3 Axis Advisors new report clears up misunderstandings about drug pricing benchmarks. The just released comprehensive report, Understanding Pharmacy Reimbursement Trends in Oregon makes general representations that are applicable to any state or group, not just Oregon.   Five key takeaways: The drug price benchmark (i.e., AWP, NADAC, MAC etc.) used to determine a drug's price does not matter when the PBM doesn't take a spread.An invisible floor exists on the reimbursement amount pharmacies are willing to acceptThen, what matters most is how close the billed (plan sponsor) amount gets to pharmacy reimbursement on a per claim basisNADAC is compiled from a voluntary monthly invoice cost survey of 2,500 randomly selected retail pharmacies with 450-600 respondents.Don't forget to tack on the dispensing fee (page 29) when comparing NADAC to AWP minus for ingredient cost analysis Medicaid Maximum Retail Dispensing Fees by State (2022) Conclusion, New Report Clears Up Misunderstandings About Drug Pricing Benchmarks This all assumes the PBM has negotiated aggressively with pharmacy networks. If not, all bets are off. The ability of a PBM to negotiate discounts and rebates varies with fire in the belly, experience, and education level of decision-makers sitting at the table.

https://youtu.be/L9GN3heEqPc

New inflation-linked drug rebates have gone into effect and other notes from around the interweb: 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. New inflation-linked drug rebates have gone into effect. The new rebates are part of the newly signed Inflation Reduction Act, which introduces this new requirement that manufacturers pay rebates to Medicare for Part D drugs whose price increases exceed inflation, and in January 2023, the same will occur with Part B drugs. The rebate system “was designed to reduce the frequency and size of drug price increases,” HHS says. The IRA also includes a provision that allows CMS to negotiate and/or cap the prices of 10 of the most expensive drugs. While those negotiations will be limited, the rebates paid by the industry may be significant. HHS released a new report on Friday outlining what the IRA could do as more than 1,200 drug price increases from July 2021 to July 2022 exceeded the inflation rate of 8.5% for that time period. The report notes most price increases occur at the beginning of January, with more than 3000 drugs experiencing a price increase in 2022, up from 2650 in 2016. The number of July price increases trended downward from 613 NDCs in 2016 to 203 in 2021, but in July of 2022, the number of increases rose to a level similar to that observed in 2016, with 601 increases. Click To Learn More 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 most 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…

4 questions to ask before signing your next PBM service agreement and other notes from around the interweb: 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. Lawsuit Challenges Federal Copay Accumulator Policy. On August 30, 2022, a coalition led by the HIV and Hepatitis Policy Institute filed a new lawsuit in federal district court in DC to challenge a Trump-era policy that allows insurers and pharmacy benefit managers (PBMs) to not apply financial support from a drug manufacturer towards a patient’s deductible or annual out-of-pocket maximum. If an insurer or PBM adopts such a policy, the enrollee cannot “count” a copay or other drug manufacturer coupon—typically used to help reduce patient costs at the pharmacy counter—towards a patient’s overall annual out-of-pocket costs. This policy was adopted in May 2020 in the final 2021 notice of benefit and payment parameters and has not been altered since. More than two years later, the plaintiffs argue that this policy is unlawful because it conflicts with the Affordable Care Act (ACA), is inconsistent with other agency regulations, and is arbitrary and capricious under the Administrative Procedure Act. They ask the court to set aside this policy. The timing of the lawsuit may be designed to influence the forthcoming proposed 2024 notice of benefit and payment parameters, which is expected later this year. Click To Learn More 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 most 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. Senate Bill and FTC 6(b) Study…

My pharmacy background started with Eli Lilly & Company, a top twenty pharmaceutical manufacturer by sales. It was one of the best jobs I ever had and not just because of the perks. We talked a lot about helping patients get better which made me feel good about what I was doing. That being said, I'm not naive. We wanted to sell as much type 2 diabetes products as we could. To do that, we relied heavily on lax formulary and drug utilization management on the part of plan sponsors. Here are three underappreciated reasons for micromanaging pharmacy benefits. Reason #1 - Drugmakers are making it easier to get access to high-cost specialty drugs Prescription medicine is moving increasingly online with direct-to-consumer advertising by adopting a more assertive catchphrase: Talk to a doctor now. I haven't checked every brand drug, but I suspect all of them have a dedicated website. These websites are now incorporating built-in buttons Talk to a Doctor Now for everything from sickle cell disease to migraine drug therapies. One communication about IBS or irritable bowel syndrome even reads, "you deserve to feel better." Source: https://www.statnews.com/2022/09/14/pharma-marketing-prescriptions-telehealth-virtual/ Reason #2 - PBMs too often permit high-cost brand drugs to be dispensed in place of lower cost generic equivalents When plan sponsors forgo efficiency for participant satisfaction PBMs take financial advantage of the decision. High participant satisfaction usually means the patient getting the exact prescription drug, prescribed by the doctor, without any scrutiny. In my time with Eli Lilly, I took a territory ranked #600 to #11 in one year by persuading doctors to dispense a new type 2 diabetes brand drug (Actos) over a proven and much less costly generic Metformin. Actos provided no significant A1C improvements compared to metformin. A1C is the primary performance metric for antidiabetic agents. It is a simple blood test that measures average blood sugar levels. Below is an audio file (click the image) of a similar conversation between a PBM and broker. The president of a brokerage firm based in the south sent this to me. The PBM has forced Zytiga over its lower cost generic equivalent Abiraterone Acetate. My instincts tell me this PBM has a distribution deal for Zytiga. Depending upon the pharmacy, the retail price of brand Zytiga is easily 30x the generic version. Conversation with Large Insurer Pharmacy Specialist Reason #3 - One of the largest electronic prior authorization (ePA) companies in the world, CoverMyMeds, is owned by a drug wholesaler. Do I need to say more? Three Underappreciated Reasons for Micromanaging Pharmacy Benefits Conclusion Employers have been reluctant actors in the U.S. pharmacy distribution and reimbursement system, relying on third parties who may not have their best interests in mind. Some companies, like Honeywell and Caterpillar, have taken tough steps to control costs, with no loss in employee satisfaction. It is impossible to run an efficient pharmacy benefits management program without elements of micromanagement. Micromanagement in pharmacy benefits means every claim gets scrutinized with a focus on the…

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, 10/11/22 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. 

2023 Large Employers’ Health Care Strategy and Plan Design Survey and other notes from around the interweb: 2023 Large Employers’ Health Care Strategy and Plan Design Survey. The recently reported, 2023 Large Employers’ Health Care Strategy and Plan Design Survey, released by the Business Group on Health, surveyed 135 large employers that covered more than 18 million people. Respondents were contacted between May 31, 2022, and July 13, 2022. Affordability remains a top concern for employers. It is one they haven’t been as successful in addressing via remediation and negotiation efforts when compared to other areas of patient engagement, including experience, access, and quality. Employers will continue to assert market influence in addressing affordability with their partners. However, they are also keenly focused on policy efforts regarding affordability. For this reason, lowering health care costs and prescription drug expenses and making more affordable coverage possible are among employers’ top future health care reform priorities. Employers are particularly concerned about both the affordability of maintenance medications and newer gene therapies. Six Things to Look Out for Within the Rebates Section of Your Pharmacy Benefit Management Contract. Prior to signing your Pharmacy Benefit Management (PBM) contract, it’s essential to pay particularly close attention to the pharmacy services that provide cost-containment strategies. One vital component you should focus on is the rebate administration. Today, we are sharing six areas within the rebate section of your PBM contract, to help you maximize savings and mitigate risk. Click To Learn More 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 most 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. 3 reasons why owning pharmacy benefits data matters. The Federal Trade Commission is pushing PBMs for greater transparency to help employers take control of their prescription costs. But what is transparency without access to plan data or performance analytics? Currently, employers are disempowered because too many don’t own their data, must pay extra to get access to what should already be theirs, or only receive partial access. These PBM practices of obscuring data have led to significant distrust from all stakeholders. To fix a broken system, the data being hidden by these third parties needs to be freed to provide employers and plan members with the information they need to find the path to lower costs.

In pharmacy benefit management (PBM) competitive bidding processes, a broker or consultant identifies 3 – 10 pharmacy benefit managers and invites each to submit a proposal. The entire bidding process, from development of the request for proposal (RFP) packet to selection of the winning bidder, can take as little as a month to two years. The latter is reserved for larger clients such as unions, state, or federal plans. The conventional PBM RFP process is flawed read on to learn how to fix it. The packet a PBM receives from a consultant as part of the RFP process can include claims data, census data such as date of birth, sex, name, dependent status, or address, and incumbent PBM contracts. Once all bids are collected the consultant then plugs them into their in-house Excel spreadsheet or a third-party bid analyzer software platform. This is where the problems begin more on that in a bit. Figure 1: Three-Year PBM Bid Comparison Workbook Figure 1 provides a glimpse into the pricing a consultant, CFO, or CHRO might look at when evaluating PBM bids. Financials are just one criterion others include but are not limited to: Accreditation support to pharmacy UM and Credentialing (5%)Clinical support services (15%)Explaining Differentiators (5%)Health support services, including data integration (10%)Implementation plan (10%)Member service capabilities (5%)Pricing and Transparency (50%) Each criterion is usually scored, with a weighted average, based upon client needs. Since pricing is most important to the client in the example above, pricing weighs the heaviest (50%) in the final score. Because most evaluators in a PBM competitive bidding process are not experts, they tend to rely on what they know which is two is less than three. I wish it were that simple. Michael Critelli, former CEO at Pitney Bowes, sent me a message a few years back tackling this very point. I’ve been teaching pharmacy benefits management for six years and just recently came to realize the forethought of his message. Michael wrote, “I am pleased that you authored the essay I downloaded. Many corporate benefits departments do not understand that they are overmatched in negotiating with pharmacy benefit managers, as are the "independent consultants" who routinely advise them. The first step in being wise and insightful is admitting what we do not know, and you have humbled anyone who touches this field.” There is a tidal wave of increased drug [specialty] spending on the horizon. One change will level set corporate benefits departments against pharmacy benefit managers at the negotiating table. The one change corporate benefits departments or steering committees must make is to put the PBM contract at the front of the competitive bidding process and keep it there. It is unthinkable that many corporate benefits departments select a winning PBM bid before even looking at or finalizing the contract. The PBM services agreement sets the foundation for all the financials. Staff, including legal, have inadequate knowledge of the PBM industry especially around contracting and driving meaningful transparency. Achieving optimal outcomes, cost and clinical,…

PBM Ordered to Pay Aids Healthcare Foundation (AHF) $23 million and other notes from around the interweb: PBM Ordered to Pay Aids Healthcare Foundation (AHF) $23 million. The United States District Court for the District of Arizona has confirmed an earlier arbitration judgment of $23 million awarded to AIDS Healthcare Foundation (AHF) against Caremark LLC, a subsidiary of the pharmacy giant CVS, for unfair reimbursement practices. In November 2019, AHF filed suit with the American Arbitration Association against Caremark LLC, a pharmacy benefits manager (PBM), for breach of agreement and the covenant of good faith and fair dealing. The dispute arose from Caremark’s unfair practice of chargebacks on prescriptions filled by AHF pharmacies on behalf of insurance prescription plan sponsors such as those covering Medicare Plan D beneficiaries. As a result of the chargebacks by Caremark, for several years AHF was being reimbursed less than what Part D plan sponsors received in prescription reimbursement from public Part D monies. Six Things to Look Out for Within the Rebates Section of Your Pharmacy Benefit Management Contract. Prior to signing your Pharmacy Benefit Management (PBM) contract, it’s essential to pay particularly close attention to the pharmacy services that provide cost-containment strategies. One vital component you should focus on is the rebate administration. Today, we are sharing six areas within the rebate section of your PBM contract, to help you maximize savings and mitigate risk. Click To Learn More 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 most 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. 3 reasons why owning pharmacy benefits data matters. The Federal Trade Commission is pushing PBMs for greater transparency to help employers take control of their prescription costs. But what is transparency without access to plan data or performance analytics? Currently, employers are disempowered because too many don’t own their data, must pay extra to get access to what should already be theirs, or only receive partial access. These PBM practices of obscuring data have led to significant distrust from all stakeholders. To fix a broken system, the data being hidden by these third parties needs to be freed to provide employers and plan members with the information they need to find the path to lower costs.