In a recent Special Advisory Bulletin and a separate report, the Office of Inspector General (OIG) emphasized the Anti-Kickback Statute risks for manufacturers that offer coupons to reduce or eliminate co-payments for brand-name drugs (co-payment coupons). The OIG explained that the Anti-Kickback Statute is implicated when co-payment coupons are used for drugs reimbursable by Medicare Part D or another federal health care program. Further, the OIG found that current safeguards are inadequate to prevent such coupons from being used for Medicare Part D drugs. The Special Advisory Bulletin and report were concurrently released in September. Special Advisory Bulletin The Special Advisory Bulletin addressed the Anti-Kickback Statute implications of pharmaceutical manufacturer co-payment coupons and the significance of cost-sharing for federal health program drugs. Co-payment coupons are any form of direct support offered by manufacturers to insured patients that reduce or eliminate immediate out-of-pocket costs for specific prescription medication. The Anti-Kickback Statute is a criminal statute that prohibits the knowing and willful offer, payment, solicitation or receipt of anything of value in order to induce or reward referrals or the generation of business of items or services reimbursable by a federal health care program. Violation is punishable by a fine of up to $25,000, imprisonment for up to five years, or both. In addition, conviction results in automatic exclusion from federal health care programs such as Medicare and Medicaid. The OIG may also initiate administrative proceedings to exclude persons from federal health care programs or to impose civil monetary penalties for fraud, kickbacks and other prohibited activities. Further, a claim that includes items or services resulting from an Anti-Kickback Statute violation also constitutes a false or fraudulent claim for purposes of the False Claims Act. Co-payment coupons constitute remuneration offered to consumers to induce the purchase of specific items, the Special Advisory Bulletin explained. Therefore, manufacturers may violate the Anti-Kickback Statute when they offer co-payment coupons for prescriptions reimbursable by a federal health care program. The Special Advisory Bulletin highlighted two benefits to cost-sharing requirements for federal health care program drugs. First, cost-sharing requirements promote "prudent prescribing and purchasing choices by physicians and patients based on the true costs of the drugs." Second, cost-sharing requirements promote "price competition in the pharmaceutical market." The OIG explained that co-payment coupons may distort these incentives, encouraging the use of expensive brand-name drugs when less expensive generic drugs or other alternatives are available. "When consumers are relieved of co-payment obligations, manufacturers are relieved of a market constraint on drug prices," the OIG noted. Excessive costs to federal programs are among the harms the Anti-Kickback Statute is intended to prevent. The Special Advisory Bulletin explained that pharmaceutical manufacturers are ultimately responsible for taking appropriate steps to ensure co-payment coupons do not induce the purchase of federal health care program items or services. "Failure to take such steps may be evidence of intent to induce the purchase of drugs paid for by these programs, in violation of the Anti-Kickback Statute," the OIG warned. Report Co-payment coupons have become…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Along with solicitations from Flying magazine (I’m not a pilot) and North Carolina Game and Fish (I’m not a hunter) and an outfit named EWS offering an extended vehicle warranty (I don’t need one), the recent mail also brought two plastic cards from American Prescription Discounts (who?). The cards came addressed to Resident Code #HB-8315-78923. That’s me in computer-speak worthy of the Enigma Machine, the fabled German encryption device of World War II. A letter accompanying the cards spoke glowingly of prescription discounts up to 75 percent for anyone without health insurance. Yes, even with ObamaCare, millions remain without prescription drug coverage, particularly “documented and non-documented Americans.” I am not one of them, thanks to Medicare Part D and a Medicare Advantage Plan from United Health Care. And neither are the people in my neighborhood, all of whom have health insurance. Nonetheless, the neighborhood telegraph lit up with questions about these prescription savings cards from an unknown vendor. Actually, many of us have heard from American Prescription Discounts, though under other names. That’s by design. The same organization operates U.S. Prescription Discounts, Help Rx, National Prescription Savings Network, Rx Relief and The Healthcare Alliance. Which card you get depends on how you’ve been identified through marketing wizardry. The cards come from the most successful marketing outfit you’ve never heard of, Loeb Enterprises. The New York City-based firm is the brains behind Priceline.com, among other ventures. Prescription savings cards are new territory for Loeb, which partnered with pharmacy benefits manager Catamaran Inc. to market the cards. Now, if you got a savings card from American Prescription Discounts cum Loeb, your first question was: Is this thing real? Yes, it is. It’s not a scam, though I’d put it into doubtful territory, and so should you. In fact, the Better Business Bureau in New York gives the cards a C rating, describing them as the equivalent of coupons without expiration dates. The cards are marketing vehicles. They imply savings from 50 percent to 75 percent, but you’re more likely to find a five-pound gold nugget in your backyard than reap a bushel of savings at your neighborhood CVS or Walgreens. Pharmacies accept the cards in return for a pittance from Loeb Enterprises – your coupon, so to speak – hoping that you will make impulse purchases of other items while in the store. That’s much the way supermarket cards work. The money comes from buying more than you planned. Supermarket cards are one of the great feats of marketing. They scoop up reams of information about our buying habits. Notice that the product coupons you get at Harris-Teeter and Food Lion are geared to your consumption. The millions of prescription savings cards issued under manifold names by Loeb Enterprises do the same thing. And, just like supermarket cards, using them surrenders a measure of your privacy. The panoply of names associated with the prescription cards includes ScriptRelief, yet another facet of Loeb Enterprises. ScriptRelief is the umbrella name for the various guises…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Express Scripts Holding Co., a large manager of prescription-drug benefits for U.S. employers and insurers, is seeking deals with pharmaceutical companies that would set pricing for some cancer drugs based on how well they work. My Comment:  This is good for payors and long overdue.  In February I published, "Specialty Pharmacy: The Top 10 Trends Payers Should Be Following" which listed pay-for-performance as the # 1 trend to follow. The effort is part of a growing push for so-called pay-for-performance deals amid complaints about the rising price of medications, some of which cost more than $100,000 per patient a year. Some insurers and prescription-benefit managers are pushing back by arguing that they should pay less when drugs don’t work well in certain patients. Drug companies are countering with pricing models of their own, such as offering free doses during a trial period. Express Scripts this month told clients it is seeking deals with drug makers for differentiated pricing for certain cancer drugs based on how well they work against different types of tumors, Express Scripts Chief Medical Officer Steve Miller said in an interview. Currently, Express Scripts and most insurers pay the same per-unit rate for a cancer drug regardless of the type of cancer it is being used to treat. Dr. Miller pointed to Tarceva, a drug co-marketed by Roche Holding AG and Astellas Pharma Inc., which has shown a smaller benefit in pancreatic cancer than in lung cancer. In one clinical trial, Tarceva extended the median survival of pancreatic cancer patients by less than two weeks versus placebo. In a separate trial, it prolonged survival among lung cancer patients by about 3 ½ months versus chemotherapy. In an “indication-specific pricing” model, the per-pill cost of Tarceva would be lower for pancreatic-cancer patients than for lung-cancer patients, given the reduced efficacy, Dr. Miller said. Tarceva currently costs about $6,850 a month per patient, according to GoodRx, a website that tracks drug prices. “One of the big frustrations has always been people paying top dollar for drugs that aren’t always giving them the best response,” Dr. Miller said. “If pharma is truly sincere about wanting value-based reimbursement, we now have the sophistication to do that.” Although Dr. Miller used Tarceva as an example, he wouldn’t identify the drugs for which Express Scripts is seeking indication-specific pricing. The company has begun approaching drug makers about arranging such deals, which could go into effect for 2016, he said. My Comment:  How much of the savings are going to be passed back to clients?  Those self-funded payors which assume 100% pass back are incorrect unless they have a fiduciary contract.  PBMs are rewarded when they've won your business and not for doing their job lest you've established some very specific performance bonuses. A spokeswoman for Roche’s Genentech unit said that when Tarceva was approved to treat pancreatic cancer in 2005, it was the first medicine approved for the disease in more than a decade. She said the drug is now rarely used to…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

PayPal and UPS, household names, have been accused of intentionally deceiving their clients. These two articles were taken from the USA Today in the same issue! Why do PBMs overcharge their clients?  Because their clients are either poor at uncovering the truth or don't believe this sort of thing is happening to them. Well, think again... Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Publicly traded health care companies have been on a tear recently compared with traditional indexes, such as the S&P 500. Innovative sectors, such as specialty pharmacy and biotechnology, once again have many viewing health care as a growth story. While these sectors are not new, the combination of improved science, more consumers accessing the health care system, and encouraging signs of an accommodative FDA have many on Wall Street optimistic about the future of health care.  Despite these encouraging signs, however, a threat is emerging. The accelerating trend of rising specialty medication costs is not only causing justifiable concern, but is also deepening the philosophical divide between the essential stakeholders, such as health care providers and payers, who play vital roles in ensuring appropriate patient care. While many are wondering whether higher Courtesy of Avalere Health pricing is a sustainable and justifiable trade-off if patient outcomes are improved, I believe that a major point is being ignored: without cooperation between the system’s essential stakeholders, our health care system’s potential will never be fully realized. While costs should be scrutinized, they should not be the sole factor in determining a patient’s access to therapy. This article will describe emerging viewpoints of key stakeholders to illustrate how specialty is segmented by price and offer insight into how this can be changed to help ensure a better scenario for all involved. According to Express Scripts, Inc (ESI), the country’s largest pharmacy benefit manager, “US spending on specialty prescription drugs—those used to treat chronic, complex diseases, such as cancer, multiple sclerosis, and rheumatoid arthritis—is projected to increase 67% by the end of 2015.”  While there are many reasons why this is occurring, manufacturers have no doubt shifted their focus when it comes to drug development.  In a general sense, pharma has transitioned from creating “me-too treatments” and drugs that improved patient conditions to the point where they became more manageable to creating high-value transformative medications that are just shy of being called curative. Some manufacturers believe that their products should be priced at a premium to reflect their innovation and that a patient pool exists that is willing to pay top dollar for the best the market has to offer. While an argument can be made justifying premium pricing, pharma’s stance has created another marketplace response that may be squeezing patient access to medications even tighter.  Last year marked a significant change for the payer community. Payers, whose primary mission is to ensure lower drug costs for the system, felt that pharma was moving in an uncomfortable direction and resorted to aggressive cost containment protocols to regain price control. There were instances when payers like ESI voiced displeasure at products they believed were overpriced without being justified by peer-reviewed, evidence-based data. It seemed as though the payer community abruptly began to shift the system from one that was product-focused to one that is data-driven and values newly manufactured drugs based on clinical distinction and economic factors.  After halting coverage for many active ingredients found…

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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

With permission from an existing client, I've provided here an example of a bad PBM contract. This section of the contract pertains only to pricing or client payments. Nevertheless, client payments are the foundation for a successful PBM program. Read the red font. It provides a detailed analysis and explains why this contract is bad for the payer (a self-funded employer group with over 5000 members) yet very profitable for the PBM. Click to Enlarge Note:  To enlarge click on the image above and when on the resulting page click the magnifying glass in the upper right corner to zoom in for a higher resolution.  Use the scale to reach the desired resolution and your mouse to move up or down the page. Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.