The malevolence of all health care sectors

The fundamental attribute of nearly all the major health care sectors is the relentless pursuit of profit without consideration of the larger social consequences.  Some may call that "amoral greed," but the reader can apply his/her own terms.  Add to this reality the fact that some health care competitors also act in a manner that is clueless, while others exhibit varying levels of laziness, arrogance and spinelessness. Consider the payer segment of health care.  These are mainly the public and private insurers and the self-funded employers that provide coverage for most Americans.  An unstated but implicit message of several postings here is that unless pharma gets its strategic orientation in order and brings its public-be-damned pursuit of profit under control, the payers will give them a thrashing. That would seem to follow because the premise behind both Obamacare, as well as the private health care market, consists of giving payers de facto charge over system.  The Affordable Care Act/Obamacare does it by requiring everyone to get health insurance.  The thinking there was that this would oblige payers to justify their place in the system by controlling costs and improving quality as a result of constraining providers and manufacturers. Any lingering notion that an insurance/payer-driven approach could work in the U.S. now seems increasingly improbable because most private insurers decline to take the initiatives required of them if they are to push American health care toward an affordable, effective system. An example of that comes from sources at several large health insurers, including some Blue Cross/Blue Shield companies.  They make the point that their managements either remain indifferent to pharma pricing or mistakenly see it as benign. Rather than actively managing their populations, their participating providers and the health care manufacturers, the insurers prefer to operate in the old, insurance sales mode of passively making money on the float while allowing costs to escalate.  By and large, they feel their recourse lies in passing higher costs along to policy holders in the form of premium increases. A source at one BC/BS said his colleagues rarely even give any thought to pharma because they outsource that concern to their Pharmacy Benefits Management (PBM) company.   Another health insurance manager related the astounding fact that his company's director of strategic planning actually considers pharma as a constructive force for controlling health care costs. This strategic planner told the people reporting to him that their company's absolute amount of “medical loss” over the past couple of years has remained fairly level.  At the same time, the relationship among the factors contributing to those medical loss expenses has changed, so that hospital expenses have declined as a percentage of the total, while pharma costs have risen substantially. Demonstrating an incredible piece of fallacious, post hoc reasoning, the planning director then concluded that spending more on pharma decreases the larger amounts paid to hospitals. For that reason, he sees rising pharma expenditures as a good thing! Even those private payers not challenged by basic logic shrug…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Should Specialty Drugs Be Shifted From Medical to Pharmacy Benefit?

Specialty drugs have been a house divided. Oral medications have been managed under the pharmacy benefit while medications that are infused or injected have been managed as a medical benefit. Self-injected medications have been a muddle, landing on both sides of the benefit divide. Common sense and convenience recommended this arrangement. If health plans and other payers were paying providers under the medical benefit for injection and infusion services, why not cover drug being injected or infused as part of the same claim? Besides, specialty drugs have been a secondary concern, so the medical–pharmacy benefit split just hasn’t been that big a deal. Until recently, oral medications have been the category in need of management, and they are clearly the province of the pharmacy benefit, accounting for the lion’s share of pharmacy expenditures. And the oncologists, rheumatologists, and other specialists who regularly prescribe and administer specialty drugs haven’t been complaining. When they buy medications and bill for them, that has added an income stream into their practice. For some, that stream has turned into a torrent as the number and cost of the specialty drugs has increased. Now that specialty drugs have become budget busters, health plan executives and pharmacy benefit managers are questioning the wisdom of covering specialty drugs in two different ways and, more particularly, whether more medications should be moved from the medical benefit to the pharmacy benefit as one way to rein in costs. According to the 10th edition of EMD Serono’s Specialty Digest, the switch is under way. A survey of 91 health plans that provided the data for the digest found a significant shift to the pharmacy benefit for the medications for hemophilia, respiratory syncytial virus, and, as a group, the intravenous immune-modulating medications for rheumatoid arthritis, Crohn’s disease, and psoriasis (figure, below). Shift from medical benefit to pharmacy benefit (2011, 2013) % of plans with RX benefit coverage Source: EMD Serono Specialty Digest, 10th Edition Moving medications to the pharmacy benefit won’t win prizes for innovation or box-departing thinking. The fact is that it has been talked about for years. Patrick Gleason, PharmD, director of health outcomes for Prime Therapeutics, the Minnesota-based pharmacy benefit manager, says there have been fewer changes than all the talk might suggest: “It isn’t so simple. That’s why it hasn’t happened very much.” Four advantages There have been some early adopters, such as Blue Cross & Blue Shield of Rhode Island (BCBSRI). The insurer acted well before the current trend, moving many specialty medications over to the pharmacy benefit six years ago. BCBSRI contracts with Walgreens to supply and help to manage the specialty medications, while Catamaran pays the claims as the pharmacy benefit manager. Control of the formulary stays with the health plan, says Donna Paine, PharmD, MBA, a specialty pharmacy program manager for Blue Cross & Blue Shield of Rhode Island: “It’s our formulary. It’s our criteria for coverage.” Four themes emerge when Paine and others talk about the advantages of moving specialty drugs to the…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

When It Comes to New Drugs, If Providers and Payers Snooze, They Lose

Three conditions — hepatitis C, diabetes, and cancer — show how budgets can be busted (and patients harmed) if providers and payers don’t astutely manage the use of costly new drugs Every profession has its maxim for survival. For academics, it’s “Publish or perish.” For lawyers, it’s “Bill or move on.” What should the maxim be for employer and health plan executives in charge of providing and paying for prescription coverage benefits?  Recent drug developments make the answer clear: Monitor — and comprehensively address — marketplace changes or imperil your plan’s assets and your participants’ health. Too long for a bumper sticker, for sure. Perhaps “You snooze, you lose” might be better. But regardless of the maxim’s length and pithiness, what’s clear is that in the fast-changing, high-cost prescription drug market, pharmacy benefit managers (PBMs) and payers must continually monitor and quickly and wisely respond to new drug developments. A look at three therapeutic categories proves the point. The continual stream of new drugs for hepatitis C, diabetes, and cancer has created astronomical cost exposure for payers. Therefore, PBMs and payers must scrutinize all drugs, determine those few that have demonstrated they are better than less expensive alternatives, and then implement well-grounded formulary decisions and effective prior authorization, step therapy and quantity limit programs. If payers are to control their costs, they must also ensure that their PBMs are providing and passing through the strongest available discounts and rebates, maximizing the benefit of coupons, and taking full advantage of patient-assistance programs. High cost of new diabetes, cancer drugs Eight of the newly approved drugs during the past two years were for diabetes, including four last year: Farxiga (in January), Tanzeum (in April), Jardiance (in August), and Trulicity (in September). Those approvals followed FDA approvals in 2013 for Invokana, Kazano, Nesina, and Oseni. Given that about 29 million Americans have diabetes — and that several manufacturers launched extensive promotional campaigns for their new diabetes drugs — large numbers of plan beneficiaries are already taking these drugs. However, all these drugs are far more expensive than the tried-and-true generic diabetes medications, including metformin and the three sulfonylureas (glyburide, glimepiride, and glipizide). The generics may cost health plans from $4 to $50 per 30-day prescription. The new drugs are likely to cost several hundred dollars for the same treatment period. Comparing the average wholesale price (AWP) by unit: For metformin, the unit AWP ranges from $0.70 to $1.44 (depending on dosage level); for Jardiance, it’s $12.04; and for Invokana and Farxiga, it’s $12.48. Drugs to treat cancer are also putting enormous financial pressures on health plans, patients, and their families. According to a recent newspaper investigation, the FDA approved 54 new cancer drugs during the past decade. Those drugs had an average monthly cost of $10,000, with four priced at more than $20,000 and one at $40,000 (Fauber 2014). While politicians, providers, and payers raised a hue and cry about Sovaldi’s $1,000-a-day price tag, there’s been barely a murmur about the cost of…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

The Makings of a Good Drug Formulary

A formulary is a list of drugs favored by the PBM for their clinical effectiveness and cost savings. Pharmaceutical manufacturers of specialty and branded drugs often promise financial incentives to have their drugs featured on the formulary. Drug formularies can be open, incented, or closed. An open formulary is a list of recommended drugs. Under this structure, most drugs are reimbursed irrespective of formulary status. However, the client’s plan design may exclude certain drugs (e.g., OTC, cosmetic and lifestyle drugs). Physicians, pharmacists, and members are encouraged by PBMs via mailings, electronic messaging, and other means to prescribe and dispense formulary drugs. An incented formulary applies differential co-pays or other financial incentives to influence patients to use, pharmacists to dispense, and physicians to write prescriptions for formulary products. A closed formulary limits reimbursement to those drugs listed on the formulary. Non-formulary drugs are reimbursed if the drugs are determined to be medically necessary, and the member has received prior authorization. In general, self-insured employers and insurance carriers outsource both administrative and clinical services to a PBM. Managed care organizations (MCOs) and some insurers may elect to retain formulary and clinical control, including manufacturer contracting, and outsource only administrative services such as claims processing and benefit administration to a PBM.   There are five factors necessary for a drug formulary to work effectively. These include:  Example of a tiered formulary (click to enlarge)  1. An enforcement mechanism 2. A specific (tiered) list of drugs 3. Understanding how the drugs are assessed 4. A firm dispute resolution process 5. An expedited appeal process An enforcement mechanism is particularly important. Certain drugs require prior authorization before they are covered under the drug benefit. Prior authorization is the pre-approval of a drug by the PBM before a pharmacy can dispense it. Currently, prior authorization of prescriptions is used only for a few chosen drugs. These are drugs that are very expensive and have major off-label uses not approved by the FDA, such as growth hormones, or drugs that require medical justification before coverage is approved, such as Viagra or Cox-2 Inhibitors. Before authorizing dispensing of one of these drugs, the PBM may ask the physician about diagnostic tests, symptoms, and other clinical measures that would establish the appropriateness of the drug according to evidence-based protocols. If the physician can’t produce the evidence it is unlikely the PBM will reimburse the pharmacy for dispensing the drug. In addition, PBMs use co-pays as a mechanism to shift some responsibility of utilization to the member by making them sensitive to the cost of their utilization. Co-pays are also used to provide incentives to encourage the use of generics or formulary drugs. There needs to be consensus among stakeholders involved in constructing a drug formulary. The biggest contributor to success is that all stakeholders in the system are part of the process. If the formulary is developed solely by the PBM, without any input from the payer, it's unlikely the payer will fully benefit from the improved patient outcomes and cost-containment opportunities a formulary exists…

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: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]