Author: Tyrone Squires, MBA, CPBS

This author has written 1305 articles

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 281)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. 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 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.

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.

How an Stand-alone PBM Uses Patient Engagement to Improve Cost and Patient Outcomes

As the PBM landscape consolidates around a few monolithic players, it’s become increasingly difficult for independent challengers to carve out space for themselves in a dominantly payer-owned field. Even one of the largest independent pharmacy benefit managers (PBMs) in the United States found they could not compete on cost.

Luckily, some independent PBMs are doing things a little differently. We are incorporating better patient care into our business strategies in pursuit of a vision for lower healthcare costs and greater transparency across the medical and pharmacy benefits.

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At the heart of the vision is a unique program launched with a small network of best-in-class specialty pharmacies, chosen because they offer patient-support services that improve logistics, promote access and adherence, and reduce costly healthcare episodes. And it works. 

These partnerships have upheld the belief that more empowered, knowledgeable, and cared-for patients have better outcomes and use the healthcare system more efficiently. This is how independent PBMs are carving out a true niche as the partner who cares about patients and lowers healthcare costs universally.

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Medicare and its beneficiaries could have saved an estimated $17.7 billion if older generics were prescribed, study finds

Medicare and its beneficiaries could have saved an estimated $17.7 billion earlier this decade on generic versions of older medicines instead of paying for newer, chemically similar but more expensive brand-name drugs that companies launched to replace those older pills, according to a new analysis in the Annals of Internal Medicine.

Tyrone’s Commentary:

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Medication switches are most often thought of as changing a brand-name product to a generic drug. Switching also can mean the changing of one brand name product for another, or the switching of a generic medication to the same drug produced by another generic manufacturer. These can be initiated by the physician, pharmacy or PBM. Switches are done to reduce the overall cost of prescription medications. Generic or therapeutic switching remains one of the great but underutilized opportunities for lowering prescription drug costs. 

  • Medication switches are done to reduce the high cost of  prescription drugs.
  • Generic substitution means that patients prescribed an expensive  brand-name medication are given a less-expensive generic  equivalent in the pharmacy.
  • Therapeutic substitution means switches within a drug class; a  brand-name medication may be replaced by a less expensive brand-name or generic product.
  • The cost savings are substantial, especially for health plans.

One of the biggest mistakes employers make is not continuously monitoring drug spend to identify generic switch savings opportunities. You can’t set it then let it go hoping for the best. In other words, standard PBM reports won’t uncover the wasteful spending. You need a trained set of eyes to catch savings opportunities early and often.

For example, Medicare spent $13.4 billion on the Nexium acid reflux pill between 2011 and 2017, but could have saved $12.7 billion if, instead, prescriptions were written for generic copies of the older version of the drug called Prilosec. Similarly, Medicare beneficiaries spent more than $832 million on Nexium between 2011 and 2015, but could have $690 million if prescribed a generic version of Prilosec.

Download Analysis >>

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 280)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. 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 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.

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.

Plan Sponsors Laser Focused on High-Cost Claims

Of the health care initiatives large employers participating in the National Business Group on Health’s (NBGH) latest Health Care Strategy and Plan Design Survey cited, implementing virtual solutions (51%) and developing a more focused strategy to address high-cost claims (39%) were at the top of the list.

The cost of specialty medical treatments is escalating at an unsustainable rate—typically a double digit percent increase year-over-year. Even worse, large employers with self-funded plans are footing the bill for newer high-cost treatments, some in the millions per treatment. Employers have many concerns related to high-cost treatments: the million-dollar price tags and the speed at which the treatments come to market, which can call into question the rigor and timeline of clinical trials.

What’s more, an increasing focus of the research and development pipeline is on treatments for narrow subsets of patient populations with rare diseases—making this an exciting time in health care when patients with certain illnesses, sometimes terminal, are able to receive treatments or even be cured, the report notes.

Large Employers’ Top Health Care Initiatives, 2020

However, as a result of the pipeline of treatments for rare diseases, large employers are increasingly focused on the impact of even one or two cases on their overall annual health care budgets. For example, Zolgensma, a one-time injection to treat spinal muscular atrophy in young pediatric patients, was launched in May at a $2.1M price tag, sending employers into action mode to uncover ways to finance such therapies.

In 2019, about one-quarter of employers are delaying the inclusion of new treatments from their formulary at launch (e.g., for 6 months) to enable the pharmacy benefit manager (PBM) or health plan to better determine the treatment’s efficacy and safety. The other two options—stop-loss insurance and outcomes-based contracting—aren’t as popular an approach, but are being considered heavily for 2021/2022.

In 2018, a majority (56%) of large employers voiced skepticism about the proposed health plan–PBM mergers. Specifically, they were unsure if these newly formed relationships would lower cost, improve quality and curate a better consumer experience. As a followup to that survey question, this year’s survey dove into whether employers are “voting with their feet” by going out to bid in direct result of mergers between health plans and PBMs.

The survey finds 16% of surveyed employers are issuing a request-for-proposal (RFP) due to health plan–PBM mergers. Another 30% are considering doing so in 2021-2022. These numbers are an indication that consolidation is having a profound effect on the health care industry, which could result in a plan change—health plan or PBM—for a number of employers, the report says.

The full report is only available to NBGH members, but an executive summary of the findings is available here.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 279)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. 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 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.

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.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 278)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. 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 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.

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.

Trump Administration ‘Opens Pathway’ on Drug Imports From Canada

A year after calling proposals allowing Americans to import cheaper drugs from Canada a “gimmick,” Health and Human Services Secretary Alex Azar said the federal government is “open for business” on such a strategy.

Image result for drug importation from canada

Azar announced a preliminary plan Wednesday to allow Americans to import certain lower-cost drugs from Canada. Insulin and other biological drugs, controlled substances and intravenous drugs would not be included. The plan relies on states to come up with proposals for safe importation and submit them for federal approval.

Tyrone’s Commentary:

Drug Utilization is more complicated than just the days supply or units being dispensed. Utilization also considers the sites or channels (i.e. retail, specialty etc.) from which prescription drugs are being dispensed and that is just for starters. I would also argue drug utilization is measured, at least in part, by the country from which prescription drugs are procured. If you are self-funded employer and aren’t at least considering Canada as an alternative source from which to procure prescription drugs, what are you waiting for?
    
Under a second option, manufacturers could import versions of FDA-approved drugs from foreign countries and sell them at a lower cost than the same U.S. versions. This appears to be a way drugmakers could avoid some of the contracts they have with drug middlemen, known as pharmacy benefit managers.

Continue Reading >>

Impact of a Co-pay Accumulator Adjustment Program on Specialty Drug Adherence

In a 2018 survey of large employers, 80% identified SpRx costs as a top 3 driver of healthcare costs, and 26% said it was their greatest healthcare cost driver, up substantially from 6% in 2014. Needless to say, employers are concerned about the rapid growth of specialty pharmaceutical (SpRx) expenditures. 

Employers have acted to constrain SpRx expenditures. Those offering high-deductible health plans (HDHPs) have combined medical and pharmacy plan deductibles into one, thereby shifting initial payment for prescriptions to enrollees until they reach the deductible limit. 

Image result for copay accumulator programs


Some employers have added pharmacy benefit management features, including utilization management, use of a SpRx vendor, and the addition of a SpRx tier in formularies. Others have excluded many SpRx products from medical plan coverage, thereby shifting greater oversight of SpRx use to pharmacy benefits.

Takeaway Points

Pharmacy benefit managers are offering co-pay accumulator adjustment programs (CAAPs) to counter pharmaceutical company co-pay assistance subsidies for enrollees receiving specialty medications, although the impact of these programs on medication adherence is unknown.

  • In this analysis, implementation of a CAAP was associated with significant reductions in autoimmune specialty drug adherence.
  • Risk of treatment discontinuation was significantly higher following CAAP implementation.
  • Use of specialty drugs included on the preventive drug list, which eliminates co-payments, was not affected by the CAAP.
  • Further analysis is needed to evaluate the implications for subsequent healthcare utilization and costs.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 277)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. 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 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.

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.