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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

The most carefully guarded secrets of the PBM industry involve tens of billions of dollars in rebates they collect from drug companies. Those payments help drugmakers secure favorable spots on medication menus that PBMs offer to millions of patients.

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On average, these and other discounts mean manufacturers lop 44 percent off list prices of brand-named drugs, according to Quintiles IMS Holdings Inc. Express Scripts and CVS say they pass along to clients about 90 cents out of every dollar in rebates.

Auditing and accounting experts interviewed by Bloomberg say that while that may be the case, it is often hard to confirm. Any restriction on audits “gives an advantage to the PBM,” said Craig Garthwaite, a health economist at Northwestern University’s Kellogg School of Management. “PBMs have no reason to want to shine a light on it.”

Mark Merritt, chief executive officer of the Pharmaceutical Care Management Association, a PBM trade group, said members are faithful servants of clients, which include employers, unions, and insurers. “The plan sponsor is in the driver’s seat,” he said. Clients “set the terms of every bit of the contract, including how it is audited.”

T’s comment:  I interpret Mark’s statement above as a shot across the bow of plan sponsors and their agents. He is suggesting that they [plan sponsors] are unsophisticated purchasers of PBM services and don’t do a good job at driving disclosure of contract details important to them.. Plan sponsors need to understand not only what they want to achieve in their relationship with their PBM but also the competitive market and their ability to drive disclosure of details on services important to them.

Still, the terms often require a rigor associated with intelligence agencies. MedImpact Healthcare Systems Inc., for instance, doesn’t permit auditors “to copy, notate or otherwise capture the terms of any pharmaceutical manufacturer rebate contract” or to reveal them to anyone else, including clients, according to a nondisclosure agreement seen by Bloomberg News.

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Here is what some participants have said about the webinar.

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

Recertification Credit Hours: 2

• Hidden cash flows in the PBM Industry such as formulary steering, rebate masking and differential pricing
• How to calculate cost of pharmacy benefit manager services or CPBMS
• Specialty pharmacy cost-containment strategies
• The financial impact of actual acquisition cost (AAC) vs. effective acquisition cost (EAC)
• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

Click to learn more

Last week, the California Assembly Committee on Business and Professions voted in favor of Assembly Bill 315.  AB 315 seeks to amend the California Business and Professions Code: (a) to require PBMs to obtain licensure from the Board of Pharmacy, (b) to state that PBMs have fiduciary duties to their “purchaser” clients (i.e., health plans), and (c) to require PBMs to disclose to their purchaser clients data regarding drug costs, rebates, and fees earned. The favorable vote moves the bill to the Committee on Appropriations.

California is not the only state that is considering adopting a PBM “transparency” law.  New York’s Governor Cuomo released a proposal that seeks to require PBMs to both register with the State and obtain a license (from the Department of Financial Services) as well as disclose financial incentives or benefits for promoting the use of certain drugs and financial arrangements that affect customers.

The Governor would also like to impose price controls on pharmaceutical manufacturers. New York has a long history of regulating PBMs through a handful  of systems because the services that PBMs offer often result in a PBM needing to hold a specific non-PBM license and to adopt a specific corporate structure.

In addition, Senator Wyden (D-Ore.) introduced the C-THRU Act to the Senate Finance Committee in March. The C-THRU Act seeks to make PBM rebate data publicly available, require the Secretary of HHS to adopt a minimum percentage of drug rebates that a PBM would need to pass through to certain of its health plan clients, and amend the definition of “negotiated prices” under the Medicare Part D Program.

Fiduciary Duties and Disclosures

The provisions of the bill that seek to make PBMs fiduciaries of their health plan clients and to impose reporting requirements are more burdensome and contentious than the proposed licensing requirement.

Becoming a fiduciary of another entity carries with it significant responsibilities and additional reporting.  While claiming that PBMs are fiduciaries of health plans might not drive up the cost of drugs, one would expect for it to drive up the cost of administrative services provided by the PBM.

The proposed reporting requirements require a PBM to report on a monthly basis the following information to its purchaser (health plan) client:

• Aggregate acquisition cost from a manufacturer or labeler for each therapeutic class of drugs.
• Aggregate amount of rebates (including utilization discounts) received by the PBM for each therapeutic class of drugs.
• Administrative fees received from a manufacturer or labeler.
• Aggregate rates negotiated by the PBM with pharmacies for each therapeutic class of drugs.

The proposed requirements are relatively similar to those that are imposed on PBMs that provide services to Part D plans and health plans that participate on an Exchange created under the Affordable Care Act.  That this data is expected to be reported monthly is more frequent than other data reporting laws that we have seen.

As rebates are typically paid quarterly, and in many instances, many months after a prescription is filled, it seems unlikely that the data listed in the bill will provide health plans with very helpful or timely information. Interestingly, these reporting requirements do not relate to or translate into information that will be provided to the health plan member, let alone lower prescription drug costs for members. Many health plans already receive this data.

Receiving this data does not require a health plan to establish its formulary in a certain manner, to impose lower cost-sharing levels, or to pass through the benefit of discounts (that are not collected for months after a prescription is filled) to its members. Which leads one to question the real significance of the legislation and whether it is more symbolic rather than substantive in nature.

[View source]

The authors analyzed SSR Health data on list price and gross sales to determine if manufacturer rebates impact prescription drug prices. Included in the study were gross and net sales for 176 self-administered, patented, branded drugs sold in the United States between 2011 and 2015.

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A statistical analysis revealed there was no correlation between price increases and rebates, according to the study. The authors found that drug prices have been both increasing and decreasing for prescription drugs, independent of rebates.

Pharmaceutical manufacturers claimed the rebates have had a negative impact on drug costs. They also allege that PBM involvement is the reason prices have increased, while PBMs have blamed manufacturers for price increases. PBMs report they pass along 90% to 100% of manufacturer rebates to plans, which cut out-of-pocket costs for patients, according to a press release from the Pharmaceutical Care Management Association (PCMA), who commissioned the study.

If rebates were responsible for increasing drug costs, the correlation would be associated with an upward sloping line; however, the authors discovered that the correlation is relatively unchanging, according to the study.

The authors also found no link between rebates for branded drugs and drug cost increases in major categories from 2011 to 2016. Interestingly, during this period, there was substantial growth in several drug categories that have low rebates, including rheumatoid arthritis, multiple sclerosis, and anticonvulsants, according to the study.

Costs for multiple sclerosis drugs increased by nearly 20% from 2011 to 2015, while manufacturer rebates were less than 5%, according to the report. Additionally, the authors discovered that there were very low increases in categories with high rebates, including treatments for diabetes and asthma. During this time, costs for drugs that treat both asthma and COPD increased approximately 7%, but the rebates for the treatments increased to nearly 40%.

These findings suggest that drug cost increases are independent of rebates, which disproves claims made by manufacturers, according to the press release.

See more at: https://www.specialtypharmacytimes.com/news/how-do-manufacturer-rebates-impact-drug-prices#sthash.fsit1XQL.dpuf

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

The customer, Anthem — owner of a variety of Blue Cross Blue Shield health insurance firms — is responsible for roughly 18% of Express Scripts’ first quarter revenue, Express Scripts said in a release.

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As a health insurer, Anthem contracts with pharmacy benefit managers like Express Scripts to help negotiate lower prices for prescription drugs. Anthem accused Express Scripts of not passing along those savings, claiming Express Scripts overcharged the insurer by billions of dollars. The ending of the contract comes after Anthem last year sued Express Scripts over the issue.

“Although conversations have been ongoing, the Company was recently told by Anthem management that Anthem intends to move its business when the Company’s current contract with Anthem expires on December 31, 2019, and that Anthem is not interested in continuing discussions regarding pricing concessions for 2017-2019 or in receiving the Company’s proposed pricing for the period beyond 2019,” said the release from Express Scripts.

Pharmacy benefit managers, or PBMs, including Express Scripts have come into the spotlight as the drug industry faces increased scrutiny over the price of prescription medicines. Drug companies, which bear the brunt of the heat over this, have been trying to convince people that they’re not the problem. Instead, they’ve pointed the finger at the PBM’s which they say are responsible for negotiating lower prices in the form of rebates.

Those rebates are meant to be passed on to patients, but a recent report from the drug companies’ lobby found that that’s not the case for 20% of prescriptions filled. Instead, the implication here is that the companies meant to pass along the rebates are keeping all of the money for themselves, in those cases. It’s led to finger-pointing from both PBMs and drugmakers over where those rebates are going.

The similarity between Renflexis and the reference product has been demonstrated for indications, dosing, and administration. While the inactive ingredients vary between the 2 drugs, there are no clinically meaningful differences in safety and efficacy.

Common side effects include upper respiratory infections, sinusitis, and pharyngitis, infusion-related reactions, headache, and abdominal pain, according to the FDA.   In April 2016, the FDA approved the first biosimilar of Remicade, Inflectra (infliximab-dyyb), for multiple indications across a range of autoimmune diseases. Inflectra was the second biosimilar to be approved in the United States and is also administered by intravenous infusion.

Remicade was the first anti-tumor necrosis factor-alpha treatment approved in the United States to be approved in gastroenterology, rheumatology, and dermatology, according to Janssen. The safety and efficacy of the drug has been well established in clinical trials over the past few years, with more than 1.5 million patients treated worldwide.

– See more at: https://www.specialtypharmacytimes.com/news/fda-approves-second-remicade-biosimilar#sthash.EKplAYoq.dpuf

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.