Drug Channels published a fascinating look at rebate payments, through Texas-mandated PBM disclosures, taken in by pharmacy benefit managers from 2016 to 2021. The majority of the rebates, fees, and other payments from manufacturers go to plan sponsors, according to their evaluations of the new PBM disclosures that Texas has enforced. Considering this impactful sharing of information, I am re-running this post: 6 Indicators Your PBM is Hoarding Rebates.

In pharmacy benefit management, pass-through doesn’t mean what you think it means hence the title of this post 6 Indicators Your PBM is Hoarding Rebates. A logical person would surmise that when a pharmacy benefit manager (PBM) professes it is pass-through, any discounts it has negotiated are distributed back to the client. Au contraire mon frere.

Pass-through pricing means that the PBM passes the discounts, rebates, other revenues, and actual costs charged by the pharmacy or paid by a pharmaceutical company (in the form of refunds) directly on to the plan sponsor. In actual use, it can have various definitions according to the understanding of the parties.

When a PBM salesperson tells you its organization is pass-through, they aren’t necessarily being untruthful. What they and you must understand is that in practice they are passing through only the discounts or refunds required by the contractual terms. The typical PBM salesperson is working with limited industry knowledge, so they don’t know any better. If there is a loophole, you must assume the PBM will take financial advantage of it.

The term pass-through must be carefully defined in the contract in every instance it is used since there is no industry-accepted definition. If the term is not included in the contract, add it. I spoke with a broker recently who was adamant that the deal they negotiated for their client was pass-through. When I pushed back the broker insisted that the contract was pass-through because the PBM told him so.

The base administrative fee for services related to pharmacy benefits management including, but not limited to, mail services, clinical services, and customer service was $0.00. I asked, rhetorically, how can the PBM make a profit if not through hidden cash flow streams when there is no administrative fee? It is not possible for a PBM contract to be truly pass-through when it waives the administrative fee. Here are 6 indicators your PBM is hoarding rebates.

1. The base administrative fee for services related to pharmacy benefits management including, but not limited to, mail services, clinical services, and customer service is artificially too low. It is not possible for a PBM to be truly pass-through when it waives the administrative fee or doesn’t charge enough to cover overhead.
2. The definition for rebates in the contract language is opaque. One example is “…and directly attributable to the Formulary and Covered Product utilization by Eligible Persons.” Allowing contract language such as this the broker unknowingly permits the PBM to retain at least 15% of rebate dollars.
3. You forgo all or a portion of rebates to take a credit on the medical administrative fee. Heck, you may as well call it for what it is – a bonus payment. The PBM’s pricing analysts will shift costs to make up for any “credit.” What’s more, these credits incentivize the PBM to dispense more brand drugs. An 87% generic dispense rate (GDR) is not good. It is below average. An 80% or higher prior authorization approval rate is not good either. In fact, it is way too high. High PA approval rates don’t improve outcomes, but it does increase drug spending unnecessarily. Rebate credits reward PBMs for rubberstamping drug utilization management programs. Never forgo rebates for any reason including medical benefit drug rebates.
4. The PBM excludes claims with DAW codes 1, 3 or 5 from rebate eligibility. There is no reason on god’s green earth for these claims to be excluded other than the PBM taking financial advantage of its client. DAW code exclusions are driven by PBMs who profit from an opaque revenue model.
5. The PBM does not provide claim (NDC) level reporting. A Rebate Remittance Summary Report is a summary of the total payments received from manufacturers, on a per client basis, which includes the total allocations for these payments, NDC, pharmacy identifier, claim number, fill date, and plan identification. The information in this report will reflect the guarantee and payment received on each specific claim.
6. The PBM service agreement ought to incorporate year-over-year increments on rebate or refund rates. This increment will assist with guaranteeing that your agreement is working every year. When long-term agreements are set up, it’s particularly vital to increase rebate rates every year to adjust for inflation and provide price protection. One more method for tending to this yearly rebate rate increment is through a market check. The market check helps to ensure you are getting the best rates year-over-year. In a perfect world, you would incorporate both the year-over-year increments of rebate rates, as well as an annual market check provision in the PBM service agreement.

Conclusion – 6 Indicators Your PBM is Hoarding Rebates

The Lehigh County Controller’s Office reviewed Lehigh County’s prescription drug plan which lost savings of almost $1.4 million, while battling a lack of transparency and openness about drug costs[i]. Lehigh County elected to choose a fixed discount structure, meaning that it received a flat rate savings for each employee on its healthcare plan. Lehigh County is self-insured. It could have elected to take full rebate value which results from savings passed from the pharmaceutical company to the pharmacy benefit manager but chose not to do this. In 2019, Lehigh County found that the actual rebate value exceeded the fixed discount by $700,000. The Controller’s Office also identified $654,749 in potential drug cost savings through a market check.

Bloomberg Law writes, “among employers’ concerns are a lack of transparency into whether PBMs are fully refunding rebates and discounts negotiated with drug manufacturers; how PBMs profit from manufacturer discounts; and whether they are including expensive drugs on formularies to increase their own profits.” It seems Bloomberg Law and Lehigh County have a lot in common.

[i] Siegel. J. 2021, January 29. Lehigh County Controller Takes on Highmark Health Insurance. PR Newswire. https://www.prnewswire.com/news-releases/lehigh-county-controller-takes-on-highmark-health-insurance-301218070.html.

Self-funded plans sue health care company, alleging overcharging and other ERISA violations and other notes from around the interweb:

• Self-funded plans sue health care company alleging overcharging and other ERISA violations. The plaintiffs, self-funded health plan fiduciaries, claim the defendants breached their fiduciary duty under ERISA by denying the plaintiffs access to their plan claims data, failing to manage the claims “prudently, loyally, and in compliance with documents governing the plans,” and partaking in “prohibited transactions relating to the management and disposition of plan assets,” the complaint said. ERISA is a federal law that requires health plans to “provide participants with plan information, including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty,” according to the U.S. Department of Labor.

• Accumulators And Maximizers: A New Front in the Battle Over Drug Costs. At the time the patient presents to the retail pharmacy and uses the copayment coupon, the retail pharmacy (which contracts with the PBM) enters the amount of the coupon in the adjudication system. The PBM notes this part of the transaction and deducts the value of the coupon so that it does not “accumulate” against the deductible. (The pharmaceutical assistance program also notes the value of the coupon, as the programs do put limits on the amount of assistance available.) The beneficiary still avoids the copayment cost at least until she hits the limits on the copayment program, when the coupon ceases to become available and the patient must begin to pay, reinstating the original incentives. From the payer’s point of view—either the self-insured employer or the insurer—the effect is financially salutary. Some pharmaceutical firm funds help pay for the initial costs of the medication. But eventually, the deductible and copayments come back into play and promote consumerism. Yet, as the coupon limits come into play, the beneficiary faces challenges from out-of-pocket spending, and adherence can drop.

• Getting off the PBM Merry-go-Round: How Late-stage Offer Tricks Take Employers for a Ride. Monies offered by PBMs come in many forms – a general allowance credit that the client can use to pay for claims and expenses during open enrollment and implementation, an administrative credit that the client can use to pay back to the PBM for administrative fees, a clinical credit that the client can use to pay for voluntary clinical programs administered by the PBM or, at times, slightly improved pricing. If it seems odd that two of these credits go towards paying back the PBM for additional services, that’s because it is. Employers should think of these credits like getting tokens at a carnival – the tokens are valuable, but only if the employer uses them at the proverbial PBM carnival (i.e., invests them back into the PBM). If PBMs would manage their costs appropriately to begin with, employers wouldn’t be taken for this ride.

• ERISA-Covered Companies Must Disclose Health Plan Costs. Starting in 2022, an estimated 2.5 million employer-sponsors of health plans are required to adopt new fee and pricing transparencies due to amendments made to ERISA. While ERISA has focused on retirement service fees in the past, the spotlight is now on healthcare costs. The requirements fall under the Affordable Care Act (ACA) and Consolidated Appropriations Act, 2021 (CAA 2021), and affect organizations covered by the Employment Retirement Income Security Act of 1974 (ERISA). ERISA applies to most private companies that offer healthcare and retirement plans to employees. Complying with ERISA fiduciary duties for group health plans has been challenging due to the lack of fee transparency in the industry. However, the new transparency rules put more fee and pricing information into the hands of health plan fiduciaries and other stakeholders to shed light on these fees.

Because plan sponsors don’t know how to calculate how much money pharmacy benefit managers (PBM) make, it gives PBMs all the incentive they need to overcharge. How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers, and their stakeholders, don’t offer a fiduciary standard of care and instead opt for hidden cash flow opportunities to generate their service fees. Want to learn more?

Here is what some participants have said about the webinar.

“Thank you, Tyrone. Nice job, good information.” David Stoots, AVP

“Thank you! Awesome presentation.” Mallory Nelson, PharmD

“Thank you, Tyrone, for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners at the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist

A snapshot of what you will learn during this 30-minute webinar:

• Hidden cash flows in the PBM Industry
• Basic to intermediate level PBM terminologies
• Specialty pharmacy cost-containment strategies
• Examples of drugs that you might be covering that are costing you
• The #1 metric to measure when evaluating PBM proposals

Understanding how PBMs make money and how much you pay them for their services is a key element in running an efficient pharmacy benefits program. Join us to learn more.

See you Tuesday, 12/12/22 at 2 PM ET!

Sincerely,
TransparentRx
Tyrone D. Squires, CPBS  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135 
Office: (866) 499-1940
Mobile: (702) 803-4154

P.S. Yes, it’s recorded. I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready. 

Type 2 Diabetes Drug is Hollywood’s Latest Diet Craze and other notes from around the interweb:

• Type 2 Diabetes Drug is Hollywood’s Latest Diet Craze. Those whose eyes are open to it are getting the drug through a crosstab of specialists—high-profile endocrinologists, ob-gyns, cardiologists—some of whom people say are looser with their justifications for prescribing it. The real proliferation has happened through telemedicine. With qualifying insurance, people can pay as little as $25. But some in Hollywood are paying out of pocket, up to $1,500 per month. The demand has overwhelmed pharmacies and made it difficult for people who actually need Ozempic to get their prescription on time. There has been no long-term study of the drug for people without blood sugar diseases taking the medication. And less of a guide for those tired of feeling tired or nauseous or injecting themselves or paying thousands of dollars a year to poke themselves with a drug people don’t know much about other than it seems to work.

• Accumulators And Maximizers: A New Front in the Battle Over Drug Costs. At the time the patient presents to the retail pharmacy and uses the copayment coupon, the retail pharmacy (which contracts with the PBM) enters the amount of the coupon in the adjudication system. The PBM notes this part of the transaction and deducts the value of the coupon so that it does not “accumulate” against the deductible. (The pharmaceutical assistance program also notes the value of the coupon, as the programs do put limits on the amount of assistance available.) The beneficiary still avoids the copayment cost at least until she hits the limits on the copayment program, when the coupon ceases to become available and the patient must begin to pay, reinstating the original incentives. From the payer’s point of view—either the self-insured employer or the insurer—the effect is financially salutary. Some pharmaceutical firm funds help pay for the initial costs of the medication. But eventually, the deductible and copayments come back into play and promote consumerism. Yet, as the coupon limits come into play, the beneficiary faces challenges from out-of-pocket spending, and adherence can drop.

• Getting off the PBM Merry-go-Round: How Late-stage Offer Tricks Take Employers for a Ride. Monies offered by PBMs come in many forms – a general allowance credit that the client can use to pay for claims and expenses during open enrollment and implementation, an administrative credit that the client can use to pay back to the PBM for administrative fees, a clinical credit that the client can use to pay for voluntary clinical programs administered by the PBM or, at times, slightly improved pricing. If it seems odd that two of these credits go towards paying back the PBM for additional services, that’s because it is. Employers should think of these credits like getting tokens at a carnival – the tokens are valuable, but only if the employer uses them at the proverbial PBM carnival (i.e., invests them back into the PBM). If PBMs would manage their costs appropriately to begin with, employers wouldn’t be taken for this ride.

• ERISA-Covered Companies Must Disclose Health Plan Costs. Starting in 2022, an estimated 2.5 million employer-sponsors of health plans are required to adopt new fee and pricing transparencies due to amendments made to ERISA. While ERISA has focused on retirement service fees in the past, the spotlight is now on healthcare costs. The requirements fall under the Affordable Care Act (ACA) and Consolidated Appropriations Act, 2021 (CAA 2021), and affect organizations covered by the Employment Retirement Income Security Act of 1974 (ERISA). ERISA applies to most private companies that offer healthcare and retirement plans to employees. Complying with ERISA fiduciary duties for group health plans has been challenging due to the lack of fee transparency in the industry. However, the new transparency rules put more fee and pricing information into the hands of health plan fiduciaries and other stakeholders to shed light on these fees.

Another request for proposal (RFP) season has passed, and I am as befuddled by the process today as I was ten years ago. Thousands of questions, dozens of finalist presentations and never once was a signature-ready contract demanded at the beginning of the competitive bidding process. It wasn’t until after the winner was selected that the PBM service agreement became a topic of discussion. The three most crucial activities during an RFP are contract drafting, contract negotiation, and contract memorializing with a PBM.

Apex Benefits understands the status quo is flawed so they opted to create an internal Peer Review Process (PRP). The PRP is a proactive four-step process for reviewing and discovering potential avenues to save on medical and pharmacy costs. Importantly, contract analysis and scoring are an integral part of their review process. The benefits of a peer review process include information symmetry, increased efficiency, better clinical and financial pharmacy benefit performance. Here are 5 metrics every PBM should be measured by during and after a competitive bidding process:

• Adherence. The most often used metrics for drug adherence, based on refill records, are medication possession ratio (MPR) and proportion of days covered (PDC). I recommend PDC as it does not give credit for refilling a script early. The US Centers for Medicare and Medicaid Services has included PDC in its plan evaluations, and the Pharmacy Quality Alliance has endorsed it as its suggested adherence metric. Even now, accreditation authorities like URAC are starting to demand PDC in authorized organizations’ annual reports. Employers could be spending millions of dollars to provide a pharmacy benefit only for most of the money to be wasted when medication adherence is poor. Goal ≥ 80%.

• Brand Effective Rate (BER). Means the average percent discount off the AWP for all brand drugs. If paid at NADAC or average sales price (ASP), ingredient cost is backed into the AWP to calculate the discount off the AWP. Goal ≥ 18% with weighted averages applied to each channel (i.e. mail, R30).

• Generic Effective Rate (GER).  The average percent discount off the AWP whether paid at MAC, U&C, NADAC, or AWP discount. GER is a crucial performance metric but must be measured with a trained eye. Cost offsets should not be permitted, for instance. A cost offset permits overperformance in one criterion to applied to a different criterion which underperformed. GER allows for the fairest comparison of PBM generic reimbursement rates which accounts for 90% of all prescription drug claims. Goal ≥ 88% with weighted averages applied to each channel (i.e. mail, R90).

• Generic Dispensing Rate (GDR). The percentage of all prescriptions that are dispensed as generic. If there are 83 generic claims out of 100 claims, the generic dispensing rate or GDR is 83%, for instance. According to HealthPartners data, a one percentage point increase in use of generics could cut pharmacy costs by around 5%. Goal ≥ 90%.

• Per Member Per Month (PMPM). There is one immutable truth in pharmacy benefits management. PMPM is the most important financial metric to plan sponsors in the world of pharmacy benefits management. Why, do you ask? PMPM takes into consideration ingredient cost (net of rebates), clinical performance such as step therapy or prior authorization where product mix and utilization are the primary cost drivers, ancillary fees like manufacturer assistance programs, and the PBM management fee. Goal < $80 PMPM.

When the state of Ohio discovered about $225,000,000[i] in secret cash flows from only two PBMs in a single year, it is what caused it to terminate those two PBM contracts. Ohio switched to include PBM management fees in their PBM financial audit instead of relying on discount assurances and rebates. EACD, also known as earnings after cash disbursements, is the sum of money retained by a PBM in exchange for its services. Only after learning how much money a PBM keeps for themselves do you start to understand the scope of overpayments.

If PBM ‘A’ proposes $63 PMPM annual cost and PBM ‘B’ proposes $88, one can safely assume the $25 PMPM cost difference is revenue to the PBM or its third-party vendors. A group with 8000 members pays PBM ‘B’ an extra $2.4 million per year for the management fee alone! Understanding and implementing the PBM’s management fee or EACD in your RFPs is necessary for running a successful pharmacy benefits program. The PBM must be willing to share both the amount and the source of its financial flows. Move on if it balks.

5 Metrics Every PBM Should Be Measured By

Generally speaking, plan sponsors aren’t taking the Consolidated Appropriations Act seriously. Sure, you want the annual reports submitted on time but that is the extent of it. The Feds are forcing you to do what they believe you have failed to do in the past – get educated and forge a new path to managing pharmacy benefits cost-effectively. It starts with your competitive bidding process. Big AWP discounts and minimum rebate guarantees have been used as a distraction. There are two things a non-fiduciary PBM can’t hide from: radically transparent contract language and a guaranteed PMPM cost.

[i] Meltzer, R. August 2016. Ohio cracks down on PBM contracts after audit shows egregious spread pricing in Medicaid. December 1, 2022. https://www.fiercehealthcare.com/regulatory/ohio-takes-action-after-finding-pbms-engaged-egregious-spread-pricing-medicaid

FDA Approves $3.5 million gene therapy, Hemgenix, to treat adults with Hemophilia B. Following approval by the U.S. Food and Drug Administration, Australian pharmaceutical company CSL Ltd on November 22, 2022, set the list price of its one-time gene therapy for hemophilia B at $3.5 million, making it the costliest treatment in the world. Hemgenix (etranacogene dezaparvovec), an adeno-associated virus vector-based gene therapy, has been approved by the U.S. Food and Drug Administration for the treatment of adults with hemophilia B (congenital factor IX deficiency) who are currently receiving Factor IX prophylaxis therapy, have experienced recent or past life-threatening hemorrhage, or have had recurrent, severe spontaneous bleeding episodes.

Blood clotting factor IX, a protein required to build blood clots to halt bleeding, is either absent or present in insufficient amounts in people with hemophilia B, a genetic bleeding condition. After an injury, surgery, or dental operation, there may be prolonged or substantial bleeding as a symptom. In more serious circumstances, spontaneous bleeding episodes may happen without a known reason. Serious problems, such as bleeding into joints, muscles, or internal organs, including the brain, can result from protracted bleeding episodes.

Men are more likely than women to develop hemophilia B and show symptoms. Hemophilia B affects roughly 15% of hemophilia patients, with an incidence of one in 40,000 in the general population. Many female carriers of the illness don’t exhibit any symptoms. However, it’s thought that 10–25% of female carriers may experience mild symptoms; very rarely, women may experience moderate or severe symptoms.

In order to strengthen the body’s capacity to stop bleeding and encourage healing, the clotting factor that is inadequate or lacking is routinely replaced. To maintain enough amounts of clotting factor to stop bleeding episodes, patients with severe hemophilia B often need a routine treatment schedule of intravenous (IV) infusions of Factor IX replacement medicines. Hemgenix is a one-time gene therapy treatment administered by intravenous infusion. A viral vector called Hemgenix carries a gene for clotting factor IX. In order to manufacture more Factor IX protein, raise blood levels of the substance, and lessen bleeding episodes, the gene is expressed in the liver.

Two studies with 57 adult men aged 18 to 75 with severe or moderately severe hemophilia B examined the safety and efficacy of Hemgenix. On the basis of drops in the men’s annualized bleeding rate (ABR), effectiveness was determined. A 54-person study found that the subjects had higher levels of Factor IX activity, less need for routine Factor IX replacement prophylaxis, and a 54% drop in ABR from baseline. Hemgenix side effects that were most frequently reported were liver enzyme increases, headaches, minor infusion-related responses, and flu-like symptoms. Blood liver enzyme increases (transaminitis) and unfavorable infusion reactions should be watched in patients.

What do Ticketmaster and Pharmacy Benefit Managers have in common and other notes from around the interweb:

• Accumulators And Maximizers: A New Front in the Battle Over Drug Costs. At the time the patient presents to the retail pharmacy and uses the copayment coupon, the retail pharmacy (which contracts with the PBM) enters the amount of the coupon in the adjudication system. The PBM notes this part of the transaction and deducts the value of the coupon so that it does not “accumulate” against the deductible. (The pharmaceutical assistance program also notes the value of the coupon, as the programs do put limits on the amount of assistance available.) The beneficiary still avoids the copayment cost at least until she hits the limits on the copayment program, when the coupon ceases to become available and the patient must begin to pay, reinstating the original incentives. From the payer’s point of view—either the self-insured employer or the insurer—the effect is financially salutary. Some pharmaceutical firm funds help pay for the initial costs of the medication. But eventually, the deductible and copayments come back into play and promote consumerism. Yet, as the coupon limits come into play, the beneficiary faces challenges from out-of-pocket spending, and adherence can drop.

• What do Ticketmaster and Pharmacy Benefit Managers have in common? Popular American singer and songwriter, Taylor Swift, released her newest album ‘Midnights’ in October. The album quickly became the most-streamed album in 24 hours on Spotify, with 184.6 million streams, according to Guinness World Records. Following the release, the artist sought to work with Ticketmaster, a company who arguably has a monopoly on all ticket sales in the country, for pre-sale tickets for her new ‘Eras’ tour. But shortly after online pre-sale started for the tour on Tuesday, November 15th, Ticketmaster canceled the public on-sale that was supposed to take place on Friday, after the site had sold two million tickets and saw long wait times and temporary outages. How is Ticketmaster getting away with this? Pharmacy benefit managers (PBMs), like Ticketmaster, are third-party administrators of prescription drug programs that are primarily responsible for processing and paying prescription drug claims. As Wayne Winegarden notes in his study, “The Economic Costs of Pharmacy Benefit Managers,” due to their government sponsored ‘near-monopoly’ position, PBMs can charge fees that are high and retrospective.

• Getting off the PBM Merry-go-Round: How Late-stage Offer Tricks Take Employers for a Ride. Monies offered by PBMs come in many forms – a general allowance credit that the client can use to pay for claims and expenses during open enrollment and implementation, an administrative credit that the client can use to pay back to the PBM for administrative fees, a clinical credit that the client can use to pay for voluntary clinical programs administered by the PBM or, at times, slightly improved pricing. If it seems odd that two of these credits go towards paying back the PBM for additional services, that’s because it is. Employers should think of these credits like getting tokens at a carnival – the tokens are valuable, but only if the employer uses them at the proverbial PBM carnival (i.e., invests them back into the PBM). If PBMs would manage their costs appropriately to begin with, employers wouldn’t be taken for this ride.

• ERISA-Covered Companies Must Disclose Health Plan Costs. Starting in 2022, an estimated 2.5 million employer-sponsors of health plans are required to adopt new fee and pricing transparencies due to amendments made to ERISA. While ERISA has focused on retirement service fees in the past, the spotlight is now on healthcare costs. The requirements fall under the Affordable Care Act (ACA) and Consolidated Appropriations Act, 2021 (CAA 2021), and affect organizations covered by the Employment Retirement Income Security Act of 1974 (ERISA). ERISA applies to most private companies that offer healthcare and retirement plans to employees. Complying with ERISA fiduciary duties for group health plans has been challenging due to the lack of fee transparency in the industry. However, the new transparency rules put more fee and pricing information into the hands of health plan fiduciaries and other stakeholders to shed light on these fees.

In a statement released last week, the FTC reaffirms commitment to unfair business practices. Beyond what is covered by the other antitrust provisions, Congress granted the Federal Trade Commission (FTC) the exclusive power to detect and enforce this conduct. However, the agency hasn’t always consistently fulfilled this duty in recent years. By limiting its oversight to a more limited range of situations, the FTC’s previous policy made it more difficult for the agency to address the whole spectrum of anticompetitive behavior in the market.

With the recent announcement, this restriction is lifted, and the agency states its intention to use all its statutory power to take legal action against businesses that take unfair advantage of their competitors rather than engaging in fair competition. Congress created the Federal Trade Commission Act in 1914 as a result of dissatisfaction with the Sherman Act’s enforcement, the first antitrust law. The FTC Act’s Section 5 prohibits “unfair methods of competition” and directs the Commission to uphold this rule.

According to the policy statement, unfair methods of competition are strategies that aim to acquire an advantage without engaging in a merit-based competition and that are likely to lessen market competition. The Commission’s strategy for policing them is outlined in the Policy Statement. It is the outcome of several months’ worth of collaboration between agency departments. Staff members combed through hundreds of Commission decisions, consent orders, and court rulings—including more than a dozen Supreme Court opinions—to examine the legislative background of Section 5 and its interpretation. The agency will follow the rich case history as it applies Section 5 to its operations. The Commission will warn firms about how to compete fairly and legally through enforcement and rulemaking.

This is without a doubt a prelude to the FTC’s inquiry into pharmacy benefit manager (PBM) practices. Those stakeholders seeking change, for the better, in pharmacy benefit manager practices are eagerly awaiting the commission’s final report. PBMs are a crafty bunch. They’ve already made moves to protect margins from any FTC decision that might curtail PBM revenue streams that are bad for customers.

Consolidated Appropriations Act shifts more responsibility to employers next year and other notes from around the interweb:

• Centene gives politicians millions as it courts contracts and settles overbilling allegations. On Nov. 2, 2021, Nevada Gov. Steve Sisolak’s reelection campaign received ten separate $10,000 contributions from unrelated health insurance plans from across the country. The Buckeye Community Health Plan of Ohio, Louisiana Healthcare Connections, and Peach State Health Plan of Georgia were among the companies that sent money to the Democrat, according to state campaign finance records, even though only one, SilverSummit Healthplan, provided insurance in the Silver State. But a thread connects the companies: Each is a subsidiary of Centene Corp., ranked 26th on the Fortune 500 list, and the nation’s largest private managed-care provider for Medicaid, the government insurance program for people with low incomes or disabilities. Centene had already sealed Medicaid deals in Nevada through its SilverSummit subsidiary — yet a potential new line of business was on the horizon. Sisolak, who is up for reelection Nov. 8, had just approved a new public health plan option that would later open to bidding from contractors such as SilverSummit. And then, less than two months after Centene’s subsidiary contributions were made, Nevada settled with the company over allegations the insurer overbilled the state’s Medicaid pharmacy program. The state attorney general’s office did not announce the $11.3 million settlement but disclosed it in response to a public records request from KHN.

• 4 questions to ask before signing your next PBM service agreement. The very idea of managing pharmacy benefits might make you nauseous. That’s because drug prices are skyrocketing, creating significant challenges for your company’s bottom line. You may think that your pharmacy benefit manager (or PBM) – who is responsible for handling contractual relationships between drug manufacturers, health insurance providers, pharmacies, and patients – would negotiate the best possible deals for everyone involved. Unfortunately, recent reports from the PBM Accountability Project show otherwise: PBMs often misuse their immense power by adding secret streams of revenue for themselves. The Federal Trade Commission (FTC) has noted this trend too and announced plans in 2022 to investigate the inner workings of PBMs. But some states are taking it upon themselves to crack down on PBM business dealings, too. For example, Florida and Iowa joined Michigan in passing legislation in 2022 that regulates certain PBM practices – while Ohio’s Medicaid department is also conducting audits.

• Is prescription copay assistance contributing to rising drug prices? Why buyers should beware. Drug manufacturers say they offer coupon programs to help patients offset the rising out-of-pocket cost of prescriptions due to health insurance plan design changes. “Every day there are patients who show up at the pharmacy and find their commercial insurance won’t cover the cost of their medicine,” said Brian Newell, spokesman for the drugmaker trade group Pharmaceutical Research and Manufacturers of America. “To help fill these gaps in insurance coverage, biopharmaceutical companies offer coupons and other forms of patient assistance.” Pharmacy benefit managers say drugmakers only offer coupons to entice people to take more expensive brand-name drugs. When these programs started, they were really mostly for uninsured people, said Robert Popovian, chief science officer of the Global Healthy Living Foundation, which advocates for patients with arthritis and other chronic illnesses. But the need for drug copay assistance among the insured has grown as health plans have shifted more of the cost burden onto patients via high deductible health plans, said Kollet Koulianos, vice president of payer relations at the National Hemophilia Foundation.

• Self-funded plans ignore the Consolidated Appropriations Act at their peril. The CAA places a range of new fiduciary responsibilities on individuals who manage health plans and on select employer-sponsored health care providers. These regulations aren’t just for plan fiduciaries, but also for trustees and other payers that provide health benefits, including pharmacy benefits. CAA provides plan sponsors with a framework to better evaluate and manage health plan spend and gain greater visibility into compensation arrangements between brokers and providers. That’s the good news. However, it also creates an element of risk because organizations must comply. Plan sponsors must familiarize themselves with the costs of health care, with how their broker or consultant partners are paid, and they must be able to disclose this information to the Department of Labor and Health and Human Services. Those who eschew this responsibility and fail to develop a defensible process or run afoul of CAA regulations could face fines and significant liability in the form of legal action from employees.

The list of methods in which bad PBM revenue streams are created is long. They include but are not limited to:

1. Clawbacks
2. Ballooning
3. Drug reclassification
4. Back-billing
5. Rebate spreads
6. Ingredient cost spreads
7. DIR fees
8. Differential contracting
9. Poor utilization management
10. Poor product mix

I could go on, but you get the idea. Kick back, increase the playback speed to 1.5x or 2x and watch as I go into detail about PBM revenue streams. To learn more about bad PBM revenue streams, join the next Certified Pharmacy Benefits Specialist course. It starts on January 12, 2023!

The Certified Pharmacy Benefits Specialist (CPBS) program offers three different instructional formats: live online classrooms, in-person Knowledge Camps, and self-study. Every Thursday at 6 PM ET, the online class meets for roughly 1.5 hours. Every class is taped for later viewing. PBIA is approved by the Society for Human Resource Management (SHRM), HR Certification Institute (HRCI), American Council of Pharmacy Education (ACPE), and forty-six states to provide up to 20 recertification credit hours to licensed pharmacists, pharmacy technicians, life and health professionals, and human resources specialists. Since we began offering our courses in 2014, more than 1,000 students have earned the CPBS credential.

“Thanks for everything throughout the course. The firm I work for is trying to get more involved in the Plan Sponsor space, and in doing so, we have been reviewing a lot of PBM/Plan Sponsor contracts. I can’t tell you how much more confident and comfortable I am working through these PBM contracts now and what I need to be looking out for.” – Adam Farkas, Esq. Associate Attorney