[Click to Enlarge] The pharmacy benefit management industry is experiencing subtle changes, and a leadership shuffle at the country's largest PBM has experts speculating about whether PBMs will remain stand-alone companies. More healthcare organizations view prescription drug use as a critical element of keeping patients healthy and reducing costs, and controlling a PBM could help with a population health strategy. “You could see a pathway forward where the PBMs become more integrated with the payers,” said Jon Kaplan, managing director at Boston Consulting Group. PBMs handle prescription drug benefits for employers and health insurers, a role that includes negotiating drug discounts with pharmaceutical companies, building pharmacy networks and creating their own drug benefit plans. They usually play second fiddle to the insurance companies that handle medical benefits, but PBMs have become more relevant in recent years due to the rising prices of brand-name and generic drugs. Skyrocketing prescription drug spending was a major reason the growth rate of the nation's healthcare tab increased from historical lows in 2014. Consequently, drugs have become a bigger political issue. Presidential hopeful and Sen. Bernie Sanders (I-Vt.) has proposed numerous bills over the past few years to control drug prices. Democratic presidential candidate Hillary Clinton outlined her own prescription drug reforms this week. Her plan came out right after the CEO of Turing Pharmaceuticals, a startup drug company, inflated the price of one of its drugs by more than 5,400%—a move that drew widespread ire from the public. Express Scripts Holding Co. is the largest PBM in the country with about $100 billion in annual revenue. The St. Louis-based company has been notably outspoken about the high sticker prices of new specialty drugs that have hit the market recently, such as the hepatitis C drugs Sovaldi and Harvoni that are manufactured by Gilead Sciences. High-cost drugs have been eating into the profits of PBMs. Paz retirement seen as foreshadowing a deal Earlier this month, Express Scripts announced CEO George Paz will retire from his position next spring. President Tim Wentworth will take over. Although it was a somewhat routine executive move, many analysts covering the industry viewed the switch at Express Scripts as a possible step toward a sale or merger. “We are positive it was announced sooner rather than later as it allows new management to better address challenges that lie ahead,” Charles Rhyee, a managing director at Wall Street firm Cowen & Co., said about Express Scripts in a research note this month. One of those challenges involves Express Scripts' contract with health insurer Anthem. Anthem has publicly said it is looking to renegotiate the contract, which expires in 2019, and expects to save between $500 million and $700 million with new terms. Anthem has some leverage because it is buying Cigna Corp. in a deal valued at more than $54 billion. Cigna uses Catamaran Corp. as its PBM, and Anthem could switch to that vendor. Anthem could also bring drug benefit management functions in-house. “All options are open,” Anthem CEO Joseph…

Why is this document 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 our 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.

There has been, in recent news, a slew of public incidents where leaders of prominent organizations have unwittingly put profit above all else. These companies placed profit above fairness, lawfulness and in some cases life itself. Here are a few examples. Volkswagen, the world's largest carmaker, admitted to installing a "defeat device" to trick U.S. regulators into believing its cars met Clean Air Act guidelines for emissions.  This device allowed it to cheat emissions tests potentially exposing people to harmful pollutants at levels 40 times the acceptable standard. The violations could expose Volkswagen to up to $18 billion in fines. Yesterday a federal judge sentenced Stewart Parnell, former head of Peanut Corporation of America, to 28 years in federal prison. His crime? He knowingly shipped peanut butter tainted with salmonella. The resulting salmonella outbreak killed nine people and sickened hundreds more. It is the toughest punishment in U.S. history for a producer in a food-borne illness case. In 2014, General Motors admitted it allowed an ignition switch defect to linger for more than a decade. The ignition switch defect caused small cars, mostly from GM's pre-bankruptcy era, to turn off suddenly when jostled, cutting off engine power and disabling airbags. Today, General Motors is close to announcing it has reached a deal to resolve the federal criminal investigation into its handling of the deadly defect blamed for more than 120 deaths and massive expenses related to recalls. Pharmacy benefit managers for the state-employee health insurance program are challenging an attempt to require them to repay $39.2 million to the Florida Department of Management Services. Medco Health Solutions, Inc. and Express Scripts, Inc., which are subsidiaries of the same holding company have filed a series of legal petitions. Documents indicate the Department of Management Services is seeking to recoup $39.2 million in what it considers "plan overpayments" and that it decided to withhold payments to the companies as a result. Pharmacy benefit management giant Catamaran Corporation engaged in a scheme against pharmacies to boost its own profits, Kmart claims in a lawsuit. In a complaint filed Monday August 31, 2015 in Cook County Circuit Court, the retailer claims Catamaran "improperly manipulated prescription reimbursements owed to pharmacies ... inflating profits to make Catamaran a more inviting acquisition target." Kmart says it has incurred at least $38 million in damages thanks to Catamaran's allegedly illegal practices. Catamaran, on the other hand, has "experienced explosive growth" reporting revenues of $5 billion in 2011 to $21.6 billion in 2014, the complaint claims. A PBM's standard of care should be of prime concern to payers and plan sponsors as they assume the burden of getting a fair and honest deal for plan participants. Payers are relied upon to research, evaluate, and recommend PBMs. Payers and plan sponsors who are aware of imprudent PBM practices run an enormous risk by dealing with them. Those who claim that they are not aware of such practices (e.g., regarding the creation of formulary and drug pricing) will not be excused.…

Why is this document 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 our 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.

When a doctor tells you to "take two of these and call me in the morning," he truly means two - not three, not one - and to get back to him the next day, not later in the week or the following month. [Click to Enlarge] Yet physicians, pharmacists and researchers have been frustrated for decades at patients' inability to follow such simple instructions and remain on their medication regimens. Twenty to 30 percent of prescriptions are never filled, according to research published in the journal Annals of Internal Medicine, and half of all people do not follow their drug instructions, even when that is critical to keeping them alive. The reasons for medication non-adherence, as it is known, are many: For the poor, it is often cost; for some elderly people, it is confusion over the 14 or more prescriptions they receive each year, according to a report from the Food and Drug Administration. Others say they have trouble understanding what their doctors want them to do. But even understanding all that, "the amount of non-adherence is staggering," said Meena Viswanathan, director of the RTI-UNC Evidence-based Practice Center, a public-private institute that analyzes health care and health policy. As much as $289 billion is spent annually on needless hospitalizations, emergency room visits and other costs for people who don't follow their drug regimens, research shows. One study, now 30 years old, attributed 125,000 deaths annually to non-compliance - about the same number of people who die each year from strokes. Publisher Comment:  In addition to making sure PBMs and TPAs aren't hiding cash flows, payers must measure outcomes based upon every healthcare dollar spent. One metric, patient medication adherence, is oft-ignored.  Would you hire 1,000 people and provide them with no leadership?  In other words, you tell these new hires to grow revenue by 30% and the only tool offered is an employee handbook.  Just as employees require a roadmap to success so do people taking multiple prescription medications. When properly prescribed and administered, prescription drugs are a cost offset opportunity.        A wide variety of attempted solutions - including free medicine - haven't helped much. But with the Obama administration keen to control medical costs and improve the quality of health care, a round of experiments funded by the Affordable Care Act is winding to a close. All three were part of the $1 billion in "health care innovation awards" handed out in 2012 under the new law. Other efforts, by public and private sector groups, are ongoing. One project applies behavioral economics to the problem. Researchers at the University of Pennsylvania gave 1,000 people "electronic pill bottles" when they left the hospital after heart attacks. If they forgot to take their medicine, the cap would light up and beep. If they didn't comply for a few more days, a designated friend or relative, as well as their doctor, were notified. If they took their medications, however, they became eligible to win small lotteries that…

Why is this document 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 our 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] The trends are clear: patients and institutions across the nation are concerned about skyrocketing drug prices. This post offers some information about drug pricing, explores the notion of market intervention, and proposes a series of responses to high pharmaceutical costs. A few jaw-dropping facts quickly illustrate the pattern of rising drug costs. The average annual cost of cancer drugs increased from roughly $10,000 before 2000 to over $100,000 by 2012, according to a recent study in Mayo Clinic Proceedings. Several breakthrough specialty medications and orphan drugs recently approved by the Food and Drug Administration (FDA) have subsequently entered the pharmaceutical market with hefty price tags. Consider Biogen Idec’s multiple sclerosis drug, Tecfidera, which costs $54,900 per patient per year; hepatitis C cures from Gilead Sciences, with a sticker price of $84,000 per patient; and Orkambi, a cystic fibrosis drug from Vertex Pharmaceuticals approved this month, priced at a whopping $259,000 per year. If specialty pharmaceutical prices are dropping jaws, generic drug prices have at least managed to raise eyebrows. In 222 generic drug groups, prices increased by 100 percent or more between 2013 and 2014, according to Forbes. As generic drugs have long provided payers some respite from other more expensive products and services, rising prices in generics like Mylan NV’s albuterol sulfate—which increased about 4,000 percent from 2013 to 2014—are well worth the concerns. The increase in drug costs—projected by the Centers for Medicare and Medicaid Services Office of the Actuary to be 12. 6 percent in 2014—has far outpaced inflation, which has hovered between zero and 2 percent over the last three years; it has also outstripped growth in other medical costs. Pricewaterhouse Coopers (PwC), in its 2013 annual medical cost trend report, projected overall cost growth to be 6.5 percent in 2014 in the large employer market. In stark contrast, a recent Express Scripts analysis declared a 13.1 percent increase in prescription drug spend in the same period. On the surface, it appears as if drug manufacturers are unduly milking the udder of American health care reimbursement, even as it runs dry for insurers and providers. Yet, this is hardly a crime. The behavior of the pharmaceutical industry is tolerated, suggesting that drugmakers have sufficient rationale for pricing products. In contrast, a Kaiser Health Tracking Poll last month found that 73 percent of Americans find the cost of drugs to be unreasonable, and most blamed drug manufacturers for setting prices too high. Some particularly high cost medications for hepatitis C have even forced insurers and Medicaid programs to limit usage of the drugs. The financial success of Big Pharma, medical innovations brought by its investments, absence of price intervention, public concerns, reactionary measures that affect clinical care — together these phenomena paint a puzzling picture. Pricing Drugs While research and development can indeed carry large costs and span multiple years, there is simply more to pricing drugs. Many modern-day assessments cite the value that a new drug brings to patients, along with savings incurred…

Why is this document 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 our 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.

Pharmacy-benefit managers for the state-employee health insurance program are challenging an attempt to require them to repay $39.2 million to the Florida Department of Management Services. Medco Health Solutions, Inc. and Express Scripts, Inc., which are subsidiaries of the same holding company, have filed a series of legal petitions that were sent this month to the state Division of Administrative Hearings. The documents indicate the Department of Management Services is seeking to recoup $39.2 million in what it considers "plan overpayments" and that it decided to withhold payments to the companies as a result. Medco Health Solutions entered into a contract in 2011 to manage prescription-drug benefits for state employees and in 2012 was acquired by Express Scripts Holding Company, according to the documents. Pharmacy-benefit managers analyze prescription-drug requests and determine whether they should be filled. The department alleges, at least in part, that the companies refilled prescriptions too soon, according to the documents. Refilling prescriptions before necessary can increase costs. Publisher Comment:  This is a new one!  Typically, PBMs authorize refills when a patient has used 75% or more of their initial supply.  Having said that, at what point (e.g. 50%, 65% or > 70%) did ESI permit refills?  Remember, traditional PBMs hire and train people specifically to drive incremental revenue, at the account level, deploying similar tactics. It would not surprise me if ESI saw this as an opportunity to hide cash flow.  If proven true this is nefarious.  Plan sponsors should stipulate in contracts that refills are permitted only when a patient's remaining supply is 25% or less.  Of course, a fiduciary contract would prevent this sort of thing from happening or at the very least provide a means for indemnification.   Medco Health Solutions and Express Scripts dispute the allegations and that they should be required to reimburse the department. "(Even) if the department were correct that refills were filled too soon, the remedy is not for Express Scripts to reimburse the department for the total costs of these prescriptions,'' company attorneys wrote. "The department is not asserting that the refills should have never been provided, just that they were provided a few days early. The members still received their proper medications; still used their medications; and it is only proper for the state to continue to pay for those proper medications." By News Service of Florida

Why is this document 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 our 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.