Why is this document 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 healthcare reform. 

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

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

The ACP’s Health and Public Policy Committee developed these positions and recommendations. This committee is charged with addressing issues that affect the health care of the U.S. public and the practice of internal medicine and its subspecialties.

The committee identified studies, reports, surveys, relevant news articles, policy documents, and other sources of public information on the pricing of prescription drugs; cost of prescription drugs; cost of drugs to patients and payers; and other aspects of the research, development, regulation, and marketing of prescription drugs.

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Draft recommendations were reviewed by ACP’s Board of Regents, Board of Governors, Council of Early Career Physicians, Council of Resident/Fellow Members, Council of Student Members, Council of Subspecialty Societies, and outside expert reviews. The position paper and recommendations were reviewed by the ACP Board of Regents and approved on 16 February 2016.

Recommendations

1. ACP supports transparency in the pricing, cost, and comparative value of all pharmaceutical products:

a. Pharmaceutical companies should disclose:

i. Actual material and production costs to regulators;

ii. Research and development costs contributing to a drug’s pricing, including those drugs which were previously licensed by another company.

b. Rigorous price transparency standards should be instituted for drugs developed from taxpayer-funded basic research.

2. ACP supports elimination of restrictions of using quality-adjusted life-years (QALYs) in research funded by the Patient-Centered Outcomes Research Institute (PCORI).

3. ACP supports the following approaches to address the rapidly increasing cost of medications:

a. Allow greater flexibility by Medicare and other publicly funded health programs to negotiate volume discounts on prescription drug prices and pursue prescription drug bulk purchasing agreements (7, 8);

b. Consider legislative or regulatory measures to develop a process to reimport certain drugs manufactured in the United States, provided that the safety of the source of the reimported drug can be reasonably assured by regulators;

c. Establish policies or programs that may increase competition for brand-name and generic sole-source drugs.

4. ACP opposes extending market or data exclusivity periods beyond the current exclusivities granted to small-molecule, generic, orphan, and biologic drugs. ACP supports robust oversight and enforcement of restrictions on product-hopping, evergreening, and pay-for-delay practices as a way to increase marketability and availability of competitor products.

5. ACP supports research into novel approaches to encourage value-based decision making, including consideration of the following options:

a. Value frameworks;

b. Bundled payments;

c. Indication-specific pricing;

d. Evidence-based benefit designs that include explicit consideration of the pricing, cost, value, and comparative effectiveness of prescription medications included in a health plan’s benefit package.

6. ACP believes payers that use tiered or restrictive formularies must ensure that patient cost-sharing for specialty drugs is not set at a level that imposes a substantial economic barrier to enrollees obtaining needed medications, especially for enrollees with lower incomes. Health plans should operate in a way consistent with ACP policy on formularies and pharmacy benefit management.

7. ACP believes that biosimilar drug policy should aim to limit patient confusion between originator and biosimilar products and ensure safe use of the biosimilar product in order to promote the integration of biosimilar use into clinical practice.

Conclusion

Recent trends show that increases in the price of prescription drugs have drawn the interest and concern of patients, payers, government officials, and physicians, particularly in the cases of very substantial price increases for some generic drugs, and in the price of existing brand-name drugs and specialty drugs (9).  The United States often pays more than other high-income countries for the same drugs, and despite discounts, rebates, coupons, and assistance programs, high and increasing drug prices still threaten to keep patients from getting the drugs they need.

Through collaboration and innovation, stakeholders have the ability to effect change by supporting transparency in how drugs are priced, developing and piloting novel approaches to evaluate and pay for drugs through evidence-based practices that reward advancements in the medical field, assuring access to needed prescription medication by not placing disproportionate economic burden on patients, encouraging informed patient participation in their health care decision making, and ensuring a truly competitive marketplace.

Continue Reading >>

Why is this document 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 healthcare reform. 

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

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

Persistent and pernicious prescription drug cost hyperinflation. A move to bundled payments by both public and private payers. A 3 percent penalty for higher-than-normal readmission rates for several disease states. A sharp focus on outcomes of care in value-based purchasing.

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Combined, those factors are creating a perfect storm that virtually mandates a key role for hospital inpatient pharmacy in a health system’s or hospital’s clinical and financial decision making. Pharmacy, until recently (or in some cases, still) relegated to simply dispensing drugs from the basement, needs to find its way upstairs, unleashing its ability to manage chronic disease, reduce readmissions through rigorous medication reconciliation while a patient is in the hospital and be a team member that helps keep patients from returning to the hospital.

It does appear that the biggest driver to achieving that larger role is drug cost inflation, which even made its way onto the ECRI Institute’s 2016 Top 10 Hospital C-suite Watch List, usually a ranking of technology issues facing healthcare executives.

“The only person who can really get a handle on drug costs is the pharmacist,” says Marvin Finnefrock, PharmD, vice president of Clinical and Purchasing Services for Comprehensive Pharmacy Services (CPS), a national provider of inpatient and outpatient pharmacy management services to nearly 600 hospitals. “In many cases, we actually see a better patient outcome by not using the more expensive drug. We’ve known that for a long time, but now it seems like everyone is more aware of it.”

Taking advantage of the opportunity that knowledge creates hinges on a provider’s willingness to invest in some form of data analytics and, just as importantly, act on those findings. A widespread absence of information technology systems that support and track interventions adds to the challenges care providers face. Buying or creating these systems is expensive and comes at a time when capital spending is severely stressed by lower reimbursements and competing demands.

The Centers for Medicare & Medicaid Services (CMS) has been road-testing an initiative that includes a single payment for inpatient stay for joint replacement surgery, plus the post-acute care and all related services for up to 90 additional days. On April 1, CMS is making involvement in the test mandatory for 789 hospitals in 67 geographic areas across the country.

Meanwhile, as just one of many examples of private-payer bundled payment initiatives, on Jan. 1 the Pacific Business Group on Health Employers Centers of Excellence Network began contracting with hospitals for a single payment for bariatric surgery for employees of large national employers.

“Bundled payment and other programs are going to change how we have to manage drugs across a health system,” says Edward Choy, PharmD, president of Health Systems Operations for CPS. “Inpatient drugs used to be under formulary, while outpatient drugs were managed by private insurers and pharmacy benefit managers. Now, all drugs need to be managed under formulary. Finding the most cost-effective way to treat the patient becomes more of a priority.”

Choy and Finnefrock suggest a few key steps toward developing a long-term plan for the pharmacy piece of bundled payments. They include:

• Maintaining a relentless focus on outcomes. “Being ruthless when it comes to deciding on using a lower-cost drug or device that may go against established physician practice is essential,” Finnefrock says. “‘That’s the way we have always done it’ isn’t going to cut it anymore. It may make physicians feel comfortable, but it’s no longer a strategy for success or even, in some cases, survival.”

• Focusing on physician prescribing patterns and how they correlate with outcomes. “Presenting physicians with really robust outcomes data is a powerful tool for changing behavior,” Choy says.

• Taking a second look at generic drugs, even older drugs that may have lost cachet but not effectiveness. For example, new research favors the use of heparin, an older blood thinner that costs about $3 a dose, prior to percutaneous coronary intervention over the anticoagulant bivalirudin, which costs hundreds of dollars per case.

• Making pharmacy an equal partner in post-discharge care. “CPS research, about to be published, finds a 20 percent to a 50 percent reduction in readmissions from having a pharmacist make follow-up calls to make sure patients have filled prescriptions and understand how to take medicines,” Finnefrock says. That research updates a 2001 study in the American Journal of Medicine that found a pharmacist follow-up call reduced 30-day readmissions by more than half versus no intervention, while also improving patient satisfaction.

“It is pretty clear bundled payments are only going to get bigger as healthcare continues to try to get hold of rising costs,” Finnefrock says. “More and more providers are starting to understand that pharmacy can be a crucial ally in succeeding under these new value-based purchasing models.”

By Todd Sloane

Employers are taking aggressive steps to tackle rising specialty drug costs head on, a report released recently found.

According to the report by Towers Watson & Co., 53% of employers have added new coverage and utilization restrictions for specialty prescription drugs, including prior authorization or limiting quantities based on clinical evidence.

Another 32% are expected to add restrictions by 2018, Towers Watson found in the 20th Annual Towers Watson/NBGH Best Practices in Health Care Employer Survey of 487 large U.S. employers.

Furthermore, more employers plan to exclude certain compound medications from their benefit coverage: 39% have already done so, and another 24% expect to by 2018, according to the report.

Compound medications are prescribed by physicians but prepared by pharmacists. The process leads to higher costs and could result in a mix that’s not approved by the U.S. Food and Drug Administration, Towers Watson said in the report

The hefty price tags on specialty drugs, which are used to treat complex conditions like cancer, multiple sclerosis and hepatitis C, are driving up employers’ overall health care spending.

And with more specialty drugs coming down the pipeline and few or no alternatives or generics to lower the price, spending on specialty pharmacy shows no signs of slowing.

According to the nation’s largest pharmacy benefit manager, Express Scripts Holding Co., spending for specialty drugs increased 30.9% to $311.11 per plan member in 2014, the highest increase ever recorded. That’s despite the fact that specialty medications account for just 1% of U.S. prescriptions.

Because specialty drugs often require careful handling and delivery by a clinician, they may be billed on the medical side of the benefit plan. As such, 26% of employers are addressing specialty drug cost and utilization in their medical plan, in addition to strategies used on the pharmacy plan. Towers Watson expects the percentage of employers addressing specialty drugs in their medical plan to triple in three years, according to the report.

“Although pharmacy represents approximately 20% of employer-sponsored medical benefits costs, it is increasing at a rate that accounts for roughly half of medical cost inflation and should be a top priority for employers,” Eric Michael, U.S. central division pharmacy leader for Towers Watson, said in a statement.

“Left unchecked, pharmacy costs will continue to soar, creating an urgent need for employers to reevaluate their pharmacy plans and benefits to include maximizing use of generic drugs, and develop clear policies on the use of specialty and compound drugs. The challenge is to prudently manage pharmacy costs while enabling employees to access effective and affordable treatment,” Carmelina Rivera, Towers Watson’s U.S. west division pharmacy leader, said in the statement.

The report is based on a survey conducted in June and July of 487 U.S. employers with at least 1,000 workers.

By Shelby Livingston

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According to a recent survey conducted by United Benefit Advisors (UBA), more large employers are selecting to self-fund their prescription drug benefit plans. According to the survey, an increasing number of employers are turning to the cost-containment benefits of self-funding to avoid the Affordable Care Act (ACA)’s impact on the cost of fully insured health coverage.

Based on data obtain from over 10,000 survey respondents, self-funded prescription drug benefit plans have increased by approximately one third from 2009 to 2014, while fully insured prescription drug benefit plans have decreased by approximately 3 percent. The data also showed that 66 percent of employers with at least 1,000 employees currently maintain a self-funded pharmacy benefit plan.

Employers across the nation are also more likely to implement a layer of stop loss protection for their prescription drug benefit plan. The increasing trend is the result of both the shift to self-funding, as well such ACA requirements as the removal of annual and lifetime limits on health benefits, which open plans up to greater high dollar claim risk and cost exposure. 

Another factor leading employers to elect stop loss coverage for their prescription drug benefit plans is the increased cost of expensive specialty medications used to treat complex disease states.

According to UBA’s survey, approximately 95 percent of self-funded pharmacy benefit plans now include specific stop loss coverage, an increase of almost 7 percent compared to the five preceding years. Approximately 77 percent of self-funded pharmacy plans incorporate a layer of aggregate stop loss protection. 

This trend has grown more rapidly over the same five year period, at a rate of just over 9 percent. In 2014, the average specific stop loss level was $140,235, representing an increase of approximately 14 percent from the four prior years.

by Jessica Marabella

Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

Doctors and cancer clinics are up in arms about a new Medicare reimbursement scheme that would cut their mark-ups on oncology drugs. But the Centers for Medicare and Medicaid Services has even bigger plans for cancer-drug payments.

Pay-for-performance deals and indication-specific reimbursements are on a list of 6 programs CMS plans to try alongside the cuts targeted at physicians and hospitals. It’s a rare example of Medicare plucking new ideas from the private sector, even before they’ve been widely adopted in the biopharma industry.

In fact, CMS says it looked to private payers for “value-based purchasing tools,” and wants to use strategies similar to those used by commercial health plans, pharmacy benefits managers, hospitals and other benefits managers.

Beginning as early as January 2017, the agency would experiment with the sort of value-based reimbursement plans that Novartis ($NVS) and Amgen ($AMGN) are using on their brand-new heart drugs Entresto and Repatha. CMS says it will be seeking “risk-sharing” deals with drugmakers to link drug payments with patient outcomes.

CMS also wants to test indication-based pricing, which vary reimbursement amounts according to a drug’s effectiveness in a given type of cancer. Drug-pricing critic Peter Bach, of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, has proposed indication-specific payments, and pharmacy benefits manager Express Scripts ($ESRX) is testing out the approach with some of its clients this year.

Tyrone’s Comment:  How are the “refunds” appropriated? Is it a shared savings or fee-for-service arrangement between the PBM and plan sponsor? Or is the PBM simply doing its job and shouldn’t be rewarded for it? These are questions every plan sponsor should be asking now. Value-based and indication-specific pricing are here to stay and soon, if not already, will become standard operating procedure.

Like private payers, CMS notes that a cancer therapy “might be used to treat one condition with high levels of success but an unrelated condition with less effectiveness, or for a longer duration of time. The goal is to pay for what works for patients.”

To see if the “purchasing tools” work to bring down drug costs, CMS wants to do a couple of head-to-head comparisons, according to the Federal Register notice. One would pit the current reimbursement model of average sales price plus 6% against the same mark-up level, subject to value-based deals. The other would test the new mark-up of 2.5% with flat fee drug payments against 2.5% with value-based deals.

The agency says it’s looking for input from the pharma industry on performance-based approaches. Right now, CMS says it doesn’t know how much money it might save, but “we intend to achieve savings.”

Meanwhile, pharma and private payers will be pushing their own performance-based deals and keeping track of the results. Novartis has been in the forefront of value-based pricing, focusing on its heart failure drug Entresto. In clinical trials, the med helped keep patients out of the hospital–saving those costs–and the Swiss drugmaker figures it can score points with payers, and potentially, higher sales, by linking Entresto’s reimbursements with results.

At first, payers weren’t convinced. But last month, the company said it had inked value-based deals with Cigna ($CI) and Aetna ($AET). Cigna says its payments to Novartis will depend on Entresto’s results, with dollar amounts linked to hospitalization rates.

Continue Reading >>

In health care, Americans demand choice. Insurers must strike a balance between respecting that demand and encouraging their members to opt for the most cost-effective care. That challenge is especially tough when designing pharmacy benefits — heavy direct-to-consumer advertising is driving up demand, and costs are rising at unsustainable rates. Nearly all payers use tiered drug formularies to move patients toward the most cost-effective drugs while still offering broad choice to people who are willing to pay.

A growing body of research shows that pharmacy-benefit design influences whether patients with chronic medical conditions start and adhere to their essential medication regimens — which, of course, affects the long-term value of those prescriptions. The bottom line for benefits managers and payers: Not all pharmacy-benefit choices are created equal.

Let Patients Choose the Access Channel

Patients have strong preferences about how they get their medications. When enrolled in a pharmacy benefit that offered a 90-day supply of prescriptions via mail service or a retail pharmacy (with no difference in out-of-pocket costs), each mode of access was selected by about half of patients in a large retrospective study. And evidence shows that giving patients such flexibility improves their rates of adherence to essential therapies.

In one study, comparing patients in a mandatory mail-order plan with patients who could choose to fill their prescriptions at either mail or retail pharmacies (with the same copay), the 90-day adherence rate was 30% better for the patients who had a choice. Results are similar specifically for adherence to specialty medications: Patients who could choose between a specialty mail-order pharmacy and a retail pharmacy, rather than being limited only to the mail-order option, had a 17.5% higher rate of filling a second prescription and an 11.4% higher rate of overall adherence.

Should Patients Choose the Medication, Too?

In a national survey, more than 70% of Americans indicated that generic medications are as effective as, cost less, and offer better value than branded medications. However, although 56% of the survey respondents believed that more people should use generics, only 38% preferred to take generics themselves. This apparent inconsistency may explain why patients choose options that are more
expensive, both for the payer and for their own wallets, without a clear clinical rationale.

In tiered benefit plans, which charge higher copays for name-brand medications, prescribing those medications leads to higher costs and poorer health. For instance, prescriptions for name-brand drugs are three to four times more likely to be abandoned right at the pharmacy when patients experience “sticker shock” and then leave without the drug in hand. And if patients or physicians request that a branded medication be “dispensed as written,” with no option to substitute a generic, patients are 37% more likely to fail to fill the initial script, and more than twice as likely not to fill subsequent prescriptions. In addition, patients with chronic conditions (e.g., hypertension, diabetes, hypercholesterolemia) had significantly higher adherence rates to generic drugs than to nonpreferred brand-name drugs (59% vs. 52%).

Among patients with heart disease, choosing a generic led to better adherence and fewer adverse clinical outcomes. In short, when broad choice of medications allows patients to select higher-cost therapies, clinical outcomes suffer — because patients are less likely to actually bring the medications home and take them as prescribed.

Continue Reading > > 

Why is this document 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 healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.