Cigna Corp. won a key part of a six-year legal dispute in which Anthem Inc. claimed it was overcharged for pharmacy benefits services, fending off the rival health insurer’s bid for $14.8 billion in damages. Anthem isn’t entitled to the billions it claimed were owed over prescription drug prices charged by Cigna’s Express Scripts unit, a federal judge in New York ruled last Thursday.

In every Certified Pharmacy Benefits Specialist class since 2017, we’ve discussed this claim. My position on Anthem’s claim was always the same. I said, “there is no question Anthem overpaid, but it is unlikely they will win this lawsuit.” You’ll learn in this blog PBM performance guarantees are meaningless unless constituent elements are spelled out.

It was clear Anthem had not spelled out the constituent elements in the contract. I’ve learned people who work for PBMs aren’t qualified to negotiate with PBMs. Anthem had not honestly evaluated its internal expertise. Anthem assumed because it owned the PBM sold to Express Scripts they wouldn’t be taken to the cleaners. The worst part of it all is that Anthem’s clients paid for its unsophistication.

Here are five tips to help you increase transparency in PBM contracts.

1. Be relentless in pursuit of radical transparency. Easier said than done and it all starts with PBM literacy. Education is the most logical and effective foundation for achieving extraordinary results in pharmacy benefit management services. To improve on the job execution and career growth, benefits consultants, finance, procurement, and HR must expand their PBM knowledge beyond a functional role and understand exactly how each domain works together within the pharmacy distribution and reimbursement system.
2. PBM performance guarantees are meaningless unless constituent elements are spelled out. Contract definitions set the foundation for financials.
3. Make the contract the focal point of any PBM competitive bidding process. The status quo is “backing in” transparency through an RFP questionnaire. At best this approach is inefficient or worse yet doesn’t work. Drafting, negotiating, and finalizing the contract with a PBM are the three most critical tasks in a PBM competitive bidding process or RFP. Period.
4. Score the PBM contract for transparency. “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn,” wrote Alvin Toffler. Create a proprietary PBM contract scorecard for your organization. Assessing transparency will be more effectively done by a trained eye.
5. Embrace competitive intelligence access does not translate into action. Your upper hand incorporates executing great examination of the right data and afterward sorting out how this affects your organization. Those who jump at the chance enjoy a huge serious benefit.

Large PBMs have pricing analysts on staff. One of the core responsibilities of a PBM Pricing Analyst is to monitor revenue performing below thresholds and implement necessary tasks to bring performance to or above targets. PBM Pricing Analysts are ineffectual when levers available to them are eliminated. If you are seeking better pricing or transparency from a PBM, doesn’t it make sense then to start with the contract language?

News and notes from around the interweb:

• Key Differences Between Fiduciary and Traditional Pharmacy Benefit Managers. Pharmacy Benefit Managers (PBM) are authorized to manage the benefit on their own behalf, with a wide range of restrictions and constraints that serve the PBMs interest, often at the client’s expense. On the other hand, a Fiduciary PBM manages the benefit without that conflict of interest, and with better transparency – looking out for the best interest of the client and plan participants only. What are the Key Differences Between Fiduciary and Traditional PBM Business Models?

• Justice Department Sues to Block UnitedHealth Group’s Acquisition of Change Healthcare. The Department of Justice, together with Attorneys General in Minnesota and New York, filed a civil lawsuit to stop UnitedHealth Group Incorporated (United) from acquiring Change Healthcare Inc. (Change). The complaint, filed in the U.S. District Court for the District of Columbia, alleges that the proposed $13 billion transaction would harm competition in commercial health insurance markets, as well as in the market for a vital technology used by health insurers to process health insurance claims and reduce health care costs.

• AHIP study claims hospitals charge double for specialty drugs compared to pharmacies. Hospitals on average charge double the price for the same drugs compared to those offered by specialty pharmacies, according to a new insurer-funded study released as federal regulators ponder a probe into the pharmacy benefit management industry. The study (PDF), released Wednesday by insurance lobbying group AHIP, comes as specialty pharmacies have grown in use among PBMs and payers to dispense specialty products. The study was released a day before a scheduled meeting Thursday of the Federal Trade Commission on whether to probe the competitive impact of PBM contracts and how they could disadvantage independent and specialty pharmacies.

• Prepare for Health Care Price Transparency Rules Taking Effect Soon. While much of the “heavy lifting” will be done by health insurance carriers for fully insured plans, by third-party administrators (TPAs) for self-funded plans, and by pharmacy benefit managers (PBMs) for carved-out prescription drug benefits, employers are ultimately responsible for ensuring that this information is ready and available, said Jay Kirschbaum, benefits compliance director and senior vice president at World Insurance Associates, based in Washington, D.C. “We’ve spent the last 20 or 30 years teaching our participants to be bad consumers of medical care by shielding them from actual prices,” said Kirschbaum, speaking March 30 at the Society for Human Resource Management’s Employment Law & Compliance Conference in Washington, D.C.

• Price Transparency or Price Obfuscation? Is A PBM-Backed Network Using Its Monopoly in One Business to Advantage Itself in the Next? On August 5, 2021, GoodRx and Surescripts announced an agreement to incorporate GoodRx drug coupons into Surescripts’ Real-Time Prescription Benefit (RTPB) service. Through the partnership, GoodRx’s drug discount pricing information is made available to prescribers at the point of care, when they are writing a prescription in their electronic health record (EHR). The partnership generated a fair amount of media attention at the time of its announcement, for a few reasons. But an in-depth look at the partnership raises a number of questions about the deal, why it was done, and who stands to benefit now and in the long term.

This document is updated weekly, but why is it 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 health care reform.

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 acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean 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.

Because plan sponsors don’t know how pharmacy benefit managers make money or how you they pay them, it gives PBMs all the incentive they need to overcharge. How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers, and their stakeholders, don’t offer a fiduciary standard and instead opt for hidden cash flow opportunities to generate their service fees. Want to learn more?

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 pharmacy benefit managers 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, 03/08/22 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 and we’ll send you the link to the session recording as soon as it’s ready. 

This blog is for anyone wanting to reduce overutilization, waste, abuse, and fraud in a self-funded pharmacy benefit program.

1. Define what it means to have a quality pharmacy benefits program then execute. Care structure should place a premium on making sure the drug works, making sure the drug is going to the right patient, and finally making sure the patient is taking the drug, for instance.
2. Document and orchestrate processes. Specialty pharmacies must have disease state specific patient intake workflows. Take the emotion out of prior authorizations (and other utilization management programs i.e. step therapy) to deliver better results for patients and plan sponsors. The largest ePA or electronic prior authorization provider in the country is owned by a drug wholesaler. Systematize processes and don’t deviate.
3. Reduce barriers to access. This doesn’t mean making every drug in the market available to anyone who has a prescription. It does mean that a patient prescribed the right drug should not be hindered by the plan design in taking said drug. A copay accumulator program is a strategy used by insurance companies and pharmacy benefit managers to stop manufacturer copay assistance programs from counting towards the deductible and out-of-pocket spending. These programs should be eliminated as they restrict access to drug therapies.
4. Be relentless in pursuit of efficiency. Plan objectives should be accomplished with the least expensive combination of resources. Easier said than done and it all starts with PBM literacy.
5. Quantify participant satisfaction. Net Promoter Score, or NPS®, measures customer experience, for example. A word to the wise, don’t sacrifice efficiency just to make a patient or doctor happy. Strive for above average participant satisfaction but stick to the documented plan. You can’t make everyone happy.

Conclusion

Reducing waste and abuse in pharmacy benefits starts with the five methods listed above. If the primary goal of drug therapy isn’t to achieve better health care outcomes, with the least expensive combination of resources, then what are we doing? Pharmacy benefits management isn’t a beauty contest.

This document is updated weekly, but why is it 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 health care reform.

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 acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean 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.