensive Solutions to Improve Health Outcomes

Specialty pharmacies use medication therapy management (MTM) to coordinate comprehensive care for patients and improve health outcomes. MTM employs a range of clinical tools to improve outcomes and promote value, including therapeutically focused clinical assessments, validated quality of life measures, detailed medication reconciliation, monitoring adverse effects, connecting patients to educational resources, peer-based support programs, and access to need-based financial resources reducing barriers to care. Specialty pharmacies provide patient level support reducing health system and therapy complexity by explaining benefits and coverage, coordinating the best site of care for injected or infused medication, providing drug administration training, adherence support, and resources empowering patients to independently manage complex, persistent treatment plans.

Imperative 2: Evaluate Parity in Pricing for Specialty Drugs

When a specialty medication is parity priced, the drug is the same price regardless of the dose prescribed. For instance, Pomalyst is manufactured in 1 mg, 2 mg, 3 mg, and 4 mg strengths. It is the same price for 1 mg as it is for a 4 mg dose. It is prescribed once per day. QD (qd or q.d.) is once a day; q.d. stands for “quaque die” (which means, in Latin, once a day). BID (or bid or b.i.d) is two times a day ; b.i.d. stands for “bis in die” (in Latin, twice a day). There is no therapeutic benefit for someone to take four 1 mg tablets as opposed to one 4 mg tablet, and yet this is something we see when repricing pharmacy claims files today. Imbruvica and Afinitor are other examples where these cases do not involve changing the drug nor changing the dose. Changing parity priced dosing can save $400K-$500K on a single prescription for a single patient.

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Imperative 3: Take a proactive approach to prior authorizations.

I’ve been fortunate enough to be a “fly on the wall” listening to the leadership teams of several national specialty pharmacies. And while they preach case management and patient care as the priority if you listen carefully what they really want first and foremost is volume or more prescriptions. I am asking self-funded employers a simple yet very important question. Does it make sense to have the same entity manage and approve specialty Rx claims when that entity stands to benefit when these claims are approved? If 85% or more of PAs are getting approved you might be a victim of rubber-stamping which leads to what? You guessed it – wateful spending. Just because you have a PA or step therapy program doesn’t mean it is efficient. Consider carving out the prior authorization process or use prior authorizations with a dollar limit. The goal is not to create disruption but to review the clinical appropriateness of any dose increases, for example.

In conclusion, PBMs will generally manage costs to a level demanded by clients when negotiating their contracts. The best proponent of radical transparency or lowest net Rx cost is informed and sophisticated purchasers of PBM services. In other words, the more you know the less you pay without any reduction in member experience or outcomes.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 338)

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.
 
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.

Tuesday Tip of the Week: Three Myths about PBM Pricing Every Employer-Sponsored Plan Should Know

Employer-sponsored plans that prioritize price risk poor clinical outcomes and higher overall costs in their pharmacy programs. Equal focus on all four pharmacy cost drivers will always produce the best results. Price is just one indicator of pharmacy benefits management program success, but it is one that can also hide problems. 
 
On the positive side, lower spend can be the result of better product mix and efficient drug utilization driven by improved formulary management. Here are three myths that have developed in the market and reasons why placing equal emphasis on each of the four pharmacy cost drivers will generate greater value at a lower cost over the long term.
 
1. Rebates are one of the Top 2 factors in lowering employer-sponsored pharmacy benefit plan costs.” The employer faces a double whammy on rebates: (1) rebates may be kept by the PBM (2) rebates are offered only on expensive drugs. Almost without exception the most heavily advertised and rebated drugs have therapeutic alternatives which cost up to 90% less than the rebated products. An employer may think it need not worry about this structure since it receives 90%+ of the rebates. Are there other fees paid to the PBM by the manufacturer that are relabeled and therefore are no longer considered a “rebate”? Does the employer even have access to the right information to make these decisions?
 
2. Pass-through and Transparent PBM business models provide similar levels of transparency and price. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser to their financial advantage. Consequently, pass-through and so called transparent PBM business models don’t let you in on what their management fee amounts to. That is a big big problem. Unlike admin fees, management fees are not easily quantifiable primarily because non-fiduciary PBMs don’t want employer-sponsors to know just how much their fees are contributing to your costs. The full-disclosure and fiduciary-model PBM will disclose to self-insured employers their management fee or the part of negotiated discounts it will keep. The lower this fee the less employers pay plain and simple. A reasonable PBM management fee bends the cost trend whilst delivering similar levels of service and outcomes. 
 
 
3. Benefit design is less important than pricing guarantees such as AWP discounts and rebates. Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I’ve not taken a poll so I don’t know the reason. Maybe it is because some believe benefit design doesn’t have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it. In pharmacy cost drivers, price is 1A and benefit design is 1B. Benefit design includes but is not limited to elements such as formulary, network configuration and member cost-sharing arrangements. Aside from copayments and deductibles (cost-sharing) most plan sponsors know little else about their benefit design and have left it up to the PBM to decide. When the PBM is non-fiduciary that could lead to significant overpayments.
 
There are a lot of bad actors [not just PBMs] in the benefits industry using employers’ bank accounts as their personal ATM. Much can be done by non-fiduciary PBMs to improve the level of transparency provided to purchasers of PBM services. Without a trained-eye reviewing PBM contracts, most companies are at the mercy of PBMs who are essentially given a blank check. I’m not taking purchasers of PBM services off the hook either. Continuous learning is essential to running an efficient and cost-effective pharmacy benefit management program.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 337)

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.
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.

[Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

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.

Tuesday Tip of the Week: Factor Benefit Design into your PBM Scorecard (Rerun)

Factor in the actual benefit design, not questions about benefit design, into your PBM scorecard. At a minimum, it should be the same form the PBM uses to set your group up in the back-office. Sometimes even the PBM’s benefit design form excludes important details, such as DAW codes, so be careful. If important information is missing get it included especially when that information contributes to your cost. 
 
Click to Learn More
 
Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I’ve not taken a poll so I don’t know the reason. Maybe it is because some believe benefit design doesn’t have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it.
 
Don’t put 50 questions in a RFP around benefit design where important details get lost in translation. Instead, get a copy of a signature ready benefit design and score it as part of the PBMs proposal. Here are some weights I recommend applying to each scorecard:
 
Contract – 40%
 
Benefit Design – 25%
 
References – 10%
 
Questionnaire – 5%
 
Reverse Auction – 15% 
 
Finalist Presentation – 5%
 
In pharmacy cost drivers, price is 1A and benefit design is 1B. Aside from copayments and deductibles (cost sharing) most plan sponsors know little else about their benefit design and have left it up to the PBM to decide. When the PBM is non-fiduciary that could lead to significant overpayments.

Bling-Loving Postal Boss Asked to Step Down Over $12,000 Worth of Cartier Watches

It was only a matter of time before bling-loving Australia Post boss Christine Holgate got some unwanted attention. The CEO, who raked in $2.5 million from the government-owned business last year, was ordered to stand down after admitting she gave $12,000 worth of Cartier watches to her staff as thanks for securing a $66 million deal in 2018.
Wasteful Pharmacy Spend
Don’t gift non-fiduciary PBMs Cartier watches

Ms. Holgate confirmed four of her highly-paid executives were handed Cartier watches during a cross-examination with the Senate. They were ‘awards’ for securing a deal with the Commonwealth Bank, Westpac and NAB, which paid a combined $66 million to Australia Post so its customers could access banking services at its stores across the country. 

 

Tyrone’s Commentary:

What does this have to do with pharmacy benefits management? It is so easy to waste money with pharmacy spend that many CFOs and HR executives are gifting the equivalent of a Cartier watch to non-fiduciary PBMs on a weekly basis. Larger businesses, $10 million or more annual pharmacy spend, are gifting PBMs the equivalent of one Cartier watch per day! As fiduciaries, employers have a duty to be good stewards of how company dollars are used to fund care for employees and dependents. A good steward of the pharmacy benefit understands not only what they want to achieve in their relationship with their PBM but also the competitive market and their ability to drive disclosure of details on services important to them. Assessing transparency is more effectively done by a trained eye with personal knowledge of the purchaser’s benefit and disclosure goals. Here is a thought. What happens when executive promotions and compensation are tied to pharmacy benefit performance?


‘They got watches,’ Ms. Holgate said as she was questioned by the Senate. They were a Cartier watch of about a value of $3,000 each. She was asked, “Do you remember the brand, the type? Was it a Cartier Tank? What was it?’ ‘The Senate said the gifts were disgraceful and appalling.

Read Story >>

Dean Foods Carves Out Specialty Pharmacy and Saves Big

In 2019, Dean Foods, which this year was acquired by Dairy Farmers of America, spent $52,900 on 4 biosimilars, well short of the $227,500 the company would have spent on 3 originator products. The carve-out was arranged through Vivio and enabled Dean Foods to sequester specialty drug costs and management so that savings could be achieved outside of the structure imposed by a pharmacy benefit manager (PBM) plan.

PBM Carve-Out Diagram
Click to Learn More

Switching employees on expensive originators to biosimilars, generic drugs, and lower-cost therapeutic alternatives while also discontinuing experimental drugs generated $1.7 million in clinical savings (avoided therapy costs) for the former dairy company, the report said. But given all anticipated vs actual costs from the carve-out program, Dean Foods saved $4.35 million in 2019, according to the report. This includes supply chain savings.

Tyrone’s Commentary:

There are several benefits to a carve-out PBM arrangement including options to carve out specialty pharmacy. The truth is if left to their own devices specialty pharmacies owned by PBMs, or independent, want to get the product out of the door and into the mail. When left unchecked, there is little chance it will pass up on filling a $15,000 prescription knowing full well a less costly therapeutic alternative is as effective. It is up to the plan sponsor to remove any conflict of interest.

Benefits of a carve-in PBM arrangement such as population health management can make life easier. When all the data is under one roof it goes without saying life is easier compared to bringing in a third-party. However, plan sponsors have to be careful though what you give up in exchange for “easier.” With carve-in arrangements plan sponsors can lose flexibilty and control of benefit design, formulary management and even forgo rebate dollars. Of course, no carved-in PBM will tell you this is going to happen just read between the lines.

Vivio said in the report it achieves savings by seeking out lowest-cost drug suppliers, passing 100% of rebates to its customers, and taking advantage of manufacturer discounts. It said that “typically, 15% of prescribed specialty drugs have lower-cost therapeutic equivalents alternatives such as biosimilars, generics, and less-costly branded drugs.”

Continue Reading >>

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 336)

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.
 
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.