One of the main advantages of using a fiduciary to manage your pharmacy benefits is that they are required to put the interests of their clients before their own financial gain. For instance, it has been reported that insurance professionals who are not obligated to uphold a fiduciary standard will recommend insurance products to their clients solely based on which ones come with the highest commissions, not necessarily because the recommendations are in their clients' best interests. Here are 8 reasons you need a fiduciary PBM. Conflicts of interest are minimized: A fiduciary pharmacy benefit manager must disclose any conflicts of interest and cannot profit from recommending certain products or investments.Professionalism and expertise: A fiduciary pharmacy benefit manager is held to a high standard of professionalism and is required to have a certain level of expertise.Transparency: Fiduciary pharmacy benefit managers must provide full disclosure of all fees, including their take rate, and costs associated with the pharmacy benefit management services they recommend and offer.Customized advice: A fiduciary pharmacy benefit manager takes the time to understand their client's unique financial situation and goals and provides customized advice accordingly.Fiduciary duty to act in client's best interest: A fiduciary pharmacy benefit manager is legally bound to act in the best interest of the clients, not their own or their firm's interest.To the best of their knowledge, ensure that all pharmacy benefit advice is accurate and comprehensive.Refrain from engaging in any potential conflicts of interest; andMake pharmaceutical benefit suggestions that are consistent with the goals, objectives, and risk tolerance of their clients. CLICK TO LEARN MORE ABOUT FIDUCIARY PHARMACY BENEFITS MANAGEMENT! As stated above, a fiduciary pharmacy benefit manager (PBM) is required by law to act in the best interests of their clients. Along with these instances, the "suitability standard" that is applied to brokers, insurance agents, and other financial professionals is far less stringent than the fiduciary requirement. The only requirement of the suitability criteria is that recommendations to clients are appropriate if a coverage objective fulfills their needs and goals (the last bullet point in the list). Since the fiduciary standard would cost them money in the form of fees as well as the additional expense of adhering to the new standard of care, many pharmacy benefit managers would prefer to be held to a suitability standard than live up to the 8 reasons you need a fiduciary PBM.

Lawsuit accuses former executives of failing in fiduciary duty to oversee PBM operations and other notes from around the interweb: Lawsuit accuses former executives of failing in fiduciary duty to oversee PBM operations. A lawsuit from a pension fund holding Centene stock accused former executives of conspiring to defraud state Medicaid programs, the St. Louis Business Journal reported Dec. 21. The lawsuit accuses the former execs of violating its Medicaid managed care contracts and federal and state law. When Centene acquired Health Net in 2016, the company received favorable reimbursements and discounts for prescription drugs because of Health Net's contract with CVS Caremark, the lawsuit alleges. The payer did not disclose its arrangements with CVS Caremark, and instead reported "inflated expenditures" to state Medicaid agencies, thereby overcharging them, the plaintiffs allege. The suit alleges five former executives breached their fiduciary duties, and names several members of the board of directors. FTC action on PBMs could be just what the doctor ordered to improve patient outcomes. The stated purpose of PBMs is to alleviate some of the administrative burden related to processing prescription drug claims and optimizing drug utilization to help manage costs for plan sponsors. Unfortunately, most PBMs have evolved to become vertically integrated pharmacies and adopt opaque business practices that mostly benefit only themselves. For example, pharmaceutical rebates have become a cash cow for PBMs. Paid out by drug manufacturers, these rebates are designed to help lower the price burden of new drugs by reimbursing plan sponsors a portion of the cost each time they’re filled at the pharmacy. The problem is, PBMs are under no obligation to pay the full rebate back to the plan sponsor, and many PBMs pocket a substantial portion, if not all, of these rebates, often with plan sponsors completely unaware. Register for CPBS today! 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. How Coupons Keep Drugs Costly. An economist who holds a joint appointment at the Harvard Kennedy School, began studying this topic more than a decade ago, prompted by the growing number of pharmaceutical ads that included coupons. Such coupons offer consumers…

How coupons keep drugs costly and other notes from around the interweb: How Coupons Keep Drugs Costly. An economist who holds a joint appointment at the Harvard Kennedy School, began studying this topic more than a decade ago, prompted by the growing number of pharmaceutical ads that included coupons. Such coupons offer consumers a discount on the co-pay for the advertised drug and have grown increasingly popular; the share of brand-name prescription drug spending that included a coupon rose from 26 percent in 2007 to 90 percent in 2017, Leemore S. Dafny reports. And the number of drugs with available coupons rose from about 200 in 2008 to more than 800 in 2018. Not everyone is eligible for coupons; Medicare enrollees are prohibited by law from using them. “The coupons are considered kickbacks or financial inducements to consume a product that is reimbursed by the federal government,” Dafny explains, and are therefore banned in that context. But pharmaceutical companies are permitted to donate to independent charities that subsidize co-pay assistance for patients, even those on Medicare, and to earmark those donations for conditions treated by drugs they make. 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. Click If You're a Curious Learner 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…

Since open communication is essential in the partnership between pharmacy benefit managers (PBM) and unions, health plans, health systems, commercial and public sector employers, you should be able to ask tough questions of prospective PBMs before selecting one. Ask PBMs these 8 questions as you look for the right fit for your company. What will be your earnings after cash disbursements (EACD)? The amount of money a PBM receives in exchange for the services it provides to your organization is referred to as EACD, or earnings after cash disbursements. You can only begin to comprehend the magnitude of overpayments after discovering how much money a non-fiduciary PBM retains for itself. The ingenious of EACD is that it is hidden in your plan's final cost! One may fairly conclude that the $25 PMPM cost discrepancy between PBMs "A" and "B" who each offer yearly costs of $63 and $88 PMPM, respectively, represents revenue for the PBM. A commercial employer with 8000 members contributes an additional $2.4 million yearly to its cost for PBM "B" management fees! The management fee or EACD of the PBM must be understood and incorporated into your financial analysis. Both the quantity and the source of the PBM's money flows must be open to disclosure. What is Your Book GDR, or Generic Dispensing Ratio? Verify that your PBM is not a member of any brand-specific incentive programs. The adoption of generic substitutes is discouraged by brand-name incentive schemes, which push PBMs to settle more prescriptions for name-brand medications. These could prompt them to suggest pricier, name-brand drugs. The fact that generic medications are less expensive means you want a PBM that supports them. That can help you find less expensive options, which can save you money. GDR is the proportion of prescription drug claims that are generic. The generic dispensing ratio, or GDR, is 82% if there are 82 generic claims out of 100 total claims. Data from HealthPartners show that a 1% increase in generic drug use might result in a 5% reduction in pharmacy expenses. Goal ≥ 90%.What is Your Book PDC, or Proportion of Days Covered? By examining the percentage of days that a person has access to the drug throughout a certain period of interest, the proportion of days covered (PDC) is used to evaluate medication adherence. For instance, from January 1 and December 31, "Amy" fills a prescription for 30 pills 11 times. January 9 saw the initial fill. This covers 330 of the 356 days between January 9 and December 31 that were covered by refills. Consequently, 93% of days are covered. Poor medication adherence leads to higher medical costs and wasteful drug spending. Goal ≥ 80%.What is Your Book PMPM Cost? Pharmacy benefits administration revolves upon one unchangeable fact. For unions, health plans, health systems, commercial and public sector employers, the most crucial financial statistic in pharmacy benefits administration is the PMPM or per member per month cost. Do you ask why? PMPM considers all costs, including but not restricted…

Americans are becoming sicker because of rising prescription drug costs and other notes from around the interweb: Americans are Becoming Sicker Because of Rising Prescription Drug Costs. Soaring prescription medicine costs are consuming an ever-greater share of household income as basic costs rise. According to a recent Department of Health and Human Services government study, prescription medicine prices increased at an average rate of 31.6% over the course of the past year, with some increases reaching 500%. The pharmaceutical industry is so complex that Americans, who pay the highest costs in the world for prescription pharmaceuticals — two to three times more than citizens in other nations — are looking for any method to avoid it. Lower-income households are disproportionately harmed by high prescription drug expenditures, especially the 9% and 23% of US individuals who lack insurance or have inadequate insurance. People of color and Native Americans are more likely to experience financial challenges and have lower rates of health insurance. According to the Commonwealth Fund, a nonprofit organization focused on health policy reform, individuals of color are less likely to have health insurance and more likely to have financial hurdles to treatment. Patients who lack insurance must forgo their drugs in favor of more urgent requirements like housing or food. People who depend on prescription medications to treat their chronic ailments frequently rack up medical debt. 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. Click To Learn More 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,…

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. Figure 1. Actual Rebate Remittance Summary Report 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.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.You forgo all or a portion…

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. Click To Learn More 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…

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? Click to Join Us 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 IndustryBasic to intermediate level PBM terminologiesSpecialty pharmacy cost-containment strategiesExamples of drugs that you might be covering that are costing youThe #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,TransparentRxTyrone D. Squires, CPBS  10845 Griffith Peak Drive, Suite 200  Las Vegas, NV 89135 Office: (866) 499-1940Mobile: (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. Click To Learn More 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…

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%. Click to Learn More 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.…