For the better part of the last decade, pharmacy costs have generally represented anywhere from 20 to 25 percent of total health plan costs. But over the past three years in particular, noticeable and sizeable growth in specialty drugs has occurred. In 2013, traditional drug trend increased by less than 1 percent, yet overall drug trend increased by 3.8 percent. That additional growth from “non-traditional” drugs represents the emergence of specialty drugs in a matter that will act as a primary cost driver for employer health plans moving forward, as 65 percent of new drug spending over the past two years was for specialty medication. Industry projections assume that 80 percent of the top ten drugs sold in the United States will be specialty drugs by 2016. While estimates of growth have varied mildly, general consensus in the pharmacy management industry suggests specialty costs will quadruple to around $400 billion by 2020. This estimate seems to be supported by observations that the drug-manufacturing development pipeline is ramping up efforts in the specialty fields. Currently, 50 percent of drugs in development are considered specialty in nature and around 70 percent of new drugs that will be approved to hit the market in the near-term will be defined as specialty drugs. Until recently, most employers looked at pharmacy costs by observing two sectors: name-brand drugs and generic drugs. Current projections indicate that specialty drug spend will eclipse 33 percent of total drug spending for a health plan by 2016. Before that occurs, employers must begin looking at drug spend in three sectors in how they analyze, determine plan-guidance and build strategy: 1) Specialty drugs 2) name-brand drugs and 3) generic drugs. What qualifies as a specialty medication? Generally speaking, a specialty medication meets one or more of the following criteria: Costs per script are greater than $750 per month Treats a rare and/or intensive condition not typically associated with chronic diseases Requires specific handling or monitoring processes Used in a limited distribution network As of 2013, cancer, multiple sclerosis, rheumatoid arthritis, hepatitis C and growth hormone accounted for more than 60 percent of the specialty market. Given the investment in this drug category, costs in the specialty pharmacy arena will be diversified to include further drugs developed for HIV, hemophilia and other costly conditions that normally fall outside of the scope of typical disease management treatments for diabetes, hyperlipidemia and the like. More than half of specialty drugs in the developmental pipeline are high-cost oral medications that intend to act as a substitute for other treatments, such as injectable drugs typically provided in physician practices, outpatient centers or through infusion treatment. Click to Enlarge What conditions are typically associated with specialty drugs? While this list is expansive, it will change and grow as further research and development occurs around other disease states and approval is provided. The percentages represent that condition’s estimated percent share of the specialty drug market: Oncology/Cancer: 30% Rheumatoid Arthritis: 12% Multiple Sclerosis: 10% HIV/AIDS: 8% Inflammatory Bowel Disease:…

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.

First, let me start by suggesting the position of PBM Pricing Strategy Analysis Manager is unnecessary if Anthem Inc. operated as a fiduciary rather than a FFS or fee-for-service provider. Better yet, this position is ultimately eliminated when employers across the country start to demand a fiduciary contract from their PBMs. This is a full-time position dedicated to drive PBM revenue growth. In fact, much of your PBMs margin protection occurs after you've signed on the proverbial dotted line! Pay close attention to the buzzwords and phrases used in the job description such as underwriting, revenue performing below thresholds, and ASO passback. The point here is that traditional PBMs are armed with seemingly unlimited resources to maximize margin revenue from clueless employers. How much human capital and other resources are you allotting, throughout the course of the year, to stem PBM overpayments? A retained national employee benefits consulting firm may not be enough to eliminate overpayments to PBMs. Trust me on this one. The simple fact is that most benefits consultants are not PBM experts rather really good connectors of buyers and sellers. Self-insured employers and benefits consultants must have, at a minimum, highly trained [internal] PBM experts to address spiraling drug costs and improved patient outcomes. Those individuals with the same level of knowledge and resources available to PBMs in order to secure pharmacy outcomes aligned to plan goals. Click the link below to view the actual job listing. ---BEGIN--- Job:  Provider Network Management Title:  PBM Pricing Strategy Analysis Manager Location:  Reno Requisition ID:  101783 Posted on: April 17, 2015 Job Description: Anthem, Inc. is one of the nation's leading health benefits companies and a Fortune Top 50 company. At Anthem, Inc., we are working together to transform health care with trusted and caring solutions. Bring your expertise to our innovative culture where you will have the opportunity to make a difference in peoples lives, and to take your career further than you can imagine. The PBM Pricing Strategy Analysis Mgr is responsible for Pharmacy Services pricing and Administrative Services Only (ASO) support functions. Primary duties may include, but are not limited to: Implements new processes, process improvements, and best practices related to pricing, guarantee monitoring, and ASO passback activities. Creates and implements metrics and supports performance measures to establish performance objectives for revenue maximization and pharmacy pricing. Creates tools and processes to monitor margin revenue, pricing accuracy, and client retention. Monitors revenue performing below thresholds and implements necessary tasks to bring performance to or above targets. This is the one which should scare the hell out of Benefits Directors, CFOs and benefits consultants; those plan sponsors who don't have an effective process to measure billed amounts against actual acquisition costs (what the pharmacy actually paid to bring prescription drugs into inventory along with full audit rights of network and manufacturer revenue agreements). Implements pricing in the system related to margin. Supports the Pharmacy Services team in implementing future revenue, member expansion and growth capacity. Assists with developing pharmacy pricing…

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.

Potential Solutions in Reducing Specialty Pharmacy Costs So, how do we contain the costs associated with specialty pharmacy drugs and actually begin to reduce spending? Care coordination – Care coordination is key not only between providers and payers but also between medical and pharmacy benefits. Currently, specialty pharmacy benefits are provided both under medical and under pharmacy programs and these tend to be done within their individual silos. In some instances, the cost to the patient is less with pharmacy benefits than medical while others the opposite is true. Integration between pharmacies and medical records can increase the coordination of care and provide higher quality care to patients and ultimately lower healthcare spending. Patient education – patient education is essential in particular with the administration of specialty pharmacy drugs. These drugs can be in the form of injectables and are often administered by a provider, which can be quite costly. Providing education to the patient as well as their family can enable these to be taken in the comfort of the patient’s home. This can help reduce healthcare spending as the cost of a doctor’s visit may not be necessary, no appointment needs to be made, and no billing/coding needs to occur. Providing care in the appropriate place – If assistance is required to administer these drugs, it is much cheaper to administer for example in a primary care setting than an emergency room or outpatient clinic which may be associated with a hospital. It is the same medication, but education as to the less expensive alternative is critical. Changes to the payment policy/reimbursement – under current fee-for-service model, providers are incentivized to prescribe more expensive medications, whether the patient really needs those particular drugs or not. Additionally, some providers are incentivized based on the total cost of the drug, in which they are reimbursed a percentage. There is also a trend of providers to purchase specialty pharmacy drugs from manufacturers and then sell them at a premium price. These incentives are not aligned to decrease healthcare spending and should be reviewed and revised. The use of bundled payments has become a trend as of late. The idea is to control the total cost of care through bundling certain services, thus lowering healthcare spending. Transparency in pricing is critical to controlling healthcare costs as well. Providers, payers and consumers should know the price, what that includes, and how the price was determined. As mentioned, specialty pharmacy drugs are not new. Cancer treatments, for example, have been around for a long time. However, the costs associated with these drugs are contributing to the out of control healthcare spending trends. In order to reduce these costs, many mechanisms can be put into place. Providers, payers, and patients working together can begin to make a dent in the costs and increase the quality of care.

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.

Pharmacy costs is one of the fastest-growing components of health care expense and is expected to increase by 15% per annum with no end in sight. It is estimated that 75% of employers plan to increase prescription drug spend year-over-year. Unfortunately, most organizations are unaware of their excessive remuneration for PBM services. While there is no magic pill to managing the pharmacy benefit, the following five key performance indicators can help to identify a path to lower pharmacy costs while still improving member outcomes. 1.  Dump the Legacy RFP Process.  Employers must instead create their own airtight fiduciary contract and put it out for bid. How is it that a plan sponsor, regardless of size, can sign a deal which doesn't hold its PBM accountable to a client-comes-first standard of care? from Wikipedia...   A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.   Case closed.   2.  Promote Limited (Preferred) Pharmacy Networks.  Most plans offer access to more than 60,000 retail pharmacies nationwide. The reality is that at any given street intersection 3 of the 4 corners are filled with pharmacies including CVS, Rite-Aid, Walgreens or others. Instead of allowing access to countless options, an employer can save 2 percent or more by narrowing the number of network pharmacies.    After cost-sharing, establishing preferred pharmacy networks has been a popular approach to cost management. Limited pharmacy networks, not talked of much before 2010, are much more of a consideration after the contract dispute between Walgreens and Express Scripts.   Providing the broadest access to members may no longer trump the more favorable pricing of a narrowed pharmacy network. A large and growing supply of retail pharmacies makes the limited pharmacy network approach possible.   Caveat emptor - Ballooning is a black box tactic whereby one PBM profit center drives an unusual amount of fees when another is being squeezed. It turns out payers’ cost for mail pharmacy services may increase, when a limited pharmacy network is selected, to offset the negotiated retail pharmacy network.    3.  Implement Specialty Therapy Management.  We know specialty therapies improve outcomes but we also know patients do not take medications the way they should, or in the way it was studied to produce published results. Disease specific algorithms enable us to: Ensure standards of care are consistently followed thereby reducing waste  Monitor therapy to detect and resolve problems; identify opportunities for referral to MTM, PFA or clinics  Pro-actively identify opportunities to keep patients on therapy  Help patients become better informed about their therapy so they can more…

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.

The fundamental attribute of nearly all the major health care sectors is the relentless pursuit of profit without consideration of the larger social consequences.  Some may call that "amoral greed," but the reader can apply his/her own terms.  Add to this reality the fact that some health care competitors also act in a manner that is clueless, while others exhibit varying levels of laziness, arrogance and spinelessness. Consider the payer segment of health care.  These are mainly the public and private insurers and the self-funded employers that provide coverage for most Americans.  An unstated but implicit message of several postings here is that unless pharma gets its strategic orientation in order and brings its public-be-damned pursuit of profit under control, the payers will give them a thrashing. That would seem to follow because the premise behind both Obamacare, as well as the private health care market, consists of giving payers de facto charge over system.  The Affordable Care Act/Obamacare does it by requiring everyone to get health insurance.  The thinking there was that this would oblige payers to justify their place in the system by controlling costs and improving quality as a result of constraining providers and manufacturers. Any lingering notion that an insurance/payer-driven approach could work in the U.S. now seems increasingly improbable because most private insurers decline to take the initiatives required of them if they are to push American health care toward an affordable, effective system. An example of that comes from sources at several large health insurers, including some Blue Cross/Blue Shield companies.  They make the point that their managements either remain indifferent to pharma pricing or mistakenly see it as benign. Rather than actively managing their populations, their participating providers and the health care manufacturers, the insurers prefer to operate in the old, insurance sales mode of passively making money on the float while allowing costs to escalate.  By and large, they feel their recourse lies in passing higher costs along to policy holders in the form of premium increases. A source at one BC/BS said his colleagues rarely even give any thought to pharma because they outsource that concern to their Pharmacy Benefits Management (PBM) company.   Another health insurance manager related the astounding fact that his company's director of strategic planning actually considers pharma as a constructive force for controlling health care costs. This strategic planner told the people reporting to him that their company's absolute amount of “medical loss” over the past couple of years has remained fairly level.  At the same time, the relationship among the factors contributing to those medical loss expenses has changed, so that hospital expenses have declined as a percentage of the total, while pharma costs have risen substantially. Demonstrating an incredible piece of fallacious, post hoc reasoning, the planning director then concluded that spending more on pharma decreases the larger amounts paid to hospitals. For that reason, he sees rising pharma expenditures as a good thing! Even those private payers not challenged by basic logic shrug…

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.