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.

Pharmacy Benefits Managers (PBMs) are offering more complex programs and adopting data-mining tools to improve outcomes -- not necessarily financial -- for stakeholders.  Payers and their agents, however, continue to use antiquated tactics to alleviate the pain [cost] associated with offering pharmacy benefits; cutting benefits and increasing member cost-share.  Better planning and tougher decisions are required to rein in rising costs. I.  Generic Drug Price Increase While most of the country is ecstatic about the "Patent Cliff" not many payers have considered the potential negative effect on relative prices for generic prescription drugs.  It only makes sense, as competition decreases and demand increases, prices will eventually follow suit. Furthermore, traditional PBMs will lose valuable manufacturer revenue or rebates.  Some PBMs will undoubtedly look to make up the difference thus generic drug prices, your MAC prices, will be the first stop. In the online marketing world the key to success, in my opinion, is a relentless focus on A/B split testing.  The same is true for payers; where those whom relentlessly monitor drug costs throughout the year, making changes on the fly, minimize expenditures.   Those payers whom more or less sign the contract, cut the check and wait for the renewal period unknowingly pay for the private corporate jets!  Find a reliable source for reference pricing and relentlessly monitor costs.           II.  Drug Formulary Tier Increase   Specialty drugs are the fastest growing segment in the pharmaceutical supply chain.  The most common cost-share tier among our plan sponsors is three-tier — generics, preferred brands, non- preferred brands. We are starting to see the emergence of innovative cost-share structures with five or more tiers, but it is unclear whether these will become standard practice.  The co-pay differential between tiers, in our pharmacy, continues to widen.  The difference between tier one and tier two co-pays has increased to $21 (compared to $5 about seven years ago). III.  Fewer Employers to Offer Retiree Prescription Drug Plans   The percentage of employers that plan to continue offering prescription drug plans to Medicare-eligible retirees has dropped dramatically in the past two years, according to a study released May 29 by Buck Consultants L.L.C. Fifty-five percent of employers that now provide pharmacy benefits for Medicare-eligible retirees said they plan to continue offering the benefit, down from 75 percent in the New York-based consulting firm's 2011 survey. Courtesy of Forbes.com Another 33 percent of employers said they were unsure if they would continue offering prescription benefits to Medicare retirees after 2014, a significant increase from the 19 percent who were unsure in the 2011 survey. "Employers have options for controlling prescription drug costs for Medicare-eligible participants," Paul Burns, an Atlanta-based principal at Buck Consultants, said in a statement. "For example, since retiree drug subsidy payments are no longer tax-exempt and do not keep pace with rising drug costs, some employers are considering moving to an employer group waiver plan to take advantage of additional subsidies available as a result of the Patient Protection and Affordable Care Act,"…

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 11/14/2013 - 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.  

With the huge generic cliff we have just experienced in prescriptions drugs and plans experiencing 80 percent generic drug use, you would think that the days of the double digit increases in the cost of prescription drugs is over. But many experts tell us that we need to brace ourselves for the over 400 bio-technically developed specialty drugs on the market with therapies of over $100,000 a year. So the question for 2014 now becomes: “How can I get my employees or members of my health plan to choose wisely when selecting drugs and get the most out of those drugs with the looming high cost drugs replacing older therapies?” Background Until very recently, the cost of the entire prescription drug transaction was hidden from both the employer and employee. In some cases, it still is. For plans under traditional programs with their pharmacy benefit manager (PBM), the pharmacy is reimbursed a lower amount and a higher amount is charged to the plan for the same transaction, with the PBM taking the undisclosed “spread” in the deal as its administration fee. This type of pricing arrangement leaves little for plans trying to create a sense of consumerism, meaning plans that encourage patients to be more responsible consumers of health care dollars through high front-end deductibles or percentage co-insurance. If it is difficult for the employer to know the true cost of a prescription drug, then how should the patient to be expected to know the cost, and then have the means and access to that information allowing better consumerism of prescription drugs? A new day has dawned. More and more PBMs are being forced to offer transparent and pass-through deals where the pharmacy is reimbursed exactly what the plan sponsor pays and the plan sponsor reimburses the PBM for its services through a reasonable and fully disclosed administration fee. With this new day and new way of doing things, PBMs have now created mobile applications that assist patients in making smart decisions – when and where they need to make them – to be smarter and better consumers. The 2014 Mobile Environment The new best weapon to control prescription drug spend is sitting in your employees’ pocket or purse: their smartphone. Research reveals members want more savings and better service. In a 2010 survey of 15 health plans conducted by InfoAlchemy, members are confused by how health care is priced, eight of out ten members want mobile health care applications, member engagement through mobile is 400 percent higher than traditional internet applications and lastly, showing local options helps to reduce cost. According to new research from the Pew Research Center’s Internet & American Life Project, 61 percent of Americans own a smartphone. Many still own a regular cellphone with 91 percent of the adult population owning some sort of mobile phone. But the jump in smartphone owners is substantial. According to Pew’s previous reports, in May 2011, 35 percent of Americans owned smartphones, while in February 2012, 46 percent owned…

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 11/07/2013 - 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.

The New York Times reported that nearly one in five Medicare patients returned to the hospital within 30 days of their initial discharge. In that first month, the patient has to begin a transition back into their regular routine, along with the application of their newly gained post-discharge treatment. These initial 30 days can reflect not only the quality of the care received at the hospital, but also the education provided to the patient in reference to their medication and can greatly affect their recovery. For the past two years, Mercy Philadelphia Hospital has teamed up with SunRay Drugs, the Philadelphia College of Pharmacy at the University of Sciences, and Keystone First insurance provider, in order to enhance the progression of care from the hospital to home, particularly in the area of medication management so as to prevent hospital readmission. This bond of organizations not only works together to dissolve the gap between home and the hospital, but also provide an even greater opportunity to further educate the patients enrolled in this program. From this opportunity, a direct correlation has been seen in readmission rates. As the patient’s medication knowledge is increased, their likelihood of being readmitted to the hospital can decrease. Compliance Packaging:  Integral part of any good MTM program Patients that are at a higher risk of readmission are identified and offered enrollment in a medication therapy management (MTM) with SunRay Drugs and the University of Sciences. Through these MTMs, clinical pharmacists uncover the patients’ individual drug therapy problems and work to adjust them. Follow-up appointments give the enrollee an opportunity to grasp a clearer concept of their medication, and assist in giving them the information they need in order to stay out of the hospital. Mercy Philadelphia Hospital’s Director of Care Coordination Austin Reed and Clinical Pharmacy Coordinator Tom Turco are two key players in this initiative. They are aware of how vital the first 30 days of a patient’s discharge can be to a patient’s short and long-term future. The two also know that the involvement of family members often plays a major part in a patient having a smooth recovery process. "The families are often the caregivers," says Turco. "They handle affairs, and in some cases, may be more involved in the details of a patient’s medication, than the patients themselves." "We have completely changed our care coordination model in order to better suit the needs of patients. In addition to that, we have been working with other hospitals that are using similar systems, in order to increase our system’s efficiency as well, "says Reed. "It is crucial that they are well-educated on how to manage their medications," Turco says in reference to high-risk patients, most notably those that take numerous medications, those with difficulty accessing medications, patients with co-morbid conditions, and the elderly. In these cases, medication compliance is key in a smooth healing process. The obstruction of one’s treatment can result in complications, morbidity, mortality, and increased healthcare costs. Factors such as low…

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 10/31/2013 - 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. I welcome any comments you may like to post.  In addition, feel free to contact me at tyrone_squires@transparentrx.com or call (702) 430-4536.

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 10/24/2013 - 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.

Today’s Managing Health Care Costs Number is $311,000 Source   (BOB= Book of Business) An editorial in today’s JAMA decries the price of the orphan drug Ivacaftor (Kalydeco), a product of Vertex Pharmaceuticals for cystic fibrosis patients who carry a specific mutation.   The price is $311,000 – although some patients could pay as much as $373,000. The drug would be taken for decades. The drug was developed after researchers funded by the National Institutes of Health, identified the genetic defect. The Cystic Fibrosis Foundation gave Vertex and its predecessor company $75 million in research funding, and allowed it access to its therapeutics development network to speed the trials that gained it FDA approval. The authors say “pharmaceutical companies have an implicit obligation to put patient well-being and resource utilization on an equal footing with return on investment” and “the pharmaceutical industry and its financial backers should seek to consider both financial return and social good, embracing the tenet of social justice.   They also call for transparency in pricing.  To continue reading click here... About the Author Jeff Levin-Scherz is an Assistant Professor at Harvard Medical School and Harvard School of Public Health. He is the Chief Medical Officer at One Medical, an innovative and growing primary care practice currently in San Francisco, New York and Washington DC.