Spending in the U.S. on specialty drugs used to treat serious diseases is projected to increase 67 percent by the end of 2015, according to a forecast  by pharmacy benefit management firm Express Scripts. Specialty medicines are those used to treat chronic, complex diseases such as cancer, multiple sclerosis and rheumatoid arthritis. They are prescription drugs that require special handling, distribution and administration. Many specialty medicines are biologics that are delivered via an injection or an infusion and are used to treat chronic, complex diseases. Prescription drug spending on eight of the top 10 specialty therapy classes will continue to increase over the next three years, according to the report. This is due to both the introduction of new biologics and physicians delaying treatment of patients until the new drugs are on the market. According to the forecast, overall spending on traditional prescription drugs – mostly pills used to treat common conditions such as high cholesterol and depression – will decline four percent by the end of 2015, largely because of the availability of generic medications. Only two of the top 10 traditional drugs — for diabetes and attention disorders — are likely to have spending increases over the next three years, but those increases will be significant. Express Scripts said it expects that cancer, multiple sclerosis and inflammatory conditions such as rheumatoid arthritis — all specialty conditions — each will command higher drug spending than any other therapy class except diabetes by the end of 2015. Hepatitis C drug spending likely will quadruple over the next three years, the largest percentage increase by far among therapy classes.  This increase will be caused in part by new interferon-free medications expected to gain FDA-approval in 2014. “As we see what’s on the horizon, it’s time for employers and health plans to act so they can continue to offer an affordable pharmacy benefit for their members,” said Glen Stettin, M.D., senior vice president, Clinical, Research and New Solutions at Express Scripts. “New specialty treatments are making a real difference in the lives of patients, but the very high cost of these drugs creates difficult decisions for plan sponsors on which medicines to cover.” Biosimilars, which are  less-costly alternatives to biologics, could become available once the patents expire on currently marketed biologics, a development that could help mitigate the rising cost of specialty medications.. Express Scripts recently projected that the country would save $250 billion between 2014 and 2024 if the 11 most likely biosimilar candidates were launched in the U.S. Diabetes became the costliest prescription drug therapy class in 2011, and according to the new projections, it will continue to hold that distinction at least through 2015. Over the next three years, Express Scripts expects spending on diabetes medications to rise an additional 24 percent because of high prevalence and a robust pipeline of new therapies. Despite the availability of generic equivalents for many attention disorder therapies, the data projects spending in the category to increase approximately 25 percent over the next…

Deirdre Yapalater’s recent colonoscopy at a surgical center near her home here on Long Island went smoothly: she was whisked from pre-op to an operating room where a gastroenterologist, assisted by an anesthesiologist and a nurse, performed the routine cancer screening procedure in less than an hour. The test, which found nothing worrisome, racked up what is likely her most expensive medical bill of the year: $6,385. That is fairly typical: in Keene, N.H., Matt Meyer’s colonoscopy was billed at $7,563.56. Maggie Christ of Chappaqua, N.Y., received $9,142.84 in bills for the procedure. In Durham, N.C., the charges for Curtiss Devereux came to $19,438, which included a polyp removal. While their insurers negotiated down the price, the final tab for each test was more than $3,500. “Could that be right?” said Ms. Yapalater, stunned by charges on the statement on her dining room table. Although her insurer covered the procedure and she paid nothing, her health care costs still bite: Her premium payments jumped 10 percent last year, and rising co-payments and deductibles are straining the finances of her middle-class family, with its mission-style house in the suburbs and two S.U.V.’s parked outside. “You keep thinking it’s free,” she said. “We call it free, but of course it’s not.” In many other developed countries, a basic colonoscopy costs just a few hundred dollars and certainly well under $1,000. That chasm in price helps explain why the United States is far and away the world leader in medical spending, even though numerous studies have concluded that Americans do not get better care. Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system. A list of drug, scan and procedure prices compiled by the International Federation of Health Plans, a global network of health insurers, found that the United States came out the most costly in all 21 categories — and often by a huge margin. Matthew Ryan Williams for The New York Times A poster illustrating diseases of the digestive system at a doctor's office. Americans pay, on average, about four times as much for a hip replacement as patients in Switzerland or France and more than three times as much for a Caesarean section as those in New Zealand or Britain. The average price for Nasonex, a common nasal spray for allergies, is $108 in the United States compared with $21 in Spain. The costs of hospital stays here are about triple those in other developed countries, even though they last no longer, according to a recent report by the Commonwealth Fund, a foundation that studies health policy. While the United States medical system is famous for drugs costing hundreds of thousands of dollars and heroic care at the end of life, it turns out that a more significant factor in the nation’s $2.7…

Few big moves expected...   Days after the Centers for Medicare & Medicaid Services released hospital chargemaster data for dozens of the most common procedures performed, providers are mulling whether to cut their prices or do nothing at all.   Bruce Lamoureux, chief executive officer of Providence Alaska Medical Center, told Kaiser Health News he was reconsidering the prices his facility charges. "There are some instances where our charges for a particular procedure are, in one case, half of a different provider's, and in a different case, twice a different provider," he told Kaiser. Lamoureux added that listing prices gives consumers more bargaining power. By contrast, Rick Davis, CEO of Central Peninsula Hospital in Soldotna, Alaska, told Kaiser he believes his prices are fair and doesn't expect them to change.   C. Duane Dauner, president of the California Hospital Association, observed in a statement that since Medicare is paid based on DRGs and the state's Medicaid program is paid on negotiated contracts, the chargemaster data release by CMS is "less relevant and may confuse patients as well as the public."   And on a national level, hospitals indicate it would be a gargantuan effort to change their prices so they're in line with Medicare payments.   "I can promise you that if you got into the weeds here, you would immediately discover that it ain't as easy as it sounds," Chip Kahn, CEO of the Federation of American Hospitals, the lobby for for-profit facilities, told the Huffington Post. "If someone decided tomorrow to do it, everybody could do it. But I'm telling you, it would cost billions of dollars--probably small billions, not big billions--because it's not a minor task."   May 13, 2013 | By Ron Shinkman

The Centers for Medicare & Medicaid Services, the largest purchaser of prescription pharmaceuticals, is eliminating or at least leveling the playing for itself and patients.  CMS is collecting wholesale invoices from pharmacies across the country (see below).     CMS will use a combination of calculus, statistics and probability to determine a national average acquisition cost for every prescription medication on its formulary.  It will then send out an RFP stating these are the prices (based upon the calculated acquisition costs) we're willing to pay for prescription drugs listed on our formulary - take it or leave it!     If you're a self-insured employer or a broker this is exactly what you should be doing for clients and employees alike.  It doesn't matter the size of your organization.  If you pay for PBM services accept nothing less than full transparency.     In this case, that means paying only true acquisition costs for all prescription drugs and not a penny more.  If you need help in calculating and/or verifying acquisition costs get off your butt and send me an e-mail I'll be happy to help.  In the meantime, read the letter sent to us by CMS.  Information asymmetry occurs when one party has significantly more information than another.  More important, the party with more information takes advantage of its position.  In business, this often leads to a lack of transparency and abhorrent price disadvantages for purchasers.     It's quite simple, don't do business with any PBM that isn't willing to: (1) share all their price lists/wholesale invoices and (2) provide full audit rights.  If you would like a copy of the original letter simply send me an e-mail and we'll get one out to you. Click here to register for: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels."

Federal and state policymakers should avoid enacting laws that undermine payers' ability to use mail-service pharmacies, preferred pharmacy networks, and other innovative pharmacy benefit management (PBM) tools, the National Center for Policy Analysis (NCPA) asserts in a new report,"Unnecessary Regulations that Increase Prescription Drug Costs." "This report shows policymakers that appeasing the drugstore lobby means higher prescription drug costs for small businesses, consumers, and government programs," said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. Click here to read the NCPA report which highlights a number of regulations and laws that could increase prescription drug costs, including: Barriers to Competition: State Boards of Pharmacy Conflict of Interest Background: The report highlights how some states are seeking to transfer regulatory authority of drug plans from the state's insurance commissioner to the state's Board of Pharmacy. NCPA: "Because state pharmacy boards are controlled by pharmacists, giving them authority over drug plans creates conflicts of interest that could undermine drug plans' ability to negotiate lower prices with pharmacy networks." Barriers to Lower Cost Mail-Service Pharmacies Background: Employers and payers use a variety of incentives to encourage patients to use efficient mail-service pharmacies to address chronic illnesses, such as diabetes. Mail-service pharmacies will save Medicare seniors, employers, unions, government employee plans, consumers, and other commercial-sector payers $46.6 billion in prescription drug costs over the next ten years. NCPA: "Unfortunately, some states are enacting laws that interfere with the ability of drug plans to reward enrollees that use the plan's mail order option by barring drug plans from offering lower prices for mail-order dispensing. This unnecessarily raises costs for consumers, insurers and employers. Obviously, these laws mostly aim to benefit local community pharmacies rather than consumers." Barriers to Competitive Pharmacy Networks Background: A new study finds that the extraordinary number of pharmacies in the United States offers an opportunity to save $115 billion over the next decade through the greater use of preferred and limited pharmacy networks. However, some states have in place so-called "any willing pharmacy" laws and regulations that force plans to contract with pharmacies that don't meet their quality standards or geographic access needs. NCPA: "These any-willing-pharmacy laws are costly to taxpayers, employers and patients alike. The Federal Trade Commission notes that these laws reduce the drug plans' bargaining power, leading to higher drug prices and higher premiums for consumers." Barriers to Efforts to Combat Fraud Background: Health care fraud is a problem that increases overall health costs and is especially burdensome in Medicare and Medicaid. Billions of claims are submitted to millions of providers, making fraudulent claims easy to disguise. PBMs and companies processing electronic payments are effective at discovering irregularities that lead to fraud. NCPA: "Regulations requiring Medicare drug plan administrators to pay claims within 14 days make it difficult to detect fraud before a claim has been paid. At the very least, drug plans need the authority to delay paying questionable claims to providers suspected of fraud. Plans also need greater authority to exclude or suspend suspected…

A bipartisan bill introduced by Rep. Jules Bailey and Rep. Greg Smith would regulate pharmacy benefit managers, which local pharmacists say are driving them out of business. By:  Christopher David Gray March 27, 2013 — Central Drugs Pharmacy has been open for 110 years in downtown Portland, and it specializes in dispensing drugs for those who suffer from HIV. But owner Shelley Bailey told two legislative committees that if abusive business practices by pharmacy benefit managers are not curtailed, she may have to close its doors. She said that pharmacists have been struggling with reimbursements that are completely unpredictable and punitive audits that are often unfounded. While insurers pay a pharmacy benefit manager through a global payment for all the drugs purchased, pharmacists are left buying generics off a commodities market that is wildly volatile, and they are compensated by the pharmacy benefit manager according to a secret formula that pharmacists say by its very design can compensate them below the actual cost. “You sign the contract and hope, you hope you’re going to get paid enough to stay open,” said Chris Brown of PayLess Drugs, a West Coast long-term care pharmacy chain with locations in Portland and Eugene.. Bailey said she was paid $8.60 by a PBM in December to dispense a generic prescription, but in January, she got less than one-fifth that price from a different PBM. “For that same prescription, for that same patient, for that same insurer, we were paid $1.60 by the new PBM that the insurer chose to partner with,” Bailey said. A pharmacy benefit manager, or PBM, is an intermediary company that stands between insurers and pharmacies and manages prescription drug plans. Just two companies — Express Scripts and CVS Caremark — control three-quarters of the prescription drug market, towering over little pharmacies like Central Drugs and even large chains like Walgreens that have no choice but to accept their terms with little protection under current law. Express Scripts, the largest of the pharmacy benefit managers, has 30,000 employees and reported $46 billion in revenue in 2011, with $1.3 billion in profit, and those dollars represent earnings before the PBM merged last year with Medco Health Solutions — an even larger company, with $79 billion in revenue in 2011 and $1.5 billion in profit. Express Scripts’ chief executive officer, George Paz, was the sixth-highest paid CEO in the country last year, with a salary of $51.5 million, according to Forbes. “I don’t believe in businesses putting their thumb on the scale,” Brown said. “Last year, Walgreens dropped out of Express Scripts. They lasted six months. They came back…If Walgreens, the nation’s largest pharmacy chain, can’t negotiate effectively with a PBM like Express Scripts how can you realistically expect community pharmacists and pharmacies? All we want is disclosure.” Generic drugs account for 75 to 80 percent of all drugs that are dispensed in Oregon. Bailey purchases generic prescription drugs off a commodities market that varies wildly, and said PBMs decide how much they will reimburse pharmacies…

The Oklahoma Insurance Department will not be participating in a collaborative effort with the Center for Consumer Information and Insurance Oversight (CCIIO) to enforce the Affordable Care Act (ACA), according to a letter released by Oklahoma Insurance Commissioner John D. Doak . "It is unfortunate that health insurers are being forced into a system of dual regulation by the overreaching Obama administration," Doak said. "My position on this has never wavered and I welcome every opportunity to try to overturn Obamacare." The letter was sent to CCIIO Deputy Administrator and Director Gary Cohen indicating that the Oklahoma Insurance Department does not have the authority to enforce federal law. In the letter, Doak wrote, "I execute my duties collaboratively with the governor and legislature of Oklahoma to meet the needs of the citizens we represent and the requirements of the Insurance Code of the Oklahoma Statutes." "The Oklahoma Insurance Department regulates the health insurance policies sold in the state and responds to consumer questions and complaints. Our consumer assistance team receives over 30,000 phone calls and our website receives over 1,000,000 visits each year. We will continue to serve these consumers by adhering to our duties under the State Constitution and Statutes. The consumers are the ones who are going to bear the costs of these unnecessary federal regulatory burdens," stated Doak. In addition to adding new fees to health insurance products increasing prices both inside and outside the exchange, the ACA requires plans to add expensive and often unnecessary coverage benefits. These costs will impact young adults most severely due to the law's requirement that older Americans pay no more than three times the premium of young adults. A survey of insurers by the American Action Forum found that average premiums for young, healthy adults may triple going into 2014. The Oklahoma Insurance Department consumer assistance team is available to help consumers with issues regarding their current health insurance at 405-521-2828 and toll-free statewide at 800-522-0071. About the Oklahoma Insurance Department The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state. For more information contact: Kelly Collins (405) 522-0683 kelly.collins@oid.ok.gov SOURCE Oklahoma Insurance Department

Click to Learn More While the aforementioned tactics do assist in controlling costs, they're standard practice and are not the aggressive measures necessary to help reduce or control spending.  A Fiduciary PBM is one which truly puts its clients and their members first; before shareholders and profitability.  Hire the right PBM, one willing to follow through on these 7 steps, and you'll surely rein in rising specialty drug costs. Hire a PBM willing to sign on as a fiduciary; transparent speak isn't enough. Promote member use of manufacturer coupons for brand and specialty drugs. PBMs should communicate availability of all coupons to members.  Pay only Cost Plus (no spreads or mark-ups) for all prescription drugs. Include a semi-annual market check in the contract language.  Attain and exercise full auditing rights.  Require the PBM to identify and pass along all sources of attributable revenue from manufacturers.  Limiting agreements to 'rebates' leaves money on the table. Use Reference Pricing — different and much more effective (when applied) than an AWP reporting service. *Cost Plus = [Acquisition Cost + dispensing fee + admin fee] minus Co-pay   Due in large part to specialty drugs, we are clearly entering a time of higher costs. Payers whom act now are in the best position to assure continued access to quality care for their members while effectively managing rising drug costs. Click here to register for: "How To Slash the Cost of Your PBM Service, up to 50%, Without Changing Providers or Employee Benefit Levels."