With specialty drug spending soaring 60% in the past five years, large health systems have jumped into the specialty pharmacy business to assert some control over those costs by dispensing the drugs to their patients and covered employees. Health systems say those pharmacies help them better manage outpatient drug costs. A growing number of insurance contracts and Medicare initiatives tie payments to quality metrics that reach beyond hospital stays to hold providers accountable for patients' total medical costs, including drugs. It's also a robust business for those systems that can successfully negotiate with manufacturers and health plans so they can compete with the bigger players. “It you want us to be responsible for the cost of care, allow us to be able to care comprehensively for these patients,” said Dick Schirber, a spokesman for ExceleraRx Corp., a for-profit specialty pharmacy services company owned by six health systems. Comprehensive care, Schirber said, includes managing the very expensive prescriptions that patients take at home for cancer or chronic diseases, so that providers have more control over waste as well as complications. ExceleraRx provides services to system-owned specialty pharmacies, such as negotiating with drugmakers and handling data reporting. Phoenix-based Banner Health started its own specialty pharmacy last year, taking its business away from Premier, which acquired Commcare Specialty Pharmacy in 2010 for $35.9 million. Banner employees enrolled in the system's health plan were the pharmacy's first customers. “For everyone, everywhere, the pharmacy expense is increasing,” said Pam Nenaber, Banner's CEO of pharmaceutical operations. Banner Health hired three clinical pharmacists, three patient advocates and three staff members to support operations. The system also spent $1 million on a drug-dispensing robot for the specialty pharmacy's new home-delivery service. The robot fills pill bottles, which are verified by a pharmacist before being shipped. Clinical pharmacists also talk to patients at home to answer prescription questions. In the first year, Banner shaved about 1% off its specialty drug spending for about 1,200 workers and their families covered by the system's employee health plan. Health systems that own specialty pharmacies argue they can do a better job overseeing the use of the drugs they dispense. That's because their pharmacies can easily access medical records, laboratory results and physician notes, allowing pharmacists to closely monitor the effectiveness of the drugs prescribed and react quickly when something goes wrong or patients need help. “They know if the patient is getting the value for the high-cost drug,” said Steven Rough, director of pharmacy for the University of Wisconsin Hospital and Clinics, which began handling transplant drugs in 2006 and expanded its specialty pharmacy in 2011. Launching a specialty pharmacy does not require significant capital investment, and the high prices of the drugs—even sold at slim margins—make it possible to quickly see a return on that investment. “It's a quite viable business,” said Scott Knoer, chief pharmacy officer at the Cleveland Clinic, which opened its specialty pharmacy roughly a year ago, and advises other systems to do the same. “Get on it and…

Testifying before Congress, Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt outlined market-based policy solutions to help increase competition and lower prescription drug costs. The Committee is examining "methods and reasoning behind recent drug price increases" at a hearing titled, "Developments in the Prescription Drug Market." PCMA is the national association representing America's pharmacy benefit managers (PBMs).  PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others. PBMs are projected to save employers, unions, government programs, and consumers $654 billion—up to 30 percent—on drug benefit costs over the next decade according to new research.  PBMs reduce drug costs by: Negotiating rebates from drug manufacturers. Negotiating discounts from drugstores. Offering more affordable pharmacy channels. Encouraging use of generics and more affordable brand medications. Managing high-cost specialty medications. Reducing waste and improving adherence. "The pricing tactics discussed today are just one piece of a much larger puzzle. The key to reducing costs is through competition. The challenge is we need more of it," said PCMA President and CEO Mark Merritt. "There is also a growing use of bait-and-switch copay assistance marketing programs that encourage patients to ignore generics and start on more expensive brand drugs." Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs for higher cost branded drugs.  Such practices are considered illegal kickbacks in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG). PCMA outlined several potential solutions for high drug prices that policymakers could consider, including: Tyrone's Comment: There is no mention by PCMA (a lobbying arm of legacy PBMs) to cut PBM service costs by eliminating the hidden cash flows from which traditional PBMs hugely profit. The focus is seemingly always "high drug cost" which is somewhat misleading.  A pharmacy benefit is inherently expensive, but even more so when PBMs drive incremental revenue through arbitrage. The solutions outlined below by PCMA are all self-serving and here's why. Accelerating FDA approvals of me-too brands against drugs that face no competition. Puts traditional PBMs in a better negotiating position for larger rebates. Accelerating FDA approvals of generics to compete with off-patent brands that face no competition. Generic drugs provide traditional PBMs higher gross margins, compared to brand drugs, and are more likely to be refilled (more volume) by patients. Creating a government "watch list" of all the off-patent brands so potential acquirers are aware that policymakers can monitor these situations. This is related to Martin Shkreli and is nothing more than an attempt to curry favor with politicians and to divert attention away from the real issue; the lack of transparency traditional PBMs provide. Making copay coupons an illegal kickback for all insurance that receives any federal subsidy. Pharmaceutical manufacturers often use co-pay coupons to skirt PBM formulary…

Increased transparency into the business practices and potential conflicts of interests of pharmacy benefit manager (PBM) corporations could provide tangible benefits to payers, patients and pharmacists, the National Community Pharmacists Association (NCPA) said in comments submitted to the House Committee on Oversight and Government Reform, which held a hearing today on the prescription drug market. "The current business climate seems to be one in which market power is increasingly concentrated in an ever-shrinking number of corporate entities," NCPA said in its comments. "In particular, the overly concentrated and largely unregulated PBM industry exerts immense influence over how prescription drugs are accessed by the majority of Americans. Given the fact that the federal government is the largest single payer of health care in the United States, it makes financial sense for Congress to demand increased transparency into this aspect of the prescription drug marketplace in order to identify potential savings." NCPA raised the following issues for the attention of committee members and staff: Source: 2014 ERISA Advisory Council The powerful PBM market is concentrated and dominated by three large corporations that each reap staggering annual revenues and are not subject to industry-wide regulation. The lack of transparency allows PBM corporations to collect lucrative rebates from pharmaceutical manufacturers and "mark up" the cost of medication, charging the health plan more than the pharmacy is reimbursed. Increased PBM transparency may provide plan sponsors with a greater ability to negotiate more competitive contracts with these vendors in the first place, reducing costs. Independent community pharmacies must agree to "take it or leave it" contracts from PBMs to continue serving longstanding patients, due to the large corporations' disproportionate market power. Community pharmacists have zero insight or transparency into generic drug reimbursement rates and routinely incur losses when those rates do not cover pharmacy acquisition and dispensing costs, jeopardizing patient access to community pharmacies and prescription drugs. The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 22,000 independent community pharmacies. Together they represent an $81.4 billion health care marketplace and employ more than 314,000 individuals on a full or part-time basis. To learn more, go to www.ncpanet.org.

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. 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 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.

On Dec. 11, New York State Governor Andrew Cuomo signed Senate Bill 3346-B, requiring contracts between pharmacy benefit managers (PBMs) and pharmacies (or pharmacies’ contracting agents) to include a mechanism for appeals for contract disputes relating to multi-source generic drug pricing. Pharmacy benefit management contracts must include the following provisions regarding appeals: The right for a pharmacy to appeal for 30 days following an initial claim submitted for payment; a telephone number through which a network pharmacy may contact the PBM for the purpose of filing an appeal and an electronic mail address of the individual who is responsible for processing appeals; The PBM must send an email acknowledging receipt of the appeal and respond in an email to the pharmacy (and/or the pharmacy’s contracting agent) filing the appeal within seven business days indicating its determination. If the appeal is determined to be valid, the maximum allowable cost for the drug shall be adjusted for the appealing pharmacy effective as of the date of the original claim for payment. The PBM must require the appealing pharmacy to reverse and rebill the claim in question in order to obtain the corrected reimbursement; If an update to the maximum allowable cost is warranted, the PBM or covered entity shall adjust the maximum allowable cost of the drug effective for all similarly situated pharmacies in its network in NY State on the date the appeal was determined to be valid; and If an appeal is denied, the PBM must identify the national drug code of a therapeutically equivalent drug, as determined by the federal Food and Drug Administration, that is available for purchase by pharmacies in NY State from wholesalers registered under NY law at a price which is equal to or less than the maximum allowable cost for that drug as determined by the PBM. Tyrone's Comment - From a plan sponsor perspective, this legislation is important because it sheds a bright light on spreads or the difference in what PBMs charge plan sponsors to fill prescriptions and what they in turn pay pharmacies to dispense those prescriptions. This difference often leads to greater profits for the PBM at the expense of plan sponsors. The spread is a prime contributor to why one pharmacy may charge your plan very little and another may charge very much for the same generic medication. Contracted rate is the reimbursement rate that a specific pharmacy or pharmacy chain contractually agrees to accept for processing prescription drug claims on behalf of a specific PBM Effective rate is the actual blended performance rate of discount for the AWP, accounting for differences in reimbursement rate among individual pharmacies and the net effect of drugs that process at a customary level (the pharmacy’s retail price of a drug), which may be lower than the negotiated AWP discount According to reporting by Fortune magazine reporter Katherine Eban, Meridian Health System audited its spending on employee medications to learn the scope of spread pricing. For the antibiotic amoxicillin, Meridian was billed $92.53 when an…

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. 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 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.

[Click to Enlarge] A new survey report from the Pharmacy Benefit Management Institute (PBMI) finds that the use of pharmacy deductibles and annual out-of-pocket limits is rapidly rising among employers. But as plan sponsors look for ways to manage mounting drug costs, the report identifies several opportunities to improve cost management and/or clinical management without having to shift additional costs to members. According to PBMI’s 2015-2016 Prescription Drug Benefit Cost and Plan Design Report, sponsored by Takeda Pharmaceuticals USA, Inc., 36% of employers reported having a prescription drug benefit deductible in 2015, compared with only 14% the year before. Plan sponsors are also shifting more costs to members through annual out-of-pocket limits, which were used by 33% of employers in 2015, up from 18% in the prior year’s survey. The survey results are based on the responses of 302 U.S. employers representing 16.3 million lives. Sharon Frazee, Ph.D., vice president of research and education at PBMI, says the 22-percentage-point jump in deductible use is particularly “striking” given that deductibles have historically been much more common in the medical benefit, but not surprising since employers want to continue to provide an affordable benefit without raising premiums. “Consumers are not accustomed to this, and it’ll be interesting to see what happens as far as member satisfaction and in terms of clinical impact,” she suggests to DBN. Meanwhile, several opportunities exist for greater plan sponsor adoption of utilization management tools such as reference-based pricing, pill-splitting and step therapy, observes PBMI. “Step therapy is really one of the bread-and-butter kinds of things for cost management and it’s something I think most consumers are used to, but it’s only used by 60% of smaller employers,” Frazee points out, referring to the 155 survey respondents with 5,000 or fewer covered lives. By comparison, nearly 80% of larger employers reported using step therapy in 2015. And reference-based pricing was used by only 11% of employers overall, compared with 12% the year before. Tyrone's Comment:  For those organizations seeking to lower pharmacy benefit service costs, reference pricing is one of the most overlooked tools. Every week I publish a list of prescription drugs and their true acquisition costs along with reference pricing instructions. It is a simple and inexpensive way to conduct effective data-mining without the huge overhead associated with big data analytics software. Companies willing to allocate 8 hours, per month, for reference pricing analysis can realize a significant reduction in PBM service costs seemingly overnight. Managing pharmacy related costs is no longer just an HR responsibility; it is a fiduciary one.     The report also identified opportunities to squeeze out additional savings through pharmacy network innovation. For example, 29% of respondents in 2015 report using a preferred pharmacy network, while only 13% were using a limited network (i.e., eliminating at least one major pharmacy chain). Meanwhile, 60% of employers offer a 90-day-at-retail option, but only about one-third of them require that members obtain their 90-day supply of maintenance medications from a limited network pharmacy. SOURCE:…

Providers of prescription drug discount cards have increased their efforts to reach out to employers, despite the Affordable Care Act's or PPACA promise to decrease the ranks of the uninsured or those most likely to use the pharmacy discount cards. Since many of their employees do not work full-time, employers with lower wage workers are primary beneficiaries.  Simply put, low wage employees tend to opt-out of the company health plan. Obviously, companies aren't required to cover part-time employees, but this card would provide them a benefit. Additionally, if employees opt out of the company plan this will also give them a benefit because the card is free to the consumer and free to the company.  One pharmacy discount card can cover an entire family without any registration or paperwork. TransparentRx, a fiduciary pharmacy benefits manager, has negotiated discount prices at more than 65,000 pharmacies such as Walgreens, Target, CVS and Walmart. The discount prices are realized when their co-branded PrescriptionGiant discount drug card is presented by consumers. The price depends obviously on the chain, the prescription itself, and even location. Most of the discounts appear with generics, but many are brand name prescription drugs.  The average savings for a discount card holder is 40% (not every medication qualifies for a discount) and can reach up to 75%. PrescriptionGiant, which seeks to reduce the cost of prescription medicine for children, families and individuals by $50 million by the end of 2020, is one provider looking to educate more employers about its discount card program. PrescriptionGiant does not charge membership fees or collect personal information.

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. 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 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.

What are those clever drug companies up to? Plenty, I learned, recently browsing the website of Medical Marketing & Media, the trade pub that keeps healthcare marketers up-to-date on selling drugs, heart stents, and just about every other product the medical industrial complex dreams up. I spotted an e-book that answered my question. Called “Pathway to Specialty Access,” the book is a primer on how to market those new and very expensive specialty drugs like the hepatitis C medicine Sovaldi, which costs $84,000 for a course of treatment. The 10-page “book” sponsored by TrialCard, a vendor of co-pay cards and vouchers, promises insights into “Patient access needs and hurdles along the specialty drug pathway, supplemented by trends, data and insights on this shifting market.”  It’s not just an interesting read for snoopy reporters but it’s a cautionary tale for journos and the public about future health system costs and how patients are manipulated in the quest for even greater profits. The tip-off for what this itty-bitty volume can do for a drug maker comes in this statement: “Clearly there is a vast undermet need for greater access to specialty medications and better support services for patients. The answer, for pharma, surely lies in an integrated, coordinated patient-centric approach.” In other words, pharma can and should, the book advises, hold patients’ hands from the time of diagnosis through the process of buying and paying for one of these uber-expensive medicines, and make sure the patient stays on the drug regimen. That’s the name of the game in the drug biz. Long-term use equals more drugs sold equals more profits. Clever drug companies have amassed an arsenal of strategies for getting more drugs into the hands of patients through speaking fees to doctors who prescribe the drugs, sponsorship of medical education programs, and very effective detailing or selling in the doc’s office to push the latest and greatest. This time, though, the strategy is aimed at the patient’s pocket book, and the new world of specialty drugs opens up a box of possibilities for expanding their co-pay programs in which the drug company pays a significant portion of the cost-sharing an insurer requires. Pollpeter told me, “when a co-pay is optimized for the patients, they stay on the drug longer.” How do these programs work?  Manufacturer Drug Coupon Example There’s the basic coupon, which doctors and druggists sometimes hand out, or patients can find them online. The industry calls them “pay-no-more” cards, telling patients they will pay no more than, say, $50 for their prescription. Discounts vary by therapeutic class with some drugs carrying larger discounts than others. Some work like loyalty programs. A patient can get a certain number of drugs for free after they’ve bought so many. That’s sort of like accumulating points for a free massage at a nail salon. Then there are e-vouchers in which a prescription is sent from the pharmacist through a switch vendor that may provide other financial support to the patient. The drug maker…