Look closely at ads for most medications that appear in magazines, on TV or on the internet. Along with an extensive list of side effects and possible uses, you'll find an offer to explore options that will make it easier for patients on commercial insurance to afford the expensive meds. They're called copayment coupons and cards, discounts and patient-assistance plans. These financial breaks for consumers are part of a $7 billion effort by pharmaceutical firms in 2015—up from $1 billion in 2010—designed to help patients access drugs they otherwise can't afford, according to IMS Health. While the coupons have improved patient compliance, drug manufacturers are covering all or part of the copays to bypass efforts by insurers and pharmacy benefit managers to rein in the rising price of drugs. One key strategy is to put lower copays on lower-cost preferred drugs and raise copays on higher-priced medicines that may not offer additional value for their higher cost. The patient-assistance portion of such drug company programs, designed to help patients access the most expensive meds, represents only 5% to 10% of the $7 billion, according to IMS. The rest goes for coupons. “Coupons eliminate members' cost share for high-cost brand medicine, removing the financial incentive for them to choose a lower-cost generic or preferred brand,” said Patrick Gleason, director of health outcomes at Prime Therapeutics, a St. Paul, Minn.-based PBM. “This circumvents formulary design, putting the insurer on the line to pay for more non-preferred brand-name medicine—at a price that is often inflated to recapture manufacturer revenue lost from offering coupons in the first place.” One example: A patient with rosacea, the common skin disorder, told Modern Healthcare how her dermatologist prescribed Monodox, an oral antibiotic that is generically known as doxycycline monohydrate. The branded version is made by Exton, Pa.-based Aqua Pharmaceuticals. She said that the medicine would cost $1,200 a month without insurance and $800 a month through her Blue Cross plan. But the dermatologist's office gave her a one-year copay coupon that whittled her out-of-pocket cost down to $30 a month. A generic doxycycline monohydrate would cost as little as $41 in the Chicago area, according to GoodRx.com, which conveniently links to coupon offers. Aqua did not respond to a request for an interview. The patient said her dermatologist never mentioned a generic was available. The FDA Orange Book lists over a dozen companies that have the right to manufacture doxycycline monohydrate. Holly Campbell, senior director of communications at Pharmaceutical Research and Manufacturers of America, the Washington, D.C.-based trade group, defended copay offset coupons and patient-assistance plans. “Today, too many patients find that they are facing very high cost-sharing that puts their ability to stay on a needed therapy at risk. Some patients face coinsurance as high as 40%, and it is becoming increasingly common that patients must meet a deductible before any prescription-drug coverage applies. In such cases, patients often are less adherent to therapy, which can lead to long-term problems for patients and the healthcare system,”…

[Figure 1] A commodity is a good or service which has no distinguishable characteristics among the good or service. Here are some examples of a commodity: Corn Soybeans Rice Coffee Wheat Gold Live Cattle Natural Gas Oil In other words, one barrel of oil, a bushel of wheat or ounce of gold is essentially the same or indistinguishable from another of its variety. The opposite of a commodity is a specialty good or service. Most PBMs attempt to differentiate their services out of the commodity class because the only way to compete in a commodity market is on price. On the other hand, specialty goods and services warrant higher prices because of a specific feature or benefit. In the procurement of PBM services, buyers wrongly place high importance on a "perceived" benefit. This is different from a specific benefit or feature. The cost of services depends heavily on the PBMs pricing model. Traditional or Legacy The PBM discloses cash flows in the sponsor's contract. Learn more about this here. Pass-Through PBM passes through all rebates and network prices to the sponsor (no spread pricing). Fiduciary or Binding Transparency The PBM provides full accounting w/auditing provisions, passes through all manufacturer revenue and more competitive drug pricing than industry norms. Commodity products are differentiated by price only as they are homogeneous or the same. Don't fall for the marketing spin or it will lead to excessive remuneration to your TPA, ASO or PBM. Generally speaking pharmacy benefit managers offer the same services (see figure 1) and differ only in the price you pay for said services. 

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 healthcare reform.  The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.

On June 1, 2016, in the southern district of Texas Federal Court, United HealthCare administered self-insured ERISA plan, AT&T Inc. and its Plan Administrator Larry Ruzicka were sued in federal court. According to the complaint: “This dispute arises out of Defendants’ ongoing and systematic ERISA violations consisting of an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets. An almost identical separate suit was filed against another United HealthCare administered health plan, GAP Inc. less than 30 days before this case was filed.  According to industry experts, more and more CEO’s, CFO’s and Plan Administrators are exposed to tremendous liabilities due to poorly managed or “Head in the Sand” monitoring practices. As we have written about and predicted, this is evidence of the growing trend of self-insured health plans being exposed to tremendous liability by TPAs. Tyrone's comment:  It's simple, if a plan sponsor doesn't have full auditing rights they're likely overpaying; not just for medical, but pharmacy claims as well. These overpayments can lead to lawsuits against the CEO, CFO and others. "We didn't know..." is no longer an excuse. For starters, do you know how much your company (or client) pays the PBM for providing pharmacy benefit management services? This is different from plan costs. Somewhere hidden in the plan costs are the PBM's service revenues. To not know this dollar amount is negligent. Click here to learn more. One of the serious problems these cases present to the self-insured health plans is inaccuracies on the Form 5500/Tax filings. ERISA requires IRS Form 5500 reporting to be accurate. AT&T, GAP Inc. and others may be reporting incorrect amounts on direct and indirect compensation, for example, based on the alleged facts of these cases. The Court Case Info: RedOak Hospital, LLC v. AT&T Inc., AT&T Savings and Security Plan and Larry Ruzicka, in the United States District Court for the Southern District of Texas, Houston Division, Case 4:16-cv-01542, Filed on 06/01/16. According to court documents, REDOAK Hospital Plaintiff filed a DOL EBSA Complaint on the alleged overpayment offset by the Defendants Plan, and the plan’s co-fiduciary, UHC, prior to filling this ERISA lawsuit, alleging: “This dispute arises out of [AT&T’s]ongoing and systematic ERISA violations consisting of an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets that were approved and allegedly paid to Plaintiff for Plaintiff’s claim, to purportedly, but impermissibly, satisfy a falsely alleged overpayment‖ for another stranger claim, especially when the stranger is a plan beneficiary of a fully-insured plan that is insured by the Plan’s co-fiduciary, United Healthcare (hereinafter, “United”).[AT&T] knew or should have known that the Plan’s overpayment recovery provisions cannot be triggered until there is an allegation of overpayment by the Plan to the Plan Beneficiary subject to this action, and that converting the Plan Assets by a fiduciary or co-fiduciary of the Plan, in this case United, to the use of another, and ultimately its own use, to pay to its own account is absolutely prohibited under ERISA statutes.…

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 healthcare reform.  The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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 Enlarge] Did you know there is a federal program that provides medicines at a steep discount to some hospitals and clinics? Created in 1992 as part of the Veterans Health Care Act, the 340B drug pricing program requires drug companies to provide discounts—sometimes as much as 50%—to covered entities, hospitals, and clinics that treat low-income and uninsured patients. Covered entities also include federally qualified health centers and look-alikes, consolidated health centers, freestanding cancer centers, and more. In addition to paying less for the drugs, the covered entities are also permitted to generate profits from the sale of prescription medications to insured patients in order to subsidize required medications for underinsured patients. Under the 340B program, participating drug manufacturers sign an agreement with the Department of Health and Human Services (HHS) stipulating that they will charge covered entities at or below a maximum price, known as the ceiling price. Pharmacy Services Typically, pharmacy services provided by a 340B-covered entity may be provided through either an in-house pharmacy or a contract with an outside pharmacy, including a community pharmacy. The thinking is that a community pharmacy might provide real value to a patient and also add an income stream to its existing business model. That is not necessarily so according to a white paper… “The 340B law’s legislative history makes clear that the intent of the 340B program is to help uninsured indigent patients by giving covered entities that serve high numbers of uninsured indigent patients access to discounts for drugs. Today, however, it is unclear whether this goal is being met even as the program continues to grow dramatically. Evidence suggests that the program has departed significantly from its statutory foundation.” Medical centers, hospitals, and other covered entities have begun to use the program to boost profits rather than help low-income and uninsured patients. Over the past few years, there have been calls for greater oversight of the program due to complaints that some hospitals are receiving discounted drug benefits disproportional to the small number of low-income patients they serve. “Hospitals participating in the 340B program aren't required to pass the discount along to patients or insurers and can subsequently turn a profit by charging the full price for medications the hospital bought at a discount,” according to an article published by Becker’s Hospital CFO. The study discussed in the article was conducted by Rena Conti, PhD, an assistant professor of health policy and economics in the University of Chicago Departments of Pediatrics and Health Studies, and Peter Bach, MD, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. They analyzed data from 960 hospitals and 3964 affiliated clinics registered for the 340B program in 2012, along with socioeconomic information on the communities those hospitals and clinics served from the US Census Bureau's American Community Survey. “Our findings support the criticism that the 340B program is being converted from one that serves vulnerable patient populations to one that enriches hospitals and their affiliated…

[Click to Enlarge] A report by Blue Cross Blue Shield (BCSBS) analyzed the growth in specialty drug costs from 2013 to 2014 through a sample size of about 70.5 million BCBS members per year. The analysis revealed a 26% increase in the annual spending of specialty pharmacy from 2013 to 2014. The increased costs of specialty drug treatments, including the price and selection of drugs, were found to be the main drivers of spending growth. Annual specialty drug spending was found to be 17% higher per member in the individual market compared with the employer market in 2014. The main difference between these markets was the utilization rates by condition, which was higher for individual members in viral infections, cancer, and hepatitis treatments. This did not include multiple sclerosis or inflammatory conditions. The study authors said that in order for specialty drugs to remain sustainable, they must be affordable to consumers. The report included 15 of the most expensive or common specialty drug categories, which account for more than 80% of total specialty pharmacy costs. Drugs used to treat cancer, inflammatory conditions, multiple sclerosis, hepatitis, and HIV are the 5 highest costing drug categories. The 10 other drug categories represented smaller contributions to overall expenditures and were grouped in the “other” category. When the categories were broken down, the study revealed that about $14.6 billion was spent on specialty pharmacy drugs for the top 15 categories in 2013, about two-thirds of which treat multiple sclerosis, cancer, and inflammatory conditions. For 2014, the total spending increased 26% to $18.4 billion. Although spending increased in each of the drug categories, hepatitis C specifically rose 612%, and as a result of the introduction of new drugs, there was a $29 annual increase per member. - See more at: http://www.specialtypharmacytimes.com/news/specialty-pharmacy-spending-continues-to-grow#sthash.PHlD3F6s.dpuf

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 healthcare reform.  The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.

Source: Department of Labor After it rang up more than $153 billion in total sales last year -- making it one of the largest retail operations in the world -- industry watchers expect the company's top-line to surpass $181 billion this year. That represents double-digit growth off of an enormous base, which is an impressive accomplishment for a company of CVS Health's size. I've been digging deep into CVS Health's recent financial results and have been blown away by just how big this company has become. Below is a list of 15 numbers that amazed me and might help you put this behemoth's size into perspective. 97.3%: This was CVS Health's retention rate for its PBM customers last quarter. It's a remarkably high number that demonstrates just how much its services are valued by customers. Tyrone's Comment:  97.3% is especially high when you consider plan sponsors can't make heads or tails about how much they actually pay for the services. This is different from plan costs; hidden somewhere in the total spend are the legacy PBM's service revenues (fee). $2.1 billion: That's how much the company spent on repurchasing its own shares during the first quarter. In total, 22.4 million shares were retired for an average price of $98.52 per share, and management has plans to buy back another $1.8 billion worth by year-end. That should ensure that the company's share count continues to decline at a rapid rate. $40 billion: That's how much revenue CVS Health pulled in from its specialty drug business in 2015, which was up 32% percent over the prior year. $5 billion: That's how much total capital will be returned to shareholders in 2016 through a combination of dividends and buybacks. Still, the company's cash balance is expected to grow this year, as management plans to throw off at least $5.3 billion in total cash flow for the year. 80 million: That's about how many members are covered by CVS Health's pharmacy benefits management (PBM) business. That's the second-largest network in the country, behind only Express Scripts. 9,600: That's the approximate number of pharmacies that are currently in CVS Health's retail empire. This number took a sizable step forward last year when the company ponied up $1.9 billion to take over Target's pharmacy and clinic business, and the company continues to grow organically, too. Management has plans to net a total of 100 new store openings during 2016. 17.5% to 19%: That's how much total revenue growth CVS Health expects to show for the full year. Acquisition-related costs and slightly lower margins are going to curtail profit growth, but management is still guiding for adjusted earnings to fall in the range of $5.73 to $5.88. That's growth of at least 11% versus the prior year. 23.9%: That is CVS Health's retail pharmacy market share during the first quarter of 2016. That's up 245 basis points versus the same quarter a year ago, mostly because of inclusion of its Target acquisition -- but the company believes that it grew organically,…

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 healthcare reform.  The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.