Author: Tyrone Squires, MBA, CPBS

This author has written 1305 articles

10 Things To Know About Specialty Drug Spending

Over 25 percent of prescription drug spending in the U.S. was attributable to specialty drug costs in 2013, and specialty drug spending is expected to grow by more than 60 percent by the end of 2015, according to a recent report by HealthPocket.
 
Here are 10 things to know about specialty drug pricing.
 
1. Nearly 70 percent of Food and Drug Administration approvals in 2013 were for specialty drugs, according to PwC’s Health Institute’s annual medical cost trend report for 2015.
 
2. Specialty drug spending is projected to reach $192.2 billion by 2016, a 121 percent increase from the $87.1 billion in 2012, according to PwC’s Health Institute’s annual medical cost trend report for 2015.
 
3. In a survey by the Morning Consult, 60 percent of respondents said they were concerned with the high price of specialty drugs and afraid they would not be able to afford them in the future.
 
4. The high price tag of some specialty drugs, including Gilead Sciences’ hepatitis C drug Sovaldi, have received Congressional scrutiny.
 
5. In July, Sens. Ron Wyden (D-Ore.) and Chuck Grassley (R-Iowa) sent a letter to Gilead seeking an explanation for Sovaldi’s $1,000 a pill price.
 
6. The vast majority of Americans (82 percent) believe charging $1,000 a pill is “unacceptable,” according to the Morning Consult survey.
 
7. When the four metal categories — bronze, silver, gold, and platinum — were compared, out-of-pocket specialty drug costs for platinum plans were the lowest, according to the HealthPocket report.
 
8. The out-of-pocket cost for specialty drugs for those with platinum plans was 64 percent lower than those with gold plans, 74 percent lower than those with silver plans, and 78 percent lower than those with bronze plans, according to the HealthPocket report.
 
9. The average annual out-of-pocket cost for a 30-year-old bronze plan enrollee taking specialty drugs is $9,568.78, while the average cost for a platinum enrollee of the same age is $6,670.70, according to the HealthPocket report.
 
10. Bronze plans do not always lead to the most out-of-pocket costs for specialty drugs, as there are some bronze plans with lower annual out-of-pocket costs than some silver and gold plans. For example, a 50-year-old bronze plan enrollee taking specialty drugs has average out-of-pocket costs totaling $11,396.44, while the average silver plan enrollee of the same age spends an average of $11,583.55, according to the HealthPocket report.
 

Reference Pricing: Pharmacy Invoice Cost (ACTUAL) for Top Selling Generic and Brand Prescription Drugs

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.

[Complimentary Webinar] click here to register: “How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels.”

Reference Pricing: Pharmacy Invoice Cost (ACTUAL) for Top Selling Generic and Brand Prescription Drugs

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.

[Complimentary Webinar] click here to register: “How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels.”

Prescription drug tiers can’t handle all budget woes, study shows

Over the years, insurers have tried–with varying degrees of success–to rein in prices and moderate the costs of prescription drugs. But to ensure consumers can afford specialty tier drugs, a new issue brief from the Robert Wood Johnson foundation recommends payers team up with state and federal regulators to combat the soaring prices.
The most commonly-used method to emerge from the prescription drug-cost debate involved benefit tiers, according to the brief. Early on, the idea was fairly simple. The design was two-tiered, with generic drugs on the first tier (and lower copayments) and brand name drugs on the second tier (and higher copayments).
But soon came the addition of a third tier, often more expensive alternatives to the first and second tier drugs, with some plans offering as many as six tiers. For individuals with a chronic or serious disease, regulators examine the drug costs for who needs them the most, and whether the tiered model violates the anti-discrimination provision of the Affordable Care Act, the authors of the report write.
Many states introduced legislation to limit cost-sharing for specialty drugs. Delaware and Maryland, for example, have a $150 cap for a 30-day supply of a single-specialty tier drug. On the federal level, U.S. Rep. David B. McKinley (R-WV) introduced an initiative this past February to establish cost-sharing limits for health plans that cover prescription drugs, notes the report.

What’s more, because insurers put certain pricey prescription drugs in specialty tiers that require members to pay more for them, which may discourage consumers with pre-existing conditions from enrolling in their plans, advocacy groups call for measures to recognize possible discrimination, the report notes.

Reference Pricing: Pharmacy Invoice Cost (ACTUAL) for Top Selling Generic and Brand Prescription Drugs

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.
 

Reference Pricing: Pharmacy Invoice Cost (ACTUAL) for Top Selling Generic and Brand Prescription Drugs

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 here to register for: “How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels.”

Insurance Industry, Consumers Join Forces to Fight High Prices of Specialty Drugs

Here’s the next salvo in the back and forth between insurers and the drug industry over drug prices: the Pharmaceutical Research and Manufacturers of America are pushing the Department of Health and Human Services to take action to protect consumers who have gained insurance via the health law’s online marketplaces from high, out-of-pocket costs for specialty drugs.
Specialty drugs are most often prescribed for complex, chronic and often costly health conditions like rheumatoid arthritis and hepatitis C that require continuous monitoring by a health care provider.
At a June 11 press event, PhRMA, the drug industry’s trade association, and five patient advocacy groups, ranging from the Colon Cancer Alliance to the Immune Deficiency Foundation, pointed to an analysis by the consulting firm Avalere Health — commissioned by PhRMA — as reason for worry regarding these medicines.
Avalere Study Did Not Include Medicare Part D Drug Plans; May Impact Costs
The analysis by Avalere Health found that the vast majority of plans in the Health Insurance Exchanges require relatively high cost sharing for all medicines in at least one class. The study did not include Medicare Part D plans but did include Medicaid managed care plans.
But, can increase costs in Medicare, says the Campaign for Sustainable Rx Pricing:
“The issue of higher cost drugs, especially “specialty drugs”, is only going to become more critical to deal with in the coming years. One estimate notes that by 2020, spending on specialty drugs will quadruple from $87 billion to more than $400 billion. This continued growth in spending will put significant upward pressure on premiums in the private marketplace as well as in public programs like Medicare.”
The Avalere study examined 123 formularies from silver-level exchange plans — the benchmark plan that will generally pay 70 percent of covered medical expenses, leaving the consumer responsible for 30 percent  – and found that a fifth of them required cost sharing of 40 percent or more for certain classes of specialty drugs used to treat HIV/AIDS, multiple sclerosis, bipolar disorder, cancer and other illnesses.
Avalere also concluded that 60 percent of silver plan formularies placed all medications for multiple sclerosis, Crohn’s disease, cancer and other illnesses in the plan’s highest formulary tier. That means patients who need these medicines would face the highest coinsurance percentage.
PhRMA President John Castellani called on HHS to limit insurers’ ability to structure drug coverage in a way that subjects patients with these types of chronic and severe illnesses from these type of high out-of-pocket costs. To continue reading click here.
By Lisa Gillespie, Kaiser Health News

Reference Pricing: Pharmacy Invoice Cost (ACTUAL) for Top Selling Generic and Brand Prescription Drugs

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 here to register for: “How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels.”