Billionaire Mark Cuban steps up assault on US prescription drug prices, or is he just another player in the mail-order pharmacy market? [Weekly Roundup]

 News and notes from around the interweb:

    Billionaire Mark Cuban steps up assault on US prescription drug prices. In an interview with Pharmacy Times, Ron Lanton III, Esq, principal at Lanton Law, said entrepreneur Mark Cuban’s new venture into the pharmacy field is very interesting, although it maybe just another player in the mail-order pharmacy market. In the interview, Lanton discussed the company’s steep discounts on drugs in a myriad of disease states, as well as the company’s pharmacy benefits manager, which is expected to be operational in 2023.

  • Is a 90-Day Supply the Best Option to Improve Medication Adherence? Medication nonadherence results in upwards of 100,000 deaths per year and billions in health care spending annually. Whether it is a newly discovered medication or a tried-and-true remedy of the past, a medication only works when it is taken correctly. Medication adherence is essential for each medication to have its therapeutic effect in every patient. Interventions to improve medication adherence may have a greater impact on individual patients and the population as a whole than any novel treatment or therapy. To address nonadherence and remove the potential barrier of accessibility to medications, 90-day supplies are commonly offered as a solution.

  • Join the Movement!

    Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.

  • 3 reasons to optimize pharmacy benefits before the next open enrollment. Drug spending in the U.S. ballooned to more than $535 billion in 2020 and was projected to increase by another 4-6% by the end of 2021. Two culprits include faster price increases and higher growth in utilization. With drug costs and pharmacy spend on the rise, reducing the cost of Rx benefits is a top priority for many of your self-funded employer clients. To put it simply, sticking with the status quo is not the best option in 2022. Here are three reasons why.
  • Issues Arise as Health Plans Begin Covering At-Home COVID-19 Tests. While plan sponsors and issuers were adjusting their benefits to cover the cost of COVID-19 at-home tests, the administration moved forward with President Joe Biden’s order that the federal government purchase five hundred million at-home rapid COVID-19 testing kits to be sent free of charge to Americans who request them. The administration’s action is in addition to its policy of allowing Americans to buy and get reimbursed through private insurance for at-home tests.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 398)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tip of the Week: eVouchers help circumvent health plan sponsor benefit designs to get high-cost brand drugs dispensed

Brand drugmakers are circumventing pharmacy benefit plan designs by offering eVouchers or electronic vouchers for expensive drugs at the “Switch.” Why aren’t more people outraged about this? The switch is what routes the third-party prescription claims to the PBM or health plan associated with the prescription. Within seconds, the script leaves the pharmacy, goes to the switch, and then is received at the relevant PBM.

When the benefit design has soft UM or no utilization management protocols, such as mandatory generic enforcement, it allows drugmakers to bypass a tier 1 drug for a tier 2-4 drug or even worse a non-formulary drug, with eVouchers (see process flow diagram below). The two largest switch companies are RelayHealth and Change Healthcare. As Relay Health tells the story, its electronic voucher program is a Win-Win-Win solution:
  • Doctors “set aside concerns over costs”
  • “Patients benefit from lower copays” and “increased adherence”
  • Manufacturers benefit from increased “scripts written”, “the likelihood patients will fill and adhere to them” and “increased brand loyalty”
But what about you, the health plan sponsor? You are conveniently left out of the equation even though you cover most of the cost. I teach in our CPBS Certification course how plan sponsors fund the entire USA prescription drug system but know the least about how it works. Simply put, it is your checkbook they are after. The budgetary impact of switch operators’ eVoucher programs to health plan sponsors is significant and growing with each passing day.

Click to Enlarge

There are two ways to prevent the scenario above from happening:

(1) PBM inserts language into its contract with the Switch company, preventing the action.
(2) Benefit design maximizes the drug utilization management toolkit including step therapy and mandatory generic enforcement programs.

Number two is sticky as many plan sponsors are hellbent on employees getting the drug they want without any scrutiny (i.e. step therapy). I don’t agree but it’s not my checkbook. The point is to make people happy through better outcomes not for the sake of avoiding the pain that comes with running an efficient health plan. In a sense, drugmakers, and non-fiduciary PBMs for that matter, are leveraging HR’s desire to keep employees “happy.”

For TransparentRx the choice is simple, either you want an efficient pharmacy benefit program or you don’t. If you [health plan sponsors] don’t want an efficient pharmacy benefit program then expect to pay $1000 for a drug when a $100 drug would have provided the same level of efficacy, for example. eVouchers, especially when supported with direct-to-consumer TV ads for high-cost brand drugs and soft utilization management protocols, are an expensive proposition for health plan sponsors yet lucrative one for brand drugmakers.

Issues Arise as Health Plans Begin Covering At-Home COVID-19 Tests [Weekly Roundup]

 News and notes from around the interweb:

    The Case Against Excluding Specialty Drug Coverage. Coverage and exclusion decisions for certain therapy classes that are not rooted in clinical rigor, particularly when there are not clinically equivalent alternatives available, could lead to a new round of scrutiny and more regulation that limit the ability of plan sponsors to implement effective benefit plan designs. The reality is that new costly specialty therapies will continue to come to market and that patients with complex, chronic conditions need appropriate access to them. 

  • 4 Ways Employers Can Contain Rx Costs. Providing the best mix of health care options and benefits can be a differentiator for companies trying to attract and retain top talent. Benefits leaders want to find the right mix of health care options that matches the needs (and wants) of employees and their families with plans that won’t hurt the company financially or overwhelm employees’ pocketbooks. One key benefit getting increased scrutiny by government and business leaders is prescription drug coverage, the cost of which has historically outpaced the cost of inflation.

  • Join the Movement!

    Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.

  • Health Plan Transparency Reporting in 2022: Do You Know Where Your Health Care Dollars Go? The Department of Labor, Health and Human Services and the IRS recently released an interim final rule with a request for comment, Prescription Drug and Health Care Spending. The rule implements another phase of the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA), and is open for public comment through Jan. 24, 2022. This most recent rule requires reporting entities—group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage—to report annually information about prescription drug and health care spending.
  • Issues Arise as Health Plans Begin Covering At-Home COVID-19 Tests. While plan sponsors and issuers were adjusting their benefits to cover the cost of COVID-19 at-home tests, the administration moved forward with President Joe Biden’s order that the federal government purchase five hundred million at-home rapid COVID-19 testing kits to be sent free of charge to Americans who request them. The administration’s action is in addition to its policy of allowing Americans to buy and get reimbursed through private insurance for at-home tests.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 397)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

The Case Against Excluding Specialty Drug Coverage [Weekly Roundup]

 News and notes from around the interweb:

    The Case Against Excluding Specialty Drug Coverage. Coverage and exclusion decisions for certain therapy classes that are not rooted in clinical rigor, particularly when there are not clinically equivalent alternatives available, could lead to a new round of scrutiny and more regulation that limit the ability of plan sponsors to implement effective benefit plan designs. The reality is that new costly specialty therapies will continue to come to market and that patients with complex, chronic conditions need appropriate access to them. 

  • 4 Ways Employers Can Contain Rx Costs. Providing the best mix of health care options and benefits can be a differentiator for companies trying to attract and retain top talent. Benefits leaders want to find the right mix of health care options that matches the needs (and wants) of employees and their families with plans that won’t hurt the company financially or overwhelm employees’ pocketbooks. One key benefit getting increased scrutiny by government and business leaders is prescription drug coverage, the cost of which has historically outpaced the cost of inflation.

  • Join the Movement!

    Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.

  • Health Plan Transparency Reporting in 2022: Do You Know Where Your Health Care Dollars Go?. The Department of Labor, Health and Human Services and the IRS recently released an interim final rule with a request for comment, Prescription Drug and Health Care Spending. The rule implements another phase of the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA), and is open for public comment through Jan. 24, 2022. This most recent rule requires reporting entities—group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage—to report annually information about prescription drug and health care spending.
  • It’s time to bring competition back to health care. We have allowed our health care system to fall victim to a highly consolidated group of pharmacy benefit managers (PBMs). These organizations control drug pricing using formulary inclusion fees and other bizarre techniques which we permit to the detriment of those who need life enhancing or life-saving medications. We also permit the acquisition of patent rights for orphan drugs (important drugs that don’t have a large market) by venture capitalists who corner the market and raise prices to very high levels because that’s the point of cornering the market. Such conduct may or may not be illegal but it certainly is immoral.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 396)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

The Chief Medical Officer for CVS Caremark Said What?!

In response to rising costs for prescription drugs, Sree Chaguturu, M.D the chief medical officer for CVS Caremark made a rather bold statement. More specifically, to combat specialty drug costs, Dr. Chaguturu offered as the first option, “to combine coverage for all specialty medications—including those currently covered in the medical benefit—under the pharmacy benefit.” Say what?!

When I initially read this I about fell out of my chair. Once the shock wore off, I started thinking out loud why would Dr. Chaguturu write this? There is little to no chance the article was submitted without approval from the CEO if not the entire board of directors. So, what gives? 

1) Is the article politically motivated?
2) Is CVS’s specialty pharmacy business under pressure by other externalities?
3) Is this a strategy to thwart Big 5 competitors who don’t own a chain pharmacy business?
4) All of the above?
5) None of the above?

Regardless of the motivation behind the statement, Dr. Chaguturu is 100% correct. However, it isn’t so simple moving medications to the pharmacy benefit. There are some distinct advantages beyond the obvious potential for realizing lowest net cost. Let’s take a look at UM or utilization management, for example. PBMs use utilization management programs to encourage the use of generics or preferred products. UM is the unsung hero of an efficiently run pharmacy benefits management program.
Click to Learn More

UM programs include services such as prior authorization, drug utilization review (concurrent, retrospective, and prospective), quantity limits, refill to soon, and dose optimization just to name a few. PBMs have also developed specific edits for the senior population. These edits include identifying drugs that are not appropriate for a member’s age (e.g., oral contraceptives), or dosing regimens that are not adjusted for an elderly metabolism.

For employer-sponsored pharmacy benefit programs, there is gold in combining coverage for all specialty medications—including those currently covered in the medical benefit—under the pharmacy benefit. All it requires is sophistication and courage. Be advised there will be all sorts of naysayers who will advise against it. 

Don’t listen to them. They either benefit from the status quo or aren’t sophisticated enough to help you navigate change. I would argue most of the innovation in health care comes from pharmaceuticals. They are the primary cost driver and will remain so for the foreseeable future. So, there are two options; get ahead of it or get left behind.

CMS Plans to Regulate Pharmacy Benefit Manager DIR Fees [Weekly Roundup]

 News and notes from around the interweb:

  • DIR charges from PBM increased by 91,500% in just 9 years. The probe by the Centers for Medicare and Medicaid Services (CMS) will center on huge increases in direct and indirect remuneration fees that PBMs charge pharmacies on Medicare prescriptions. These DIR fees were implemented as a way to incentivize U.S. pharmacies collecting millions of Medicare dollars to do more than simply push pills. But the assessment — charged well after a prescription drug sale is supposedly complete — evolved into a system that today offers pharmacies only penalties through higher and higher fees, even if every PBM performance standard is achieved. The fees now total $11.2 billion a year, up from $200 million in 2013.

  • Join the Movement!

    Documents reveal the secrecy of America’s drug pricing matrix. Several people who work in the industry, who asked not to be named due to the confidential nature of coalitions, said most employers, regardless of how big they are, have no idea what they’re giving up when they enter coalitions. Once employers are locked into the coalition, they can’t get a full second opinion on the drug prices they pay, experts said.

  • The Consolidated Appropriations Act Introduces Broker Compensation Transparency. Effective December 27, 2021, brokers and consultants of ERISA covered group health plans, regardless of size, will be required to execute a written contract with a responsible plan fiduciary which includes a description of the services to be provided, a description of all direct compensation the broker expects to receive, and a description of all expected indirect compensation including vendor incentive payments. 
  • CMS Plans to Regulate Pharmacy Benefit Manager DIR Fees. On Dec. 14, 2021, the Centers for Medicare and Medicaid Services (CMS) unexpectedly issued a letter to U.S. Senator Ron Widen (D-OR)[1] indicating that CMS plans to use its “administrative authority to issue proposed rulemaking” addressing price concessions and direct and indirect remuneration (DIR) fees that pharmacy benefit managers (PBMs) have increasingly charged to specialty and retail pharmacy providers in Medicare and other pharmacy benefit programs in recent years. CMS’s letter is welcome news to pharmacy providers around the country and could result in substantial disruption to a multi-billion-dollar line of fees that PBMs have previously realized.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.