Author: Tyrone Squires, MBA, CPBS

This author has written 1372 articles

The Untold Truth: How Pharmacy Benefit Managers Make Money [Free Webinar]

How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. 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 on 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

Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
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.   

The Consolidated Appropriations Act (CAA) Introduces Broker Compensation Transparency [Weekly Roundup]

 News and notes from around the interweb:

  • Survey on Outcomes-Based Contracts Shows Mixed Results for Novel Therapies. Avalere Health’s fifth annual survey of outcomes-based contracts (OBC) for novel therapies showed varied results in overall participation and across specific therapies. OBCs center on “high-cost novel treatments and other types of products” and “typically include an agreement between health plans and drug or device manufacturers that ties product reimbursement to specific clinical, quality, or utilization outcomes.” John Neal, an Avalere managing director notes: “These products come with big price tags. Payers want to make sure the outcomes are what was indicated in clinical trials.”

  • Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers. Over time, PBMs have found ways to take advantage of a lack of transparency and oversight to increase their profit, said Sally Greenberg, executive director of the National Consumers League. This report showcases not only the many ways they do this but also just how much money they’re making from these tactics. We must find policy solutions to bring that money — those savings — back to consumers as intended.

  • Join the Movement!

    Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.

  • The Consolidated Appropriations Act Introduces Broker Compensation Transparency. Effective December 27, 2021, brokers and consultants of ERISA covered group health plans, regardless of size, will be required to execute a written contract with a responsible plan fiduciary which includes a description of the services to be provided, a description of all direct compensation the broker expects to receive, and a description of all expected indirect compensation including vendor incentive payments. 
  • 340B Program, PAPs Help Ensure SP Rx Success. But those 340B savings don’t magically appear, Dr. Mitchell stressed. His specialty pharmacy has clinical pharmacists embedded in clinics who make sure that orders for specialty medications sent to the internal specialty pharmacy are eligible for 340B savings. They also are responsible for ensuring that orders patients choose to have filled at external pharmacies—or that payors mandate be sent to a specialty pharmacy—still remain in the health system’s contract pharmacy network.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Tip of the Week: Think Twice Before Joining a PBM Drug Pricing Coalition (rerun)

Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they’re actually providing a good deal. 

How it works: Employers hire pharmacy benefit managers to handle the drug coverage in their workers’ health insurance plans. PBMs negotiate prices with drug manufacturers and decide which drugs get preferential treatment.
Big consulting firms work with PBMs to organize drug pricing coalitions, pulling Fortune 500 companies and other large employers into purchasing agreements that, in theory, maximize negotiating power. But it can be difficult for employers to determine the financial upside of these arrangements. So what are employers not seeing within coalitions? The data on prices, and understanding whether those prices are a good deal.

Tyrone’s Commentary:

I’m not opposed to coalitions per se. I am, however, opposed to information asymmetry in health care. Information Asymmetry or “Information Failure” is a term that refers to when one party in a business transaction is in possession of more information or knowledge than the other (see figure 1). In certain transactions, sellers might take advantage of buyers because information asymmetry exists whereby the seller has more knowledge of the good or service being sold than the buyer. The best proponent of transparency is informed and sophisticated purchasers of PBM services. If a coalition is engaging in information asymmetry, employers in that coalition are leaving money on the table.

Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers [Weekly Roundup]

 News and notes from around the interweb:

  • Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers. Over time, PBMs have found ways to take advantage of a lack of transparency and oversight to increase their profit, said Sally Greenberg, executive director of the National Consumers League. This report showcases not only the many ways they do this but also just how much money they’re making from these tactics. We must find policy solutions to bring that money — those savings — back to consumers as intended.

  • Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.
Join the Movement!
  • Pharma Grapples With Best Price Accumulator. A new CMS policy, issued in December 2020 with an effective date of Jan. 1, 2023, requires pharmaceutical manufacturers to “ensure” the benefit of copay assistance programs goes only to patients to maintain the exclusion from best price reporting. If a coupon’s full value doesn’t accrue to the patient, the pharmaceutical manufacturer must count it as a discount to the drug’s Medicaid price.
  • 13 million Americans skip prescription drugs due to cost. The report, based on a national survey of U.S. households, outlined the range of obstacles that Americans face in affording needed medications. According to the report, more than 2.3 million elderly Medicare beneficiaries and 3.8 million privately insured working-age adults reported skipping needed treatments because of costs in both 2018 and 2019. 
  • 340B Program, PAPs Help Ensure SP Rx Success. But those 340B savings don’t magically appear, Dr. Mitchell stressed. His specialty pharmacy has clinical pharmacists embedded in clinics who make sure that orders for specialty medications sent to the internal specialty pharmacy are eligible for 340B savings. They also are responsible for ensuring that orders patients choose to have filled at external pharmacies—or that payors mandate be sent to a specialty pharmacy—still remain in the health system’s contract pharmacy network.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Tip of the Week: Think Twice Before Joining a PBM Drug Pricing Coalition

Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they’re actually providing a good deal. 

Figure 1: Explanation for coalitions withholding data


How it works: Employers hire pharmacy benefit managers to handle the drug coverage in their workers’ health insurance plans. PBMs negotiate prices with drug manufacturers and decide which drugs get preferential treatment.
Big consulting firms work with PBMs to organize drug pricing coalitions, pulling Fortune 500 companies and other large employers into purchasing agreements that, in theory, maximize negotiating power. But it can be difficult for employers to determine the financial upside of these arrangements. So what are employers not seeing within coalitions? The data on prices, and understanding whether those prices are a good deal.

Tyrone’s Commentary:

I’m not opposed to coalitions per se. I am, however, opposed to information asymmetry in health care. Information Asymmetry or “Information Failure” is a term that refers to when one party in a business transaction is in possession of more information or knowledge than the other (see figure 1). In certain transactions, sellers might take advantage of buyers because information asymmetry exists whereby the seller has more knowledge of the good or service being sold than the buyer. The best proponent of transparency is informed and sophisticated purchasers of PBM services. If a coalition is engaging in information asymmetry, employers in that coalition are leaving money on the table.

Pharmacy Benefit Managers are Outwitting Attempts at Accountability, Tougher Rules [Weekly Roundup]

 News and notes from around the interweb:

  • The case for “unbundling” self-funded health benefit programs. They [employers] can unbundle their plan and choose a fully transparent PBM that makes sure all of the rebate dollars get back to the plan within certain time frames and their contractual obligations are potentially different than they might have been within the bundled plan. That unbundling could save the employer a significant amount of money without negatively affecting the services provided to plan participants.

  • Key Drugs in Specialty Pharmacy Slated to Launch in 2022. Ray Tancredi, RPh, MBA, divisional VP of specialty pharmacy development and brand Rx/vaccine purchasing at Walgreens, addresses key drugs in development that are slated to launch in 2022, key drugs in development that are slated to launch in the future of note, and some of the promising and unique medications to keep an eye on that are expected to be approved in the specialty pharmacy space.
Join the Movement!
  • Pharma Grapples With Best Price Accumulator. A new CMS policy, issued in December 2020 with an effective date of Jan. 1, 2023, requires pharmaceutical manufacturers to “ensure” the benefit of copay assistance programs goes only to patients to maintain the exclusion from best price reporting. If a coupon’s full value doesn’t accrue to the patient, the pharmaceutical manufacturer must count it as a discount to the drug’s Medicaid price.
  • Pharmacy and PBM Leader Deloitte Consulting: Specialty Drugs Rely on Personalization for Optimal Outcomes. The high cost of specialty drugs makes it important to use companion diagnostics and other tests to make sure the drug is going to the right patient, said George Van Antwerp, MBA, managing director, Deloitte Consulting. When we look at the cost of specialty drugs, and especially some of the cell and gene therapy drugs, which are really all about precision medicine, those costs mean they have to work. They have to be focused on and personalized to the individual.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Tip of the Week: Don’t Opt-Out of Step Therapy Programs

Step therapy is a process that requires physicians to prescribe more costly drugs, usually brand drugs, only after a less costly drug treatment has been tried and failed with a patient. Step therapy is just one tool in the drug utilization management (DUM) toolkit which includes drug utilization review, quantity limits, prior authorization, refill too soon, and mandatory generic enforcement programs just to name a few. Step therapy programs evoke strong emotions in both support and opposition.

Click to Enlarge
Positions in Opposition of Step Therapy Programs

Coalition of State Rheumatology Organizations: Step therapy can lead to serious negative patient outcomes and increased costs if not carefully managed. Step therapy needs to be regulated by nationally recognized clinical practice guidelines. Physicians should have the authority to override step therapy protocols based on a patient’s medical history. Override protocols should be clear and abbreviated.

Patient Rising: Step therapy prevents patients from accessing treatments prescribed by their doctor, and instead mandates a course of treatment mandated by their insurance carrier. Patients start with older, cheaper treatments, and if they are not effective, patients “step” to another treatment. Some patients suffer terribly during this process, becoming sicker when denied prescribed treatments. For this reason, it becomes abundantly clear why patients across the country have another description for step therapy: “fail first.” When a patient has to fail first on a drug before being allowed to take the medication originally prescribed, the patient, physician and public health suffers.

National Psoriasis Foundation: Because of the rise in costs of conventional medical treatments, many patients nowadays are beguiled by their health insurance companies into undergoing considerably less expensive options such as step therapy. This “wealth before health” kind of thinking is actually futile and unwise, at best, since step therapy is never a good option in treating life-threatening diseases.

According to a new study, led by researchers at Tufts University, tracked the application of step therapy protocols across 17 payers. Across those insurers, 38.9% of coverage policies deployed some kind of step therapy protocol. On average, insurers required 1.5 steps in their protocols, with 66.6% of policies requiring a single step. Of the remaining policies, 22.7% required two steps, 7.6% were three steps and 3.1% included four or more steps, according to the study. 

Here’s the part few opponents talk about

Before I owned a mail-order pharmacy and fiduciary-model PBM, I was a pharmaceutical sales representative. Yes, whatever you’ve heard about drug sales reps it is likely true. It was a good gig with a great company. Eli Lilly and Company had a big sales force and effective marketing machine behind it. It took me 1.5 years but I took a territory ranked something like 600 out of 612 to #12 in the country. 
I did it by asking doctors to prescribe a new brand oral antidiabetic, Actos, as a first line drug therapy or in combination with metformin. It wasn’t any more complicated than that.  
Looking back, there were thousands of prescriptions written for an expensive brand drug when the “old” tried and true generic metformin would have been as efficacious at 1/100 the cost. Multiply that by the tens of thousands of other drug sales reps across the country doing exactly the same thing. I’ll dig deeper into direct-to-consumer advertising as a key sales driver in a separate post. But don’t kid yourself. A lot of people see a TV ad then go into the doctor’s office and say, “I want to try that.” Simply put, pharmacy benefit managers deploy step therapy as a tool to manage drug costs.
Step therapy programs are not created equally. Some PBMs run better, more efficient step therapy programs than others. That said, no PBM wants to put patients in harms way. Opponents of step therapy programs aren’t cutting the checks which cover the high costs of biologics, cell or gene therapies. Sure, health plan sponsors can opt out of step therapy programs but in doing so you expose your company to massive FWA. 

Pharmacy and PBM Leader Deloitte Consulting: Specialty Drugs Rely on Personalization for Optimal Outcomes [Weekly Roundup]

 News and notes from around the interweb:

  • Key Drugs in Specialty Pharmacy Slated to Launch in 2022. Ray Tancredi, RPh, MBA, divisional VP of specialty pharmacy development and brand Rx/vaccine purchasing at Walgreens, addresses key drugs in development that are slated to launch in 2022, key drugs in development that are slated to launch in the future of note, and some of the promising and unique medications to keep an eye on that are expected to be approved in the specialty pharmacy space.
Join the Movement!
  • 2021 Kaiser Family Foundation Employer Health Benefits Survey. The researchers found that 56 percent of small companies structured their prescription drug cost-sharing in 2021 to have at least four tiers. Meanwhile, slightly more than half of the larger companies surveyed could say the same. Nearly four out of ten large employers implemented three tiers (39 percent) compared to less than three out of ten small employers (28 percent).
  • Explaining the Prescription Drug Provisions in the Build Back Better Act. On November 19, 2021, the House of Representatives passed H.R. 5376, the Build Back Better Act (BBBA), which includes a broad package of health, social, and environmental proposals supported by President Biden. The BBBA includes several provisions that would lower prescription drug costs for people with Medicare and private insurance and reduce drug spending by the federal government and private payers. The key prescription drug proposals included in the BBBA would…
  • Pharmacy and PBM Leader Deloitte Consulting: Specialty Drugs Rely on Personalization for Optimal Outcomes. The high cost of specialty drugs makes it important to use companion diagnostics and other tests to make sure the drug is going to the right patient, said George Van Antwerp, MBA, managing director, Deloitte Consulting. When we look at the cost of specialty drugs, and especially some of the cell and gene therapy drugs, which are really all about precision medicine, those costs mean they have to work. They have to be focused on and personalized to the individual.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Tip of the Week: How Hospitals and Specialty Pharmacies Get Paid – The 340B Math

Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. These organizations include community health centers, children’s hospitals, hemophilia treatment centers, critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH) that serve low-income and indigent populations. While most patients never know about the program, they are at the center of how it works.


Source:  Hannah Norman/KHN; Getty Images

Under the law, drugmakers who want their drugs covered by Medicaid and Medicare Part B must sell them at a discount in the 340B program. According to pharmaceutical manufacturers, large hospital systems, for-profit pharmacies and other middlemen have co-opted a program meant to help patients and turned it into one that boosts their bottom lines. Click here to learn more about the 340b program.

Medicaid Specialty Drug Trend Finally Surpasses 50% of Pharmacy Spend in Most Recent Pharmacy Trend Report [Weekly Roundup]

 News and notes from around the interweb:

  • New Report: Anti-Competitive Practices Lead to High Prescription Drug Costs. The report, conducted by the research firm Visante, examines certain drug manufacturer anti-competitive tactics that affect many different types of prescription drugs. For example, some manufacturers of specialty drugs, which include many cancer medications, and orphan drugs employ tactics to take extra advantage of government-established monopoly status and exclusivity. In 2017, 80% of prescription drugs approved were specialty and orphan drugs, doubling from just 40% of approvals in 2001. Currently, the average launch price for drugs in these categories is more than $200,000 per patient per year.
Join the Movement!
  • 2021 Kaiser Family Foundation Employer Health Benefits Survey. The researchers found that 56 percent of small companies structured their prescription drug cost-sharing in 2021 to have at least four tiers. Meanwhile, slightly more than half of the larger companies surveyed could say the same. Nearly four out of ten large employers implemented three tiers (39 percent) compared to less than three out of ten small employers (28 percent).
  • Comer: Congress Must Review PBMs’ Role in Rising Prescription Drug Prices. In his opening remarks, House Committee on Oversight and Reform Ranking Member James Comer outlined how PBMs’ consolidation has negatively affected competition in the marketplace, leading to higher drug prices for Americans. He concluded his remarks by calling on PBMs to provide greater transparency about their practices and urged further review of proposed legislation to determine any changes needed to decrease the costs of prescription drugs and benefit patients.
  • As Big Pharma and Hospitals Battle Over Drug Discounts, Patients Miss Out on Millions in Benefits. Companies that want their drugs covered by Medicaid or Medicare Part B are required to offer 340B discounts, typically 25% to 50% off what they might otherwise pay. Hospitals and clinics buy the drugs at the discount and then are reimbursed by an insurance company, Medicare or Medicaid at the higher negotiated rate. The difference is kept by the hospital or clinic to use as it sees fit. The law does not require patients to benefit directly, a nuance that has fueled great conflict about how the program works and should be regulated.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.