FTC Reverses Course on Previous Endorsement of Pharmacy Benefit Intermediaries and other notes from around the interweb:

• FTC Reverses Course on Previous Endorsement of Pharmacy Benefit Intermediaries. The FTC on Thursday plans to walk back years of advocacy in support of the entities that manage prescription drug coverage—support that analysts say has helped fuel the growth and market integration the agency is now investigating. The agenda for the Democratic-controlled Federal Trade Commission’s open meeting includes voting on a statement that would withdraw prior advocacy statements against state legislation aimed at boosting transparency, as well as studies related to pharmacy benefit managers that the FTC said, “no longer reflect current market realities.” The agency declined to provide specifics on the statement ahead of the meeting but said the vote is a direct response “to PBMs’ continued reliance on older FTC advocacy materials that opposed mandatory PBM transparency and disclosure requirements.” A former top FTC policy official and other antitrust analysts said this includes several statements the FTC issued primarily in the early 2000s against state legislation that would have required PBMs to disclose certain information about their business practices and finances to state governments. The entities manage drug coverage on behalf of health plans and others.

• Employers are suing their health plan for claims data in increasing numbers. Lawsuits from large companies and employers are increasingly being filed against third-party health plan administrators to access complete employee medical claims data. Through lawsuits recently filed against Aetna, Elevance Health and BCBS Massachusetts, employers claim payers have breached their fiduciary duties by not allowing complete access to claims data and how claims are processed. In a June 30 complaint, Kraft Heinz alleged Aetna has used its role as its TPA “to enrich itself to Kraft Heinz’s detriment” through undisclosed fees and processing medical and dental claims without human review. In December, bricklayer and metal worker unions filed a lawsuit against Elevance Health, alleging the payer does not allow self-insured plans to access their own claims data and charges the plans higher rates than it had negotiated with hospitals. A labor union in Massachusetts sued BCBS Massachusetts in April over similar allegations. These lawsuits are largely being driven by the Consolidated Appropriations Act and the hospital price transparency rule that took effect in 2021, according to a July 6 Bloomberg Law report.

• Playbook for Employers – Addressing PBM Misalignment. The guide, released by the National Alliance of Healthcare Purchaser Coalitions, identifies several key strategic recommendations that employers can adopt when looking to better navigate their relationship with PBMs. For one, the playbook recommends that employers find advisers that are genuinely putting in the work for them. Advisers should be independent and transparent, according to the guidebook, and contracts should be designed to ensure that PBMs act in the employer’s best interest. “As we uncover these increasingly apparent anomalies, I think we’ve got to challenge ourselves to do better and most importantly require that our advisers, our middlemen and our intermediaries do better on our behalf,” Mike Thompson, CEO of the alliance, told Fierce Healthcare.

• STAT News investigation takes deep dive into PBM broker conflicts of interest. Employers across the country — from big names like Boeing and UPS to local school systems — pay consulting firms to handle a straightforward task with their prescription drug coverage: Get the best deals possible, and make sure the industry’s middlemen, known as pharmacy benefit managers, aren’t ripping them off with unfair contracts. But a largely hidden flow of money between major consulting conglomerates and PBMs compromises that relationship, a STAT investigation shows. Some consulting firms often are getting paid more — a lot more — by the PBMs and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.

The evolving relationship between self-funded employers and their third-party administrators within the US healthcare system is underlined by the Consolidated Appropriations Act of 2021. This act provides employers with enhanced access to claims data. Highlighted within this context are two significant lawsuits. Kraft Heinz and two unions have taken legal action against health insurance providers. A CAA-Compliant Checklist will help self-funded companies avoid similar actions.

Central to these lawsuits are allegations that the providers have not fully adhered to the law’s requirements. It is mandated that employers must have unrestricted access to their de-identified claims data. Accusations levelled at the providers suggest they have supplied selective and edited claims data. Consequently, employers find it challenging to assess the integrity of payment associated with the management of their plans’ funds.

Additional allegations against Aetna include wrongful retention of millions in undisclosed fees, payment of millions of dollars in provider claims that should not have been paid, and misconduct related to claims processing. These actions have been to the detriment of Kraft Heinz.

CAA-Compliant Checklist for HR Leadership Teams

These lawsuits could potentially mark the beginning of a wave of similar legal actions. Stakeholders in the healthcare industry and employers who do not undertake proper reviews of their health plans could face significant implications.

Advice to employers includes conducting an in-depth review of their advisors. This includes consultants, brokers, third-party administrators, and pharmacy benefit managers (PBMs). The aim is to understand if there are any conflicts of interest. It is suggested that employers establish fiduciary committees to review contracts and the spending of health plans.

Employers are warned of the risk of being sued by their own employees if they fail to meet their fiduciary responsibilities. In summary, this discussion raises serious concerns about transparency and fiduciary duties in the management of healthcare plans. It also highlights potential legal repercussions for employers and third-party administrators.

Understanding PBM Key Performance Indicators (KPIs) is crucial for HR and finance leaders. KPIs provide measurable and actionable insights into PBM performance, progress, and success. Furthermore, KPIs serve as quantifiable metrics that help assess the effectiveness and efficiency of PBM pricing and clinical programs. Mastering pharmacy benefit management (PBM) KPIs is crucial for the following reasons:

Performance Evaluation: KPIs provide a standardized and objective way to evaluate PBM performance at member, departmental, or organizational levels. By setting clear KPIs, HR and their consultants can monitor progress, identify strengths and weaknesses, and make data-driven decisions to improve performance.

Goal Setting and Alignment: KPIs play a crucial role in establishing SMART goals—specific, measurable, achievable, relevant, and time-bound. By offering a clear sense of direction, KPIs effectively channel efforts towards desired outcomes. When HR fully understands the KPIs, they can concentrate their actions and allocate resources to the areas of utmost importance, thereby facilitating the accomplishment of strategic objectives.

Decision Making: KPIs provide valuable insights that assist in making informed decisions. By tracking relevant KPIs, employee benefit brokers, consultants, and self-funded organizations gain visibility into what is working and what needs improvement. KPIs enable data-driven decision-making, helping to prioritize initiatives, allocate resources effectively, and adjust when required.

Continuous Performance Monitoring: KPIs serve as monitoring tools that allow individuals and organizations to track progress over time. Regularly reviewing KPIs helps identify trends, patterns, and areas of concern. By analyzing KPI data, organizations can identify bottlenecks, inefficiencies, or underperforming areas and take proactive measures to address them, leading to continuous improvement. Continuous performance monitoring is best done with software automation that doesn’t rely on PBM self-reporting.

Accountability and Transparency: KPIs promote accountability by clearly defining expectations and responsibilities. When KPIs are well-defined and understood, PBM and HR teams know what is expected of them. This fosters a sense of ownership and responsibility, leading to improved performance. Furthermore, transparently sharing KPI data within an organization promotes a culture of transparency, enhances communication, and enables collaboration.

Benchmarking and Performance Comparison: KPIs facilitate benchmarking by allowing organizations to compare their performance against industry standards, competitors, or their own historical data. Benchmarking helps identify areas where an organization is lagging or excelling, providing insights for improvement or potential areas of competitive advantage.

Communication and Stakeholder Management: KPIs provide a common language for communicating performance to stakeholders, whether they are employees, management, investors, or customers. Clear and well-defined PBM KPIs help stakeholders understand the progress, achievements, and challenges faced by an organization, fostering trust, and facilitating effective communication.

To ensure a successful relationship with their Pharmacy Benefit Manager (PBM), the self-insured organization and their advisors must possess a comprehensive understanding of their objectives and the competitive landscape. Additionally, they should be capable of compelling the PBM to provide pertinent information about essential services. Evaluating PBM transparency is best accomplished by a trained individual who possesses intimate knowledge of the buyer’s desired benefits and disclosure objectives. Pharmacy Benefit Managers will offer openness and disclosure to the extent that the competitive market requires them to do so, and they often depend on demands for information from potential customers when negotiating their contracts.

In summary, understanding PBM Key Performance Indicators (KPIs) is essential for individuals and organizations to monitor performance, set goals, make informed decisions, foster accountability, and drive continuous improvement. By leveraging KPIs effectively, self-insured organizations can enhance their competitiveness, achieve their objectives, and adapt to the ever-changing pharmacy benefit management landscape.

Playbook for Employers – Addressing PBM Misalignment and other notes from around the interweb:

• Playbook for Employers – Addressing PBM Misalignment. The guide, released by the National Alliance of Healthcare Purchaser Coalitions, identifies several key strategic recommendations that employers can adopt when looking to better navigate their relationship with PBMs. For one, the playbook recommends that employers find advisers that are genuinely putting in the work for them. Advisers should be independent and transparent, according to the guidebook, and contracts should be designed to ensure that PBMs act in the employer’s best interest. “As we uncover these increasingly apparent anomalies, I think we’ve got to challenge ourselves to do better and most importantly require that our advisers, our middlemen and our intermediaries do better on our behalf,” Mike Thompson, CEO of the alliance, told Fierce Healthcare.

• STAT News investigation takes deep dive into PBM broker conflicts of interest. Employers across the country — from big names like Boeing and UPS to local school systems — pay consulting firms to handle a straightforward task with their prescription drug coverage: Get the best deals possible, and make sure the industry’s middlemen, known as pharmacy benefit managers, aren’t ripping them off with unfair contracts. But a largely hidden flow of money between major consulting conglomerates and PBMs compromises that relationship, a STAT investigation shows. Some consulting firms often are getting paid more — a lot more — by the PBMs and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.

• FTC adds a third GPO to its investigation into pharmacy benefit managers. The Federal Trade Commission is building out its deep dive into the pharmacy benefit management industry yet again. The agency said Thursday that it has sent an order to the group purchasing organization Emisar Pharma Services, requiring it to provide information and records pertaining to its business practices. The order follows similar missives sent to two other GPOs, Zinc Health Services and Ascent Health Services, last month. Emisar negotiates rebates with drugmakers on behalf of Optum Rx, a UnitedHealth Group subsidiary and one of the three largest PBMs. The FTC said its order to Emisar is “substantially similar” to those issued to Zinc and Ascent.

• Report: “Specialty” Drugs are by Far the Most Expensive, but Classification Seems Arbitrary. The prescriptions with the most astonishing price tags — like cancer meds that can cost more than $20,000 a month — are usually classified as “specialty” drugs. You’d think that since they’re so costly, there would be clear criteria for putting drugs in the specialty category. But, according to a new report, you’d be wrong. The issue might seem arcane, but it’s hugely important. Specialty drugs account for only about 2% of the volume of drugs dispensed in the United States, according to industry estimates, but they also account for more than 50% of overall drug spending. The report, by data analysis firm 46Brooklyn Research, found that the three largest drug middlemen in the United States often don’t classify the same medicines as specialty. It also said that a substantial portion of the ones they do put into that category are generics — drugs that are usually no longer under patent and thus are supposed to be cheaper because multiple drugmakers can supply them.

A professional certification in employee benefits offers a range of advantages that can positively impact an individual’s career and professional growth. Here are some key advantages of obtaining a professional certification in employee benefits:

1. Enhanced Credibility and Recognition: A certification demonstrates your expertise and validates your skills in a specific field or industry. It serves as an official recognition of your knowledge and competence, boosting your credibility among employers, colleagues, and clients.
2. Career Advancement: Certifications often serve as a differentiating factor in a competitive job market. They can provide you with a distinct advantage over candidates who lack the same credentials, increasing your chances of landing a job or earning a promotion.
3. Skill Development and Knowledge Expansion: Pursuing a certification requires dedicated study and preparation. Through this process, you acquire new knowledge and develop specialized skills that are highly relevant to your profession. This ongoing learning can help you stay updated with the latest industry trends and advancements.
4. Expanded Professional Network: Certification programs often involve interacting with professionals from diverse backgrounds who share a common interest. This enables you to build valuable connections and expand your professional network, opening doors to new opportunities, collaborations, and mentorship.
5. Increased Earning Potential: Certified professionals generally command higher salaries compared to their non-certified counterparts. Employers recognize the value of certifications and are willing to compensate individuals who possess specialized skills and knowledge.
6. Industry Recognition and Standards Compliance: Certain industries have established standards and regulations that require professionals to hold specific certifications. Acquiring these certifications ensures that you are in compliance with industry norms and can provide services or perform tasks that meet recognized standards.
7. Continuous Professional Development: Many certifications require ongoing education or recertification, ensuring that certified professionals stay up to date with the latest developments in their field. This commitment to continuous learning helps professionals maintain their expertise and adapt to evolving industry requirements.
8. Personal and Professional Growth: Pursuing a certification demonstrates your commitment to personal and professional growth. It showcases your dedication, perseverance, and willingness to invest in yourself, which can boost your self-confidence and provide a sense of accomplishment.

While professional certifications in employee benefits offer numerous advantages, it’s important to choose certifications that align with your career goals and the demands of your industry. Conduct thorough research, consider your professional aspirations, and assess the value that a specific certification can bring to your career path.

The Market Demands Transparency and Perhaps a Whole Lot More and other notes from around the interweb:

• Site-of-Care Shock Looms for Infusion Services. Infusion therapy site-of-care (SOC) management policies imposed by third-party payors are driving an increasing number of infusion patients out of hospital outpatient departments (HOPDs). That’s not surprising, given the $6 billion size of this market. So, where will these patients go instead? Two SOC experts sought to answer that question during a session at the 2023 MHA Business Summit. “HOPD infusions cost on average 70% more than a physician’s office for the same infusion,” said Jacob Wiesenthal, a consultant to healthcare consultancy Recon Strategy, citing data from the Magellan Pharmacy Trend Report. But because many patients on long-term infusion therapy are often extremely sick and the treatments hard to tolerate, requiring clinical support nearby, he noted that employers and payors have not historically pushed to shift SOC for these cases, instead pursuing less risky cost-cutting opportunities. “As a pharmaceutical therapy typically covered under the medical benefit, infusion has also tended to fall through the cracks of expertise between the health plan and the pharmacy benefit manager [PBM].

• The Market Demands Transparency and Perhaps a Whole Lot More. Even though the original purpose of PBMs was to reduce the cost of prescription drugs and to keep drugs affordable, the current nationwide debate is whether PBMs do in fact lower drug prices and make them more affordable and accessible. Because PBMs have historically not been regulated, there was a lack of transparency in how PBMs operated. Multiple state and federal lawsuits have been commenced against PBMs for overcharging public programs for drugs, unjust enrichment, misrepresentation, fraud, and failure to meet ethical and safety standards. Many of these actions have already resulted in hundreds of millions of dollars in damages to providers, plans, patients, and States, while others are still ongoing. The opaque nature of PBM corporate ownership and control, as well as the confidential arrangements with key players in the health care delivery system are speculated to be causing increases in drug and medication prices without a clear and justifiable reason. What’s more, the historical lack of transparency hampers the ability of policymakers to effectively respond to the high and escalating pharmaceutical costs.

• FTC adds a third GPO to its investigation into pharmacy benefit managers. The Federal Trade Commission is building out its deep dive into the pharmacy benefit management industry yet again. The agency said Thursday that it has sent an order to the group purchasing organization Emisar Pharma Services, requiring it to provide information and records pertaining to its business practices. The order follows similar missives sent to two other GPOs, Zinc Health Services and Ascent Health Services, last month. Emisar negotiates rebates with drugmakers on behalf of Optum Rx, a UnitedHealth Group subsidiary and one of the three largest PBMs. The FTC said its order to Emisar is “substantially similar” to those issued to Zinc and Ascent.

• Report: “Specialty” Drugs are by Far the Most Expensive, but Classification Seems Arbitrary. The prescriptions with the most astonishing price tags — like cancer meds that can cost more than $20,000 a month — are usually classified as “specialty” drugs. You’d think that since they’re so costly, there would be clear criteria for putting drugs in the specialty category. But, according to a new report, you’d be wrong. The issue might seem arcane, but it’s hugely important. Specialty drugs account for only about 2% of the volume of drugs dispensed in the United States, according to industry estimates, but they also account for more than 50% of overall drug spending. The report, by data analysis firm 46Brooklyn Research, found that the three largest drug middlemen in the United States often don’t classify the same medicines as specialty. It also said that a substantial portion of the ones they do put into that category are generics — drugs that are usually no longer under patent and thus are supposed to be cheaper because multiple drugmakers can supply them.

The PBM industry is saturated with different business models, each claiming to save plan sponsors money and improve pharmacy benefit plans. However, there is one crucial aspect that none of them openly share with employers: the amount of money they are making from their groups. Only fiduciary or radically transparent PBM models are willing to disclose this information. It’s time to face the reality that traditional, pass-through, and transparent PBM models are essentially the same, failing to reveal the true extent of the PBMs’ profits from servicing your group. A guide to identifying a pass-through pharmacy benefit manager (PBM) is provided below.

Consider this for a moment: the contracts between pharmacy benefit managers, pharmaceutical manufacturers and/or pharmacies are usually fixed. Unless a PBM significantly exceeds the terms of the contract, it remains unchanged until its expiration. For a PBM to outperform such a contract, it would require a substantial increase in the number of covered lives, for instance. This leads us to a crucial realization. When plan sponsors negotiate during renewal, they are essentially deciding how much of the secured discounts they will allow the PBM to retain.

The amount of revenue retained by the PBM is known as the service or management fee, which essentially represents the cost of the services provided by the PBM. These service fees heavily influence the per member per month (PMPM) or per employee per year (PEPY) costs. While rebates, and discount guarantees are important, they often serve as distractions, diverting purchasers’ attention from a key driver of their final plan costs—the PBM service fees. A trained eye is crucial as it possesses the expertise and discernment to recognize and interpret intricate contract details or nuances that may elude the untrained observer, leading to more accurate and insightful observations or judgments. Take our knowledge assessment to uncover where you stand.

It’s important not to confuse the service fee with the administrative fee. The service fee is the amount the PBM keeps as profit after settling its bills, while the administrative fee is usually a quantifiable fee per claim, per employee per month (PEPM), or per member per month (PMPM). However, the latter administrative fee I refer to is distinct from the manufacturer admin fee or rebate, which is a separate topic altogether. In many cases, non-fiduciary PBMs offer artificially low administrative fees, knowing well that accepting them essentially grants them a blank check for service fees.

Pass-through and transparent PBM models fail to disclose the actual amount of their service fees, which is a significant problem. Unlike administrative fees, service fees are not easily quantifiable, primarily because non-fiduciary PBMs intentionally keep this information hidden to conceal their impact on costs. On the other hand, PBMs that operate under a full-disclosure or fiduciary model willingly share the service fee or the portion of negotiated discounts they will retain with employers. The lower this fee, the less employers will pay—plain and simple. A fair PBM service fee can effectively curb cost trends. Non-fiduciary PBM companies have become adept at exploiting the purchasing power of unsophisticated plan sponsors to their financial advantage.

Many plan sponsors mistakenly focus on “AWP minus discount” and the “minimum rebate guarantee” as the key factors when evaluating PBM proposals. However, it is crucial for plan sponsors to examine the cash flows to the PBM. PBM cash flow, often overlooked, can have the most significant impact on final costs. Shifting the primary metric for evaluating PBM proposals to what employers pay the PBM, or the service fee, is a groundbreaking idea. A fiduciary PBM is willing to provide this level of transparency. If a PBM claims to be pass-through but fails to offer such transparency, it is, at the very least, presenting only half-truths. A guide to identifying a pass-through pharmacy benefit manager (PBM) must address the PBM earnings after cash disbursements or EACD.

There are two aspects that should be non-negotiable for purchasers of PBM services. First, full access to their own claims data, free of charge, via Secure File Transfer Protocol (SFTP). Additionally, it is imperative for employers to have full transparency regarding the fees they are paying to PBMs for the services they were hired to provide. In the words of Alvin Toffler, a renowned futurist, “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” The Toffler quote emphasizes the significance of education as the logical and effective foundation for achieving exceptional outcomes in pharmacy benefit management services.

Site-of-Care Shock Looms for Infusion Services and other notes from around the interweb:

• Site-of-Care Shock Looms for Infusion Services. Infusion therapy site-of-care (SOC) management policies imposed by third-party payors are driving an increasing number of infusion patients out of hospital outpatient departments (HOPDs). That’s not surprising, given the $6 billion size of this market. So, where will these patients go instead? Two SOC experts sought to answer that question during a session at the 2023 MHA Business Summit. “HOPD infusions cost on average 70% more than a physician’s office for the same infusion,” said Jacob Wiesenthal, a consultant to healthcare consultancy Recon Strategy, citing data from the Magellan Pharmacy Trend Report. But because many patients on long-term infusion therapy are often extremely sick and the treatments hard to tolerate, requiring clinical support nearby, he noted that employers and payors have not historically pushed to shift SOC for these cases, instead pursuing less risky cost-cutting opportunities. “As a pharmaceutical therapy typically covered under the medical benefit, infusion has also tended to fall through the cracks of expertise between the health plan and the pharmacy benefit manager [PBM].

• The Consolidated Appropriations Act and PBM Transparency. Pharmacy Benefit Managers (PBMs) have been extending vertical integration in new and unique ways, leading to significant issues for plan sponsors and plans (referred to as “Plans” collectively). In a new and innovative approach, several large PBMs have created an additional layer between themselves and manufacturers to effectively delegate the collection of manufacturer rebates to “rebate aggregators.” Sometimes referred to as rebate GPOs, these mysterious entities include Ascent Health Services, a Switzerland-based GPO that Express Scripts launched in 2019; Zinc, a contracting entity launched by CVS Health in 2020, and Emisar Pharma Services, an Ireland-based entity recently rolled out by OptumRx. Even some of the major PBMs (i.e., the “Big Three” PBMs) sometimes contract with other PBMs’ rebate aggregators for the collection of manufacturer rebates as seen in the case of OptumRx contracting with Express Scripts for rebate aggregation for public employee plans. Worse yet, several of these entities have claimed exemption from the federal GPO Safe Harbor, resulting in a lack of transparency, and few limitations of their profitability.

• FTC adds a third GPO to its investigation into pharmacy benefit managers. The Federal Trade Commission is building out its deep dive into the pharmacy benefit management industry yet again. The agency said Thursday that it has sent an order to the group purchasing organization Emisar Pharma Services, requiring it to provide information and records pertaining to its business practices. The order follows similar missives sent to two other GPOs, Zinc Health Services and Ascent Health Services, last month. Emisar negotiates rebates with drugmakers on behalf of Optum Rx, a UnitedHealth Group subsidiary and one of the three largest PBMs. The FTC said its order to Emisar is “substantially similar” to those issued to Zinc and Ascent.

• Report: “Specialty” Drugs are by Far the Most Expensive, but Classification Seems Arbitrary. The prescriptions with the most astonishing price tags — like cancer meds that can cost more than $20,000 a month — are usually classified as “specialty” drugs. You’d think that since they’re so costly, there would be clear criteria for putting drugs in the specialty category. But, according to a new report, you’d be wrong. The issue might seem arcane, but it’s hugely important. Specialty drugs account for only about 2% of the volume of drugs dispensed in the United States, according to industry estimates, but they also account for more than 50% of overall drug spending. The report, by data analysis firm 46Brooklyn Research, found that the three largest drug middlemen in the United States often don’t classify the same medicines as specialty. It also said that a substantial portion of the ones they do put into that category are generics — drugs that are usually no longer under patent and thus are supposed to be cheaper because multiple drugmakers can supply them.

PBMs have every motive to overcharge since plan sponsors don’t know how to measure how much money they generate from their business. How many companies do you know that wish to halve their revenue? Because of this, traditional pharmacy benefit managers and their stakeholders don’t provide a fiduciary standard of care and instead choose to generate their service fees through hidden cash flow possibilities. Need to know more? Sign up for Demystifying PBM Pricing and Unveiling the Truth Behind Pharmacy Benefit Manager Costs.

Here is what some participants have said about the webinar.

“Thank you, Tyrone. Nice job, good information.” David Stoots, AVP

“Thank you! Awesome presentation.” Mallory Nelson, PharmD

“Thank you, Tyrone, for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners at the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist

A snapshot of what you will learn during this 30-minute webinar:

• Hidden cash flows in the PBM Industry
• Basic to intermediate level PBM terminologies
• Specialty pharmacy cost-containment strategies
• Examples of drugs that you might be covering that are costing you
• The #1 metric to measure when evaluating PBM proposals

Understanding how PBMs make money and how much you pay them for their services is a key element in running an efficient pharmacy benefits program. Join us to learn more.

See you Tuesday, 06/13/22 at 2 PM ET!

Sincerely,
TransparentRx
Tyrone D. Squires, CPBS  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135 
Office: (866) 499-1940
Mobile: (702) 803-4154

P.S. Yes, it’s recorded. I know you’re busy … so register now for Demystifying PBM Pricing and Unveiling the Truth Behind Pharmacy Benefit Manager Costs and we’ll send you the link to the session recording as soon as it’s ready. 

Employers’ New Decision Point: Whether to Cover Expensive Weight Loss Drugs and other notes from around the interweb:

• When is a Smaller AWP Discount Better? Buyers need to be able to select a cheaper product if one is available on the market to save money. It’s common sense. The pharmaceutical business, however, is not your typical market. Many people are prevented from using cheaper biosimilars and forced to pay exorbitant prices for brand name medications because of perverse incentives. Health plans and PBMs now benefit from brand manufacturer price reductions, such as rebates, in return for securing preferred positioning on formularies and excluding cheaper biosimilars from those formularies. The modest uptake of less expensive biosimilar insulin serves as a stark illustration of these processes. As evidenced by statistics from IQVIA, several health plans have continued to favor and promote the use of an expensive brand insulin.

• The Consolidated Appropriations Act and PBM Transparency. Pharmacy Benefit Managers (PBMs) have been extending vertical integration in new and unique ways, leading to significant issues for plan sponsors and plans (referred to as “Plans” collectively). In a new and innovative approach, several large PBMs have created an additional layer between themselves and manufacturers to effectively delegate the collection of manufacturer rebates to “rebate aggregators.” Sometimes referred to as rebate GPOs, these mysterious entities include Ascent Health Services, a Switzerland-based GPO that Express Scripts launched in 2019; Zinc, a contracting entity launched by CVS Health in 2020, and Emisar Pharma Services, an Ireland-based entity recently rolled out by OptumRx. Even some of the major PBMs (i.e., the “Big Three” PBMs) sometimes contract with other PBMs’ rebate aggregators for the collection of manufacturer rebates as seen in the case of OptumRx contracting with Express Scripts for rebate aggregation for public employee plans. Worse yet, several of these entities have claimed exemption from the federal GPO Safe Harbor, resulting in a lack of transparency, and few limitations of their profitability.

• Employers’ New Decision Point: Whether to Cover Expensive Weight Loss Drugs. Thanks to buzzy results and popularity among celebrities, there’s a big spike in demand for GLP-1 drugs, such as Ozempic and Wegovy, as a tool to help people shed pounds. The injectable medications, originally prescribed for diabetes management, have also shown promising results for weight loss. That demand is creating a major decision point for employers: whether their health insurance plans should cover the pricy drugs for weight loss. “It’s a really big issue for employers,” said Dr. Jeff Levin-Scherz, M.D., population health leader at consulting firm WTW. “We’re seeing a pretty dramatic increase in the rate of the prescription of [drugs such as] Ozempic, which is only approved for diabetes but is now showing to be very effective for weight loss.” As a result, employers are thinking about how to handle coverage of the drugs, industry experts say, a decision made more difficult by competing priorities of trying to hold down rising health care costs for themselves while also retaining and wooing talent in an employee-driven job market. Covering desirable drugs for weight loss could help them with the latter.

• Report: “Specialty” Drugs are by Far the Most Expensive, but Classification Seems Arbitrary. The prescriptions with the most astonishing price tags — like cancer meds that can cost more than $20,000 a month — are usually classified as “specialty” drugs. You’d think that since they’re so costly, there would be clear criteria for putting drugs in the specialty category. But, according to a new report, you’d be wrong. The issue might seem arcane, but it’s hugely important. Specialty drugs account for only about 2% of the volume of drugs dispensed in the United States, according to industry estimates, but they also account for more than 50% of overall drug spending. The report, by data analysis firm 46Brooklyn Research, found that the three largest drug middlemen in the United States often don’t classify the same medicines as specialty. It also said that a substantial portion of the ones they do put into that category are generics — drugs that are usually no longer under patent and thus are supposed to be cheaper because multiple drugmakers can supply them.