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. As of 01/09/2014 - Published Weekly on Thursdays 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.

The debate rages over which option provides the better experience: pharmacy filled-and-delivered prescription drugs, or mail-order systems. Generally, research has shown that more patients prefer to get their drugs through a retail pharmacy than by mail. However, when it comes to who’s saving who more money, two new studies suggest that mail order wins that one hands down. The thumbs up for mail order come from two analyses: One by Centers for Medicare & Medicaid Services, another by Kaiser Permanente and the Centers for Disease Control and Prevention. The former analysis compares mail-service pharmacies and retail pharmacies in Medicare Part D claims, while the latter looks specifically at the experiences of patients with diabetes. The Medicare Part D “finds that mail-service pharmacies have lower overall costs,” reported the Pharmaceutical Care Management Association. “CMS’ data confirms what consumers have known for years: mail-service pharmacies offer a better deal than drugstores in Medicare Part D. This is unwelcome news for drugstore lobbyists who want new regulations on their more affordable competitors,” said PCMA President and CEO Mark Merritt. When CMS looked at generic drugs only, the cost advantage via mail order was 13 percent compared to pharmacy prices.  Click here for the full story... BY DAN COOK December 4, 2013

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" then apply this knowledge to lower plan expenditures for stakeholders. As of 12/19/2013 - Published Weekly on Thursdays 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.

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? Let's take a look at the two standards: Brokers (non-fiduciary) Must recommend "suitable" products, not necessarily best or least expensive Earn commissions or other transaction-based fees   Advisers (fiduciary) Must put clients interests before their own Most charge a fixed fee or percentage Here is the definition of Fiduciary from Wikipedia... A fiduciary duty is a legal and/or ethical relationship of confidence or trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to the other one, who for example has funds entrusted to it for investment.    In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole and interest of the one who trusts.   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. When a fiduciary duty is imposed, equity requires a different, arguably stricter, standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without knowledge and consent.    A fiduciary ideally would not have a conflict of interest. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd" and that "[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.     I don't completely understand why all self-insured plan sponsors don't require pharmacy benefits managers to contractually obligate themselves to a fiduciary role; managers are too busy to investigate further, the C-suite isn't aware of the potential cost savings, or maybe no one cares enough to make a change - all excuses.  As healthcare costs continue to climb it is increasingly important for plan sponsors to hold themselves, brokers, consultants and PBMs more accountable. I've spoken directly with hundreds of benefit personnel and am surprised by how little they actually know about pharmacy benefits. Brokers, consultants and plan sponsors must…

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" then apply this knowledge to lower plan expenditures for stakeholders. As of 12/12/2013 - Published Weekly on Thursdays 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. Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see 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.

I want to make this very clear - not all PBMs engage in deceptive practices. There is a relatively new model, fiduciary, some PBMs are embracing.  This essentially means that a fiduciary PBM has taken the position to forgo driving revenue from hidden cash flows and instead earns revenue from a single source, an administrative fee [per script or per member].    A fiduciary PBM model provides payers with the opportunity to know the actual or true cost of its pharmacy benefit plan.  While this new business model benefits both plan sponsors and their members, some traditional PBMs either can't or won't adopt the fiduciary model for all of its clients.     Here are four deceptive practices traditional PBMs use to hide cash flows from their clients thereby significantly increasing the actual cost of the plan. Excessive Mark-ups from Mail-order Prescriptions It is not uncommon for some PBMs to mark-up mail-order medications as much as 500%! Why do you think traditional PBMs push so hard to move prescriptions to mail-order from retail? A fiduciary PBM will not make an undisclosed profit from mail-order dispensed medications. Again, it will only charge its plan sponsor a flat administrative fee per claim unless some other arrangement has been agreed upon.  The savings are passed back to plan sponsor reducing actual plan costs.  This is not to say that drugs dispensed via mail-order are a bad thing. In fact, mail-order can offer quite a bit of savings.  But you must be aware of the arbitrage opportunities for non-fiduciary pharmacy benefits managers and eliminate them.   Rebates     There was a study conducted by the Pharmacy Benefit Management institute which concluded that 47% of a traditional PBM's revenue is derived from manufacturer revenue.  Just think about this for a second.  It is the plan sponsor driving the business for which these revenues are earned so why should they be earmarked for the PBM?     These monies shouldn't be shared with a PBM, but instead passed back to the plan sponsor 100%. Hence, the fiduciary PBM business model. Don't be duped, there are many names traditional PBMs may use to hide rebate cash flows such as reimbursements or SG&A expenses.  It doesn't matter; the plan sponsor is entitled too any money awarded by a manufacturer as a result of prescriptions dispensed from its plan member. For a rebate eligible prescription drug, rebates are typically $2.00 - $3.00 per prescription.   Differential Pricing or Contracting   A deceptive tactic that is very common yet too many payers are unaware of its detrimental cost. Here is how it works; let's say that a PBMs billing terms to a plan sponsor are based on AWP or average wholesale price for a certain generic drug.  But, the reimbursement to the network pharmacy for dispensing this medication is based on MAC or maximum allowable cost.  MAC is always lower than AWP thus leaving a difference in price or contracting.  The amount a plan sponsor is billed should be exactly…

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" then apply this knowledge to lower plan expenditures for stakeholders. As of 12/5/2013 - Published Weekly on Thursdays 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 10% 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. Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see 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.

Former Surgeon General C. Everett Koop once remarked, “Drugs don’t work in patients who don’t take them.” In the pharmacy realm, not taking prescribed medications, or not taking them correctly, is known as non-adherence. Unfortunately, a new study commissioned by the National Community Pharmacists Association (NCPA), titled “Medication in America: A National Report Card,” uncovered some troubling levels of non-adherence among some of the most frequent medication users in the United States. The research, conducted by Langer Research Associates, found that Americans 40 and older with a chronic medical condition requiring prescription medication receive on average a C+ when it comes to taking their medications correctly. Additionally, one in seven adults who meet the same criteria—approximately 10 million people—receive an F. The grades were based on an average of answers to questions on nine non-adherent behaviors: whether or not in the past 12 months patients failed to fill a prescription; neglected to have a prescription refilled; missed a dose; took a lower dose than prescribed; took a higher dose than prescribed; stopped a prescription early; took an old medication for a new problem without consulting a doctor; took someone else's medicine; or forgot whether they'd taken a medication. These findings show that there are opportunities for prescription drug plans and policymakers to increase the nation’s overall adherence grade. On a federal level, NCPA urges Congress to pass the Medication Therapy Management Empowerment Act (S. 557 in the U.S. Senate and H.R. 1024 in the U.S. House of Representatives) to expand medication therapy management (MTM) services to Medicare Part D beneficiaries. This would not cost the government a dime; previous MTM programs have been shown to lower overall costs as increased pharmacist engagement with patients has avoided costlier health care treatments and procedures. Additionally, plan sponsors should examine their plan designs to ensure they are supporting activities that promote strong adherence such as allowing patients to choose a pharmacy that best suits their individual needs and allowing refill synchronization, which enables patients to have all of their medications refilled on the same day each month. Both of these activities facilitate a stronger patient-pharmacist relationship and promote safer medication use. There is a vested interest for all to increase adherence rates in patients, and enacting the aforementioned changes will help to reach that goal. By implementing common-sense reforms, we can help improve the adherence grade. After all, when it comes to safe medication use, anything less than an “A” is unacceptable. By B. Douglas Hoey, RPh, MBA Hoey is CEO of the National Community Pharmacists Association. The research referred to was commissioned by NCPA as part of the association’s Pharmacists Advancing Medication Adherence (PAMA) initiative, which is sponsored by Pfizer, Merck, and Cardinal Health Foundation.

Acquisition Cost is defined as the invoice price to the pharmacy for a prescription drug dispensed to a patient, minus the amount of all discounts and other cost reductions attributable to such dispensed drug. Average Manufacturer Price (AMP) is the average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to retail community pharmacies and by retail community pharmacies that purchase drugs directly from the manufacturer. The health reform law excludes payments and rebates or discounts provided to certain providers and payers from the calculation of AMP.   In March of this year, the Affordable Care Act (ACA) again amended the legal definition of average manufacturer price (AMP). AMP uniquely serves to determine both a multiple source drug’s reimbursement amount and the rebate amounts for single source, innovator single source, and multiple source drugs within the Medicaid program. No other pricing metric serves this dual function.  Average Sales Price (ASP) - In 2005, Medicare began to pay for most drugs using an entirely new methodology based on ASP rather than AWP. Unlike AWP and WAC, there is a specific method to calculate ASP set forth in the MMA and the Act. Section 1847A(c) of the Act, as amended by the MMA, defines ASP as a manufacturer’s unit sales of a drug to all purchasers in the United States in a calendar quarter divided by the total number of drug units sold by the manufacturer in that same quarter.  The ASP is net of any price concessions such as volume, prompt pay, and cash discounts; free goods contingent on purchase requirements; chargebacks; and rebates other than those obtained through the Medicaid drug rebate program. Certain sales are exempt from the calculation of ASP, including sales at a nominal charge. Average Wholesale Price (AWP) is not based on actual transactional, marketplace price data.  Despite its name and its sometime use as a price index, the published AWP is not an average of actual wholesale prices. It is not intended to represent, and cannot be assumed to reflect, actual transaction prices.   A wholesaler or other direct purchaser from a pharmaceutical manufacturer may agree to sell its products to one or more of its customers at prices that on their face are effectively lower than the published AWP.  AWP information does not reflect any such lower pricing that may be made available in actual purchase transactions through a variety of methods, including, but not limited to, purchase, prompt-pay or other discounts, volume or other rebates or credits, or a variety of other price reduction arrangements. Direct Price (DP) is the price directly reported to AWP publishers by a manufacturer as the list price at which non-wholesalers and healthcare providers may purchase drug products from that manufacturer. These publishers generally do not receive a reported DP for drugs that are sold by a manufacturer exclusively through wholesalers, although in some cases both a DP and a WAC may be provided at the manufacturer’s discretion.  DP does not represent an actual sales price…

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" then apply this knowledge to lower plan expenditures for stakeholders. As of 11/21/2013 - Published Weekly on Thursdays 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 10% 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. Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see 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.