Yearly Archives: 2021

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 372)

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.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 371)

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.

 

AIDS Healthcare Foundation (AHF) Files Federal Antitrust Lawsuit Against BUCA PBM

The AIDS Healthcare Foundation (AHF), a leading provider of health care to people living with HIV/AIDS around the world, filed a lawsuit in federal court in Los Angeles to stop Prime Therapeutics from fixing prices of reimbursements to AHF pharmacies, along with all other independent pharmacies doing business with Prime, for providing prescription drugs to patients in need. 

In late 2019, Prime announced a new three-year “collaboration” with Express Scripts, Inc. The word “collaboration” is a clever choice of word as it avoids the use of merger, purchase or strategic alliance. In fact, it appears Prime is simply aligning its reimbursement rates with those of the other PBM, and doing so on an ongoing basis. 

AHF’s pleading asserts that Prime is thereby violating the most settled principle of antitrust law, the prohibition against fixing prices with a direct competitor. Here’s a breakdown of the relationship between Express Scripts (ESI) and Prime.

Express Scripts handles:

  • Manufacturer rebate negotiations under the pharmacy benefit
  • Retail pharmacy network management and contracting

Each PBM will operate independently in these areas:

  • Custom retail pharmacy network options
  • Formulary management
  • Medical benefit drug claims to include formulary management and rebates
  • Member support including enrollment and eligibility
  • Outcomes-based contracting

Tyrone’s Commentary:

It seems there is a cleansing taking place within the PBM industry. Non-fiduciary PBMs are scrambling to protect not only revenues but their business models. Last year the Supreme Court ruled 8-0 that ERISA, which as you know sets national rules for most large employer-benefit plans, doesn’t prevent states from regulating prescription plans for people who get health coverage through their employers. This decision has opened the flood gates for litigation against pharmacy benefit managers in both the state and federal levels. PBMs who have profited from bad business models are the targets. Some non-fiduciary PBMs saw the writing on the wall and have cashed out before the s%&t really hits the fan.

The action was filed in U.S. District Court, Central District of California. Download the case file.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 370)

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.

 

Mississippi AG Files Lawsuit Against Insulin Manufacturers and PBMs over Insulin Pricing Scheme

The Mississippi attorney general last week filed a lawsuit accusing several drug makers and pharmacy benefit managers of conspiring to set prices for insulin, the life-savings diabetes treatment that has become a poster child for the high cost of prescription medicines. 

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The lawsuit alleged that the manufacturers benefited from a scheme in which prices were “artificially” inflated to win placement on formularies, the list of medicines for which insurance is provided. And pharmacy benefit managers profited by receiving “secret” rebates from the manufacturers and also through their own mail-order pharmacy sales. In the alleged scheme, the Manufacturer Defendants artificially and willingly raise their reported prices, and then deceptively refund a significant portion of that price back to PBMs through things called rebates, discounts, credits, and administration fees. 

Tyrone’s Commentary:

I’ve been teaching and writing about how non-fiduciary PBMs engage in self-dealing for 9.5 years. Check the first blog post. Some of my readers have become clients others were dismissive. Are you listening now? The amount of money some PBMs are printing, based primarily on predatory behavior, is wrong. Don’t be the last one to the party. Overpayments to PBMs isn’t just about money. These overpayments impact the level of care patients receive – health care outcomes. Don’t wait another decade before you take decisive and corrective action.

They [PBMs] also switch medications within their formularies to suit their pricing scheme to the detriment of diabetics relying on those drugs the lawsuit alleges. This practice has resulted in record profits for Defendants at the expense of diabetics and payors. 

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PBM Agrees to Pay a Record $88.3 Million to Settle Ohio Case

The settlement is the first and largest in the country secured by a state attorney general against a pharmacy benefit manager (PBM). “Centene used sophisticated moves to bill unearned dollars – moves known only at the top levels of health care companies,” Yost said. “It has taken a huge effort by my team to untangle this scheme–and now that we know how it works, the alarm bells should be ringing for anyone using similar tactics.”
Centene Corp. (CNC) has agreed to pay Ohio $88.3 million to settle a lawsuit filed by Attorney General Dave Yost in March alleging the pharmacy benefit manager overbilled the Ohio Department of Medicaid for pharmacy services it provided. Yost also alleged Centene and its subsidiary, Buckeye Health Plan, conspired to misrepresent the costs of pharmacy services, including the price of prescription drugs.
Formula: True Cost of PBM Services

Most Ohioans’ prescription-drug plans are under the management of a PBM through their health insurance plans. PBMs are middlemen in control of prescription-drug costs, and they decide which prescription drugs are covered by health insurance companies.
Tyrone’s Commentary:
Well that didn’t take long for Centene to fold. Now that the cat is out of the bag, I wonder if commercial plan sponsors and their advisors will be as aggressive in eliminating overpayments to non-fiduciary PBMs? 

AG Yost began investigating PBMs in 2018 while state auditor. Yost found that PBMs, while managing the Department of Medicaid prescription drug program, were engaged in spread pricing, which is an artificial inflation of prescription drug pricing. That investigation found that PBMs collected more for drugs compared to the actual cost to dispense the drugs. With help from outside counsel, the Office of Attorney General Yost conducted a thorough investigation of these practices, finding significant breaches of contract.

Notably, the breaches include:

  • Filing reimbursement requests for amounts already paid by third parties.
  • Failing to accurately disclose to ODM the true cost of pharmacy services, including the disclosure of discounts received.
  • Artificially inflating dispensing fees.

Continue Reading >>

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 369)

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 Drugs Have Taken Over

 Evernorth 2020 Drug Trend Report

Specialty drugs used to be the novelty part of the drug spend: expensive, yes, but unusual. Ten years ago, specialty accounted for 15% to 20% of the money spent on drugs, but the CVS Caremark 2020 Drug Trend Report shows that specialty drugs accounted for more than half (52%) of the pharmacy spend last year. 

The 2020 drug trend report from Evernorth (the new Cigna entity that Express Scripts is now part of) also showed that the spend on specialty drugs edged ahead of the spending on traditional medications (50.8% versus 49.2%).

Tyrone’s Commentary:

1) It’s more important than ever to drive high generic drug utilization. A generic dispensing rate or GDR of 80% is not high, relatively speaking. It costs you as much as 2.5% net savings for each 1% below the national average of 90% GDR.

2) Manufacturer assistance programs are a temporary reprieve. First, a drug manufacturer could pull the plug on financial assistance at any moment. More importantly, as more and more new patients initiate a specialty drug therapy regimen, you will find your Rx costs returning back to pre-PAP and pre-CAP program PMPM costs. In a commercial plan, 20 new specialty drug treatments are started per 1000 members annually. Say it with me…cha-ching! Take full advantage of manufacturer derived assistance programs while you can. Restrict the non-fiduciary PBM’s ability to profit from them. The more the PBM benefits from these programs financially the more you and your members pay. 

3) Eliminate expanded drug lists or EDLs. If you choose to keep an EDL as part of the benefit design, restrict them. Are you paid formulary rebates for a drug listed on the EDL? Worse yet, these EDLs create an environment where the relationship between physician and patient becomes transactional. Circumvention of a really good formulary is likely to result in wasteful and/or duplicative spending. 

4)  Lowest net cost formularies, high adherence rates (> 80%) and radical transparency in PBM contracts are and will remain the backbone of an efficiently run pharmacy benefit management program. Be relentless in removing money leaks from employer-sponsored pharmacy benefit programs. That effort starts with achieving radical transparency in your PBM service contract.

5) Education is key to getting to lowest net cost in employer-sponsored pharmacy benefit plans. Only the most sophisticated purchasers of PBM services will have the knowledge and confidence to bind lowest net costs for prescription drugs into contract language and benefit design. Hence, your competitive advantage includes executing good analysis of the correct information then deciding what all of this suggests for your organization. Those who seize the chance and develop a good plan have a higher probability of getting to lowest net cost. 

Five therapeutic categories are driving 90% of the specialty trend for CVS Caremark. Autoimmune is the largest drive because of supplemental indications, which is driving more utilization. The other four were oncology, cystic fibrosis, atopic dermatitis and HIV. New oncology products continue to be a large driver of spending and that in cystic fibrosis you are starting to see patients take more drugs per patient.

Evernorth’s report says 17 of the top 25 drugs ranked by total pharmacy spend were specialty medications in 2020.

<<Continue Reading>>

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 368)

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.

 

Tip of the Week: Smaller PBMs Grade Higher on Customer Satisfaction

A newly released survey finds that plan sponsors’ overall satisfaction with their PBMs is relatively high. But Pharmaceutical Strategies Group’s 2020 Pharmacy Benefit Manager Customer Satisfaction Report also reveals that customer satisfaction of PBMs varies depending on the firms’ size and the type of client being served.

Key takeaways from the 2020 PBM Customer Satisfaction Report include:

  • 90 percent of respondents feel their PBM financial relationship is somewhat/completely transparent
  • Likelihood to renew their PBM contract averaged 8.0 on a 10-point scale
  • Highest-rated core PBM function is retail network options
  • Highest-rated noncore PBM function is the account team acts as a strategic advisor
  • Highest-rated specialty management function is customer service for patients using specialty medications
  • Highest-rated PBM service dimension tied between meets financial guarantees and PBM staffing adequate to meet customer needs

“The size of the PBM does make a difference, often in the services that are provided because of scale. It also makes a difference in the types of customers who choose a PBM — so many customers are looking to middle-market, midsized PBMs for more flexibility, where others look to the larger PBMs for perhaps deeper discounts,” Sharon Phares, Ph.D., senior vice president of research and data innovation at Pharmaceutical Strategies Group, said during a May 25 webinar to discuss the survey’s findings.

Tyrone’s Commentary:

I asked one of our broker partners last week a simple question. Mind you this broker does business with all types of PBMs large, mid-size and small. The question was simply, “do any of the other PBMs you work with beat TransparentRx on price.” His answer, “no.” His response was matter of fact there was no fluff. What matters more than a PBM’s size is whether or not it is aligned philosophically to its clients desire for radical transparency. It is a myth to say that large PBMs offer deeper discounts. What they often times offer is the illusion of deeper discounts. You can’t have ‘deeper’ discounts and little to no transparency, for instance. It doesn’t work that way in this business not by a long shot.

In general, “PBMs with 20 million or fewer members tend to have higher satisfaction ratings than larger PBMs,” Phares said, attributing the difference to both “customers with different needs and expectations from their PBM” and “the services provided by the PBM itself.”