Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 339)
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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 —
Tuesday Tip of the Week: Specialty Drug Utilization Management Three Things to Know
DUM or drug utilization management in specialty pharmacy helps to maximize efficiency. That employers don’t engage in wasteful spending and the right drug, at the right time gets in the hands of the right person. It likewise encourages digital monitoring of the member’s drug therapy in the past, the now and in the future. Here are three imperatives around specialty drug therapy to consider while designing a pharmacy benefit plan:
Specialty pharmacies use medication therapy management (MTM) to coordinate comprehensive care for patients and improve health outcomes. MTM employs a range of clinical tools to improve outcomes and promote value, including therapeutically focused clinical assessments, validated quality of life measures, detailed medication reconciliation, monitoring adverse effects, connecting patients to educational resources, peer-based support programs, and access to need-based financial resources reducing barriers to care. Specialty pharmacies provide patient level support reducing health system and therapy complexity by explaining benefits and coverage, coordinating the best site of care for injected or infused medication, providing drug administration training, adherence support, and resources empowering patients to independently manage complex, persistent treatment plans.
Imperative 2: Evaluate Parity in Pricing for Specialty Drugs
When a specialty medication is parity priced, the drug is the same price regardless of the dose prescribed. For instance, Pomalyst is manufactured in 1 mg, 2 mg, 3 mg, and 4 mg strengths. It is the same price for 1 mg as it is for a 4 mg dose. It is prescribed once per day. QD (qd or q.d.) is once a day; q.d. stands for “quaque die” (which means, in Latin, once a day). BID (or bid or b.i.d) is two times a day ; b.i.d. stands for “bis in die” (in Latin, twice a day). There is no therapeutic benefit for someone to take four 1 mg tablets as opposed to one 4 mg tablet, and yet this is something we see when repricing pharmacy claims files today. Imbruvica and Afinitor are other examples where these cases do not involve changing the drug nor changing the dose. Changing parity priced dosing can save $400K-$500K on a single prescription for a single patient.
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Imperative 3: Take a proactive approach to prior authorizations.
I’ve been fortunate enough to be a “fly on the wall” listening to the leadership teams of several national specialty pharmacies. And while they preach case management and patient care as the priority if you listen carefully what they really want first and foremost is volume or more prescriptions. I am asking self-funded employers a simple yet very important question. Does it make sense to have the same entity manage and approve specialty Rx claims when that entity stands to benefit when these claims are approved? If 85% or more of PAs are getting approved you might be a victim of rubber-stamping which leads to what? You guessed it – wateful spending. Just because you have a PA or step therapy program doesn’t mean it is efficient. Consider carving out the prior authorization process or use prior authorizations with a dollar limit. The goal is not to create disruption but to review the clinical appropriateness of any dose increases, for example.
In conclusion, PBMs will generally manage costs to a level demanded by clients when negotiating their contracts. The best proponent of radical transparency or lowest net Rx cost is informed and sophisticated purchasers of PBM services. In other words, the more you know the less you pay without any reduction in member experience or outcomes.
Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 338)
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 —
Tuesday Tip of the Week: Three Myths about PBM Pricing Every Employer-Sponsored Plan Should Know
Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 337)
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 —
[Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money
“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 flow streams in the PBM Industry
- Basic to intermediate level PBM terminologies
- Examples of drugs that you might be covering that are costing you
- The #1 metric to measure when evaluating PBM proposals
- Strategies to significantly reduce costs and improve member health
Sincerely,
TransparentRx
Tyrone D. Squires, MBA
10845 Griffith Peak Drive, Suite 200
Las Vegas, NV 89135
866-499-1940 Ext. 201
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.
Tuesday Tip of the Week: Factor Benefit Design into your PBM Scorecard (Rerun)
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Bling-Loving Postal Boss Asked to Step Down Over $12,000 Worth of Cartier Watches
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Don’t gift non-fiduciary PBMs Cartier watches |
Ms. Holgate confirmed four of her highly-paid executives were handed Cartier watches during a cross-examination with the Senate. They were ‘awards’ for securing a deal with the Commonwealth Bank, Westpac and NAB, which paid a combined $66 million to Australia Post so its customers could access banking services at its stores across the country.
‘They got watches,’ Ms. Holgate said as she was questioned by the Senate. They were a Cartier watch of about a value of $3,000 each. She was asked, “Do you remember the brand, the type? Was it a Cartier Tank? What was it?’ ‘The Senate said the gifts were disgraceful and appalling.
Dean Foods Carves Out Specialty Pharmacy and Saves Big
In 2019, Dean Foods, which this year was acquired by Dairy Farmers of America, spent $52,900 on 4 biosimilars, well short of the $227,500 the company would have spent on 3 originator products. The carve-out was arranged through Vivio and enabled Dean Foods to sequester specialty drug costs and management so that savings could be achieved outside of the structure imposed by a pharmacy benefit manager (PBM) plan.
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Switching employees on expensive originators to biosimilars, generic drugs, and lower-cost therapeutic alternatives while also discontinuing experimental drugs generated $1.7 million in clinical savings (avoided therapy costs) for the former dairy company, the report said. But given all anticipated vs actual costs from the carve-out program, Dean Foods saved $4.35 million in 2019, according to the report. This includes supply chain savings.
Tyrone’s Commentary:
There are several benefits to a carve-out PBM arrangement including options to carve out specialty pharmacy. The truth is if left to their own devices specialty pharmacies owned by PBMs, or independent, want to get the product out of the door and into the mail. When left unchecked, there is little chance it will pass up on filling a $15,000 prescription knowing full well a less costly therapeutic alternative is as effective. It is up to the plan sponsor to remove any conflict of interest.
Benefits of a carve-in PBM arrangement such as population health management can make life easier. When all the data is under one roof it goes without saying life is easier compared to bringing in a third-party. However, plan sponsors have to be careful though what you give up in exchange for “easier.” With carve-in arrangements plan sponsors can lose flexibilty and control of benefit design, formulary management and even forgo rebate dollars. Of course, no carved-in PBM will tell you this is going to happen just read between the lines.
Vivio said in the report it achieves savings by seeking out lowest-cost drug suppliers, passing 100% of rebates to its customers, and taking advantage of manufacturer discounts. It said that “typically, 15% of prescribed specialty drugs have lower-cost therapeutic equivalents alternatives such as biosimilars, generics, and less-costly branded drugs.”
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