An ownership mindset means taking responsibility for outcomes and being empowered to make the decisions that will lead to those outcomes. To cultivate an ownership mindset on your team, focus on transparency, autonomy, and customer empathy[i]. I would like to think the transparency piece swings both ways both internally and externally. In other words, to have an ownership mindset requires us to be transparent with our teams and demand the same from our vendors. Because pharmacy benefit managers falsely use DAW codes to reduce the number of rebate eligible claims, one can’t stress enough the importance of pharmacy benefit manager (PBM) contract language.

We’re at the tail end of yet another PBM selling season. Not much has changed as PBM proposals – optics – are being placed on a spreadsheet for comparative analysis. There is little regard for evaluating and memorializing contract terms which drive lowest net cost and full disclosure. The language (transparency or lack thereof) in a PBM contract has the biggest impact on PBM cost performance. More specifically, whether a plan sponsor has entered a fair deal or bad deal with a pharmacy benefits manager.

Manufacturers dictate to PBMs which claims are eligible to earn refunds or rebates, for example. The list of claims not eligible for rebates is long! Here is a brief list of claims excluded by drug manufacturers from eligibility for rebates.

• Reversed Claims or Claims for non-eligible Members
• Claims where the Member pays 100% of the cost of the product without subsequent reimbursement under a Benefit Plan (e.g., discount card program), except where Member may pay for the full cost during a deductible or similar period under a Benefit Plan
• Compounds
• LDD
• Home Infusion (claims from IV infusion hospitals are excluded but not necessarily the infusion itself)
• Indian Health/Tribal Serv
• LTC
• Military/DoD
• OTC (except certain test strips for which we get a rebate)
• Vaccines
• Veterans Affairs

It is understandable why drug manufacturers compile an exclusion list of claims before paying rebates. What I can’t reconcile is a non-fiduciary PBM adding to this already exhaustive list of exclusions. Moreover, consultants reviewing proposals must consider the number of claims for which rebates are being paid or are going to be paid. Below are exclusions which should not be allowed but are often left in the contract allowing the PBM to retain the full dollar amount of rebate payments for these types of claims.

• Dispense As Written (DAW) Claims with code 1
• Dispense As Written Claims with code 2
• Dispense As Written Claims with code 5
• Claims with greater than 50% Member cost share

DAW codes are set up by PBMs in our claims adjudication software platforms! One of my Certified Pharmacy Benefits Specialist (CPBS) students wrote, “this is a good course to learn how PBMs nickel and dime their clients to death.” How DAW codes are employed is at the discretion of the PBM and/or sophisticated plan sponsor. In the list of exclusions shared above, DAW codes are being used to generate hidden cash flow. Conversely, PBMs are increasing the final plan cost for their clients. DAW codes are not the only source of rebate spreads, outcomes or value-based refunds are other examples.

DAW 9 has become increasingly popular and is being put into place by non-fiduciary pharmacy benefit managers. In short, even when prescribers write a prescription and sign Product Substitution Permitted — the pharmacist must dispense the brand name product for the product to be covered by the patient’s insurance. This is done by changing the computer DAW code from a 0 to a 9[ii]. Non-fiduciary PBMs make more money from rebates at the expense of their clients not being able to attain the lowest net cost.

Pharmacy Benefit Managers (PBM) Falsely Use DAW Codes to Reduce the Number of Rebate Eligible Claims

Non-fiduciary PBMs have learned how to leverage the purchasing power of unsophisticated plan sponsors to their financial advantage. They give you the optics or what you want to see in exchange for what equates to a blank check. PBM contract language gives the purchaser a peek into the future as to what is really going to happen – after the plan goes live! Contract nomenclature will dictate how a PBM behaves.

A contract with radically transparent language prevents the PBM from taking a rent-seeking strategy. Proposals with opaque contract language should be discounted. Conversely, proposals with radically transparent contract language should be given a premium. Make sure your broker or consultant is an expert at scoring PBM contracts. Ask for samples of their contract scorecards and the methodology. That is step one. Step two is recognizing drafting, negotiating, and finalizing a contract with a PBM are the three most important tasks during a competitive bidding process.

[i] Goff-Dupont, May 25, 2021, 3 signs your team doesn’t have an ownership mindset and what to do about it, August 16, 2022, https://www.atlassian.com/blog/leadership/how-leaders-build-ownership-mindset

[ii] Blakemore, January 6, 2018, The increasing use of DAW 9 and its potential impact on pharmaceutical care, May 12, 2020, https://samblakemore.com/2018/01/06/the-increasing-use-of-daw-9-and-its-potential-impact/

Biosimilars shake up US drug market in 2023 and other notes from around the interweb:

• How specialty drug ‘solution stacking’ can rein in pharmacy benefit costs. Brokers and employer groups alike know that 5% to 10% percent of insured workers and their dependents drive 50% to 60% of the cost of pharmacy claims. A few members with prescriptions for a specialty drug with a five-figure price tag can easily represent the majority of an entire group’s pharmacy spend. These drugs are often lifesaving or provide a dramatic quality of life improvement for those who take them. No one would question the necessity of using them. But when a group can mitigate some of the cost without affecting the clinical outcome, it can be a game changer. The broker who unlocks these savings becomes a trusted ally.

• Biosimilars shake up US drug market in 2023 and beyond despite ‘problem of complexity’. Despite the glacial pace of biosimilar uptake in the United States so far, their use is expected to cut drug costs by $54 billion over the next decade, noted a presenter at the 2022 Rheumatology Nurses Society Conference. “We think biosimilars will drive down drug costs by about $54 billion over the next 10 years,” Christopher Palma, MD, ScM, assistant professor in the department of allergy/immunology and rheumatology at the University of Rochester, in New York, told attendees. Part of the reason for this optimism, according to Palma, is the expected entry of as many as 11 Humira (adalimumab, Abbvie) biosimilars into the U.S. marketplace through the end of 2023. AbbVie’s blockbuster Humira is currently the highest-grossing drug in the world, netting the company $16 billion in U.S. revenue and $19.8 billion in global revenue in 2020 alone.

• AHIP study claims hospitals charge double for specialty drugs compared to pharmacies. Hospitals on average charge double the price for the same drugs compared to those offered by specialty pharmacies, according to a new insurer-funded study released as federal regulators ponder a probe into the pharmacy benefit management industry. The study (PDF), released Wednesday by insurance lobbying group AHIP, comes as specialty pharmacies have grown in use among PBMs and payers to dispense specialty products. The study was released a day before a scheduled meeting Thursday of the Federal Trade Commission on whether to probe the competitive impact of PBM contracts and how they could disadvantage independent and specialty pharmacies. “The data are clear, specialty pharmacies lower patient costs by preventing hospitals and physicians from charging patients, families, and employers excessively high prices to buy and store specialty medicines themselves,” said Matt Eyles, president, and CEO of AHIP, in a statement.

• Simplifying Medical Benefit Drug Management Complexities. For the first time ever, specialty medications make up 50% or more of plan sponsors’ total drug spend, despite accounting for only 4% of total pharmacy prescriptions. And within the specialty space, about 40% of drugs are billed through the medical benefit. The current specialty pipeline is full of medications that will be billed under the medical benefit or, in some cases, both medical and pharmacy benefits. Of these drugs, gene therapies, biosimilars and cancer treatments are three critical categories to consider. The growing number of drug approvals and alternative therapies underscore the need for a better way to manage the cost of specialty drugs billed through the medical benefit, which typically lacks the oversight afforded under the pharmacy benefit. Within the pharmacy benefit, plan sponsors have historically been able to apply proven drug trend management strategies that help optimize member access to the most affordable medications and manage overall pharmacy spend.

Because plan sponsors don’t know how to calculate how much money PBMs 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 pharmacy benefit managers 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, 08/09/22 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. 

Pharmacogenomics is increasingly relevant and other notes from around the interweb:

• Government declines to appeal ruling in PBM accumulator programs. The Final Rule would have required a manufacturer to count the value of patient cost-sharing assistance in best price and average manufacturer price unless the manufacturer “ensure[d]” that the full value passed to the patient, as opposed to the plan. The Final Rule was vacated on the grounds that it violated the text of the Medicaid rebate statute. We issued a client alert on the ruling available here. The government had 60 days from the date of the ruling to appeal, and that deadline passed on July 18, 2022. Because the government has decided to not appeal the ruling, the Final Rule remains invalidated and will not go into effect.

• Doctors use more brands if they’re on the pharma dole: JAMA. The study offers more evidence that doctors who collect more payments from drugmakers prescribe more brand-name drugs. Harvard Medical School researchers matched Part D Medicare claims in Massachusetts with data on pharma payments to Massachusetts physicians, zeroing in on prescriptions for statin drugs. The widely used class of cholesterol drugs is also widely available in generic form. The conclusion? The higher the payments from drugmakers, the more prescribers used brands, rather than generics. Overall, Massachusetts doctors prescribed branded statins 22.8% of the time. Doctors who collected no money from pharma prescribed brands at a rate of just 17.8%. Doctors who did saw their percentage of brand prescribing rise with every $1,000 in pharma payments reported, the JAMA Internal Medicine study said.

• Precision Medicine vs Trial and Error: Why Pharmacogenomics is Increasingly Relevant. Pharmacogenomics looks at how genetic influences affect an individual’s response to therapeutic medications. Rather than taking the approach that therapy for all people with a certain health condition should begin with the same medication at the same dose, pharmacogenomics has the potential to enable personalized medicine selection and dosing to a degree not previously possible. As of late 2021, 180 approved drugs were labeled by the U.S. Food and Drug Administration (FDA) with genetic factors. While many pharmaco-economic studies suggest that pharmacogenomic testing is cost-effective, a growing body of evidence also highlights the clinical impact of pharmacogenomics. Estimates indicate that more than 98% of people in the U.S. carry at least one high-risk genomic variant in one of the 12 most-tested pharmacogenetic genes. The presence of such variants suggests that treatment with relevant medications may need to be altered to avoid side effects or optimize efficacy. Therefore, the traditional one-size-fits-all, trial-and-error approach to medication management is inherently risky.

• Two firefighters admit role in $50 million prescription fraud scheme. According to the indictment, from July 2014 through April 2016, the conspirators recruited teachers, firefighters, police officers and state troopers enrolled in the state health benefits program to obtain very expensive and medically unnecessary compounded medications, including pain, scar, anti-fungal, and libido creams, as well as vitamin combinations from a Louisiana pharmacy. The pharmacy benefits administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

Fake medications cause in excess of 1,000,000 passings every year, as per the World Health Organization (WHO)[i]. It’s a sufficient scourge that a large gathering of specialists grouped together in 2019 to pronounce the ascent in “misrepresented and unsatisfactory meds” nothing short of a “public health crisis,” one that kills 250,000 youngsters every year. Is drug importation a valid prescription?

A few fake[ii] medications contain an inadequate measure of active ingredients important to battle a specific illness. Many fakes start in China and India and contain inactive as well as poisonous fixings, for example, printer ink, paint, and arsenic. What’s more regrettable, without knowing the private subtleties of the bundling, separating what’s genuine from fake is exceedingly difficult.

What’s more, the risk is developing, unfortunately. A report by Pfizer distinguished 29 phony meds in 75 nations in 2008. By 2018, there were 95 fakes in 113 nations. As per the WHO, one out of each and every 10 medications sold in non-developed nations is fake or unacceptable, bringing about substantial numbers of unnecessary passings consistently.

In any case, the issue isn’t simply in the undeveloped world. In 2018, as a component of a weeklong anti-counterfeiting operation, Canadian authorities examined almost 3,600 packages and tracked down that 87% contained fake or unlicensed healthcare items. Beginning around 2008, INTERPOL eliminated more than 105 million fake or substandard medications from dissemination and made more than 3,000 captures of people involved.

Conclusion – Is Drug Importation a Valid Prescription?

Drug importation comes with an increased level of risk. That risk has been explained above. The benefits outweigh the risks of drug importation provided proper precautions have been made to mitigate said risks (i.e. members taking a fake or substandard medication).

1. Avoid including drugs in an importation program which require refrigeration
2. Import drugs from Tier 1 countries only: Australia, Canada, United Kingdom, New Zealand
3. Require Radio Frequency Identification (RFID) in the importation drug supply chain. RFID is used to accurately count, correct, and track all individual items and cartons across the supply chain. This starts in the factory where items are tagged at source, goes on to the distribution center where orders are sorted and finally sent out to pharmacies.
4. Incorporate a first-fill program to ensure no breaks in drug therapy. First-fill programs account for the longer delivery timeframes associated with the importation of authentic drugs.
5. Don’t sacrifice safety for price among importation vendors.

A prescription drug benefit program is expensive to support. It will get more expensive over time as cell and gene therapies replace first generation specialty and biologic drugs. Healthcare plan sponsors must stack solutions in their cost management process to ensure annual costs are affordable. There is a myriad of solutions available to get drug costs in line with expectations. Drug importation is one solution for every plan sponsor to consider.

[i] The WHO member state mechanism on substandard and falsified medical products. World Health Organization. www.who.int/publications/i/item/WHO-MVP-EMP-SAV-2019.04. Published April 2019. Accessed October 26, 2021.

[ii] Fake medicines. INTERPOL. www.interpol.int/en/Crimes/Illicit-goods/Shop-safely/Fake-medicines. Accessed October 26, 2021.

Doctors use more brand drugs when on the pharma dole and other notes from around the interweb:

• How specialty drug ‘solution stacking’ can rein in pharmacy benefit costs. Brokers and employer groups alike know that 5% to 10% percent of insured workers and their dependents drive 50% to 60% of the cost of pharmacy claims. A few members with prescriptions for a specialty drug with a five-figure price tag can easily represent the majority of an entire group’s pharmacy spend. These drugs are often lifesaving or provide a dramatic quality of life improvement for those who take them. No one would question the necessity of using them. But when a group can mitigate some of the cost without affecting the clinical outcome, it can be a game changer. The broker who unlocks these savings becomes a trusted ally.

• Doctors use more brands if they’re on the pharma dole: JAMA. The study offers more evidence that doctors who collect more payments from drugmakers prescribe more brand-name drugs. Harvard Medical School researchers matched Part D Medicare claims in Massachusetts with data on pharma payments to Massachusetts physicians, zeroing in on prescriptions for statin drugs. The widely used class of cholesterol drugs is also widely available in generic form. The conclusion? The higher the payments from drugmakers, the more prescribers used brands, rather than generics. Overall, Massachusetts doctors prescribed branded statins 22.8% of the time. Doctors who collected no money from pharma prescribed brands at a rate of just 17.8%. Doctors who did see their percentage of brand prescribing rise with every $1,000 in pharma payments reported, the JAMA Internal Medicine study said.

• AHIP study claims hospitals charge double for specialty drugs compared to pharmacies. Hospitals on average charge double the price for the same drugs compared to those offered by specialty pharmacies, according to a new insurer-funded study released as federal regulators ponder a probe into the pharmacy benefit management industry. The study (PDF), released Wednesday by insurance lobbying group AHIP, comes as specialty pharmacies have grown in use among PBMs and payers to dispense specialty products. The study was released a day before a scheduled meeting Thursday of the Federal Trade Commission on whether to probe the competitive impact of PBM contracts and how they could disadvantage independent and specialty pharmacies. “The data are clear, specialty pharmacies lower patient costs by preventing hospitals and physicians from charging patients, families, and employers excessively high prices to buy and store specialty medicines themselves,” said Matt Eyles, president, and CEO of AHIP, in a statement.

• Simplifying Medical Benefit Drug Management Complexities. For the first time ever, specialty medications make up 50% or more of plan sponsors’ total drug spend, despite accounting for only 4% of total pharmacy prescriptions. And within the specialty space, about 40% of drugs are billed through the medical benefit. The current specialty pipeline is full of medications that will be billed under the medical benefit or, in some cases, both medical and pharmacy benefits. Of these drugs, gene therapies, biosimilars and cancer treatments are three critical categories to consider. The growing number of drug approvals and alternative therapies underscore the need for a better way to manage the cost of specialty drugs billed through the medical benefit, which typically lacks the oversight afforded under the pharmacy benefit. Within the pharmacy benefit, plan sponsors have historically been able to apply proven drug trend management strategies that help optimize member access to the most affordable medications and manage overall pharmacy spend.