Major Findings Health spending is projected to grow at an average rate of 5.7 percent for 2013-2023, 1.1percentage points faster than expected average annual growth in the Gross DomesticProduct (GDP). Health spending growth for 2013 is projected to have remained slow at 3.6 percent due tothe modest economic recovery, the impacts of sequestration and continued slow growth in the utilization of Medicare services, and continued increases in cost-sharing requirements for the privately insured. Improving economic conditions, the Affordable Care Act (ACA) coverage expansions, and the aging of the population, drive faster projected growth in health spending in 2014 and beyond. Expected growth for 2014 is 5.6 percent, as 9 million Americans are projected to gain health insurance coverage, predominantly through Medicaid or the Health Insurance Marketplaces. Average annual projected growth of 6.0 percent per year is projected for 2015 through 2023, largely as a result of the continued implementation of the ACA coverage expansions, faster projected economic growth, and the aging of the population. While projected growth is faster compared to recent experience, it is still slower than the growth observed over the longer-term history. The number of uninsured people is expected to decline from 45 million people in 2012 to 23 million people by 2023. By 2023, health expenditures financed by federal, state, and local governments are projected to account for 48 percent of national health spending and to reach a total of $2.5 trillion; in 2012, such expenditures constituted 44 percent of national health spending and $1.2 trillion. Health spending is projected to be 19.3 percent of GDP by 2023, up from 17.2 percent in 2012. Major Findings by Payer Medicare Due to a deceleration in growth driven by sequestration and lower utilization across services, Medicare spending growth is projected to have slowed to 3.3 percent in 2013, down from 4.8 percent growth in 2012, and to have totaled $591.2 billion. Projected Medicare spending growth of 4.2 percent in 2014 reflects both an expected  increase in use and intensity of Medicare services, alongside slow increases in payment rates. For 2015, Medicare growth is projected to slow to 2.7 percent, mostly due to lower payments to Medicare Advantage plans. For 2016 through 2023, projected Medicare spending growth is expected to rebound to 7.3 percent per year due to increased enrollment by the baby boomers, increased utilization of care, and higher payment rates driven by improved economic conditions, which increase growth in the cost of input goods and services used to treat Medicarepatients. These drivers in growth will be partially offset by slow growth in payment updates due to provisions in the Affordable Care Act and sequestration. Medicaid Medicaid spending is anticipated to have grown 6.7 percent and to have reached $449.5 billion in 2013, driven by higher payments rates to primary care physicians called for in the Affordable Care Act, as well as actions by states that increased provider reimbursement rates and expanded benefits. Total Medicaid spending is projected to grow 12.8 percent in 2014 due to increased enrollment…

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 here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]

Foreword: The zero-spread full pass through pharmacy benefits manager (PBM) program you were promised may not be all that it appears. The only way to guarantee (or at least have grounds for indemnification) is to do business with a fiduciary PBM; one that contractually agrees to always put its clients' needs first. By the way, I predicted both the rising cost of generic drugs and increased number of drug tiers last year! ********************************************************************************* A friend of mine, a diabetic, stumbled on to another booby trap in the pricing of generic drugs. In my last column I described the new two-tiered arrangements insurers are pushing on patients. You can choose a non-preferred generic and pay more, maybe a lot more, or a preferred generic and get a price break. That’s the same pricing scheme insurers use for the expensive brand-name drugs. Rising costs are a direct result of demand Consumer groups, doctors, and insurance carriers have encouraged patients to choose generics over the name brands as a way to help lower the nation’s healthcare tab. So for many years my friend has been using a generic drug called Gemfibrozil that diabetics often take to lower triglycerides and cholesterol. It has worked for him. No nasty drug interactions. No nasty side effects. And the price has been low--$2.71 for 60 pills. In August the price more than doubled to $6.14. He was still OK with that. He was not OK when he got a bill in September from Express Scripts, the pharmacy benefit manager for his Medigap carrier whose plan is offered by his former employer, the City of New York. (PBMs, as they’re called, manage the drug benefits for employers and insurers and supposedly help hold the line on prices.) Express Scripts wrote his doctor without consulting my friend, the patient, suggesting that for reasons of “safety and efficacy,” he should switch his patient to a different drug, a generic called Fenofibric acid. His share of the cost would now be $156.70 for 90 pills. Fenofibric acid costs $1.74 per pill compared to Gemfibrozil’s 10 cents a pill resulting in an out-of-pocket cost increase of 1,640 percent. Why the switch, my friend asked his doctor. The doctor pointed to the reasons given in the letter about an increased risk of skeletal muscle effects and said maybe it was advisable to try the new drug. He was, however, astounded by the price, but my friend said it was clear the doctor wasn’t going to fight the PBM. My friend spoke to an official at New York City’s employee benefits office who said her office has never heard of a PBM recommending that a more expensive generic drug replace a cheaper one. I rang up John Rother, former chief lobbyist for AARP and now head of a group called the National Coalition on Health Care. The Coalition is waging a campaign to educate the public about the exorbitant prices of drugs, particularly the Hepatitis C drug Sovaldi and other specialty drugs in the pipeline 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 here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]  

The growing move among employers to adopt high-deductible health plans is one of the major “trends that matter” to specialty pharmacy in today’s stormy health care environment, according to Myrtle Potter, a health care consultant and former Big Pharma executive who offered some tips for navigating this challenge at the 2014 Armada Specialty Pharmacy Summit. In 2013, Ms. Potter noted, 17% of employers offered high-deductible health plans as their employees’ only option—up 31% from 2012, according to PricewaterhouseCoopers’ “Behind the Numbers 2014.” For 2014, she said, some 44% of employers were considering such a move (http://pwc.to/​1eRYLxr). High-deductible plans can pose challenges for anyone with a chronic condition, but they are particularly problematic for patients taking expensive specialty medications, with annual minimum deductibles of $1,250 per person and $2,500 per family. The 2014 annual cap on out-of-pocket costs is $6,350 for an individual and $12,700 for a family—high for anyone, but harder to swallow if it’s front-loaded into the first month or two of each year because of costly specialty drugs. Those steep costs can be a powerful trigger for noncompliance. In one study, high-deductible health plans were found to reduce adherence to prescription medication regimens in four of five conditions evaluated: hypertension, dyslipidemia, diabetes and depression (Am J Managed Care 2013;19:e400-e407), Ms. Potter noted. Only in asthma/chronic obstructive pulmonary disease was there not a significant decline in adherence. The conditions included in the compliance study generally do not require specialty medications, Ms. Potter pointed out; it’s thus possible that the documented adherence problems might be even more pronounced when it comes to specialty medications, “particularly because few of these drugs have generic alternatives in a lower tier, and patients may have to pay $7,600 or more per year out of pocket for specialty medications,” she said. Health Exchanges Not Immune If employer-sponsored plans are increasingly moving toward high deductibles, many plans on the new health insurance exchanges—especially at the lower bronze “metal level”—are already there. In December, HealthPocket Inc., which compares health insurance plans for consumers, found that the average annual individual deductible for a bronze plan was just over $5,000, in addition to the average premium of $295.51 a month, or $3,546 a year (http://bit.ly/​1oevFqq). “These high-deductible plans are causing a bit of a problem,” Debbie Stern, president of Rxperts, told Specialty Pharmacy Continuum. “It’s really putting a high burden on the patient to come up with all of that up front. Even if it’s just a $2,000 deductible, the patient has to pay that up front almost immediately for most specialty drugs, so the first prescription is going to cost them almost the full out-of-pocket for the year. When these plans were designed, people were thinking of drugs that cost $200 a month, not specialty drugs that cost $2,000 a month or more.” Here’s where good specialty pharmacies can really distinguish themselves, Ms. Potter said. “You can provide additional patient support, working proactively to help patients understand their medical plans and anticipate their financial demands.” (See sidebar for…

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 here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]

Insurers may need to find new ways to control costs for specialty drugs, as more states add limits to cost-sharing and utilization continues to grow. At least five states have enacted laws limiting copays and two — New York and Alaska — have expressly prohibited the use of tiered formularies for specialty medications. Another 11 states, including California, Illinois and Virginia, have legislation up for consideration that would limit copays. That state governments are stepping in to place limits on cost-sharing for specialty drugs suggests that public angst over rising out-of-pocket costs is reaching an inflection point—monthly drug costs that were once affordable for patients with conditions like arthritis or multiple sclerosis are becoming harder to cover as part of a family budget. Consumers are seeking relief and lawmakers are turning to insurers to limit what they can charge their members. “The trend towards increased reliance on specialty pharmaceuticals would not raise such an important concern if specialty drugs did not represent the most expensive segment of pharmaceuticals not only for insurers, but also for consumers through cost-sharing measures,” as Chad Brooker, a health policy analyst at Connecticut’s insurance exchange, Access Health, wrote in Health Law and Policy Brief last year. By some estimates, specialty medications account for only one percent of all U.S. prescriptions but 25 percent of national drug spending. Not only is that set to grow to as much as 45 percent by 2017, but the assumption that prices for existing will fall over time may not always be the norm. Teva Pharmaceuticals’ Copaxone, an injection-based multiple sclerosis drug, debuted in 1996 at a price of about $1,000 per month, by 2008 was priced at $2,000 per month, and nowadays is hovering around $5,000. To continue reading click here. By:  Anthony Brino Click here to register for: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]

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 here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]

Until May 1999, the daytime speed limit in Montana was “reasonable and prudent.” Lead foots from around the country called it the home of the Montanabahn. That’s very much how prices are set by the big drug companies today – with similar results. Last year, commonly used generic medicines spiked 600 percent. Meanwhile, the pharmaceutical industry is trying to derail a vital federal drug discount program called 340B that helps hospitals and community health centers supply lower-cost medicines and enhanced services to underserved patients. The industry’s profiteering has gotten the attention of Congress, insurance companies and patients. Per-unit costs on specialty drugs rose 12 percent last year, according to Express Scripts. A database compiled by Bloomberg News shows the steady price increases of leading medications during the past seven years. An Epipen for allergic reactions rose 222 percent. A single dose of the drug Benicar for high blood pressure is up 164 percent. The high-cholesterol medicine Crestor jumped 103 percent per pill. Against this backdrop, the drug industry has marshalled an army of lobbyists to go to war against poor, underserved Americans and the hospitals that treat them. Congress created the 340B drug discount program in 1992 with bipartisan support to allow health providers that serve large numbers of low-income patients to receive discounted medication from drug companies. In turn, these safety-net hospitals and clinics supply low-cost or no-cost medicines to the community. The program also helps fund diabetes, HIV/AIDS, cancer, dental and primary-care clinics. Affordable medications are the key to improving health outcomes. When drug costs get too high, patients skip doses -- or pass up buying prescriptions altogether. According to a survey from the Commonwealth Fund, the United States leads the world in this respect, with one quarter of adults choosing to go without their medications. Their health often declines and many end up back in the emergency room, largely on the taxpayer’s dime. Everyone agrees, even John Castellani, CEO of the industry trade association PhRMA. In a recent interview with Kaiser Health News, he said patients’ “out-of-pocket expenses are potentially so high that we have to be concerned about whether or not people will be able to afford to continue to get their medicines.” In fairness, Castellani was complaining about high prescription deductibles in some plans offered under the Affordable Care Act. But what about the devastating impact of his own industry’s overpriced medications? Here, Big Pharma ducks responsibility and conveniently chooses profits over people. Click here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar] by: GIL GUTKNECHT

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 here to register: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels." [Free Webinar]