[Free Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

 The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line growth. 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 on 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

Sincerely,
TransparentRx
Tyrone D. Squires, MBA
10845 Griffith Peak Drive, Suite 200
Las Vegas, NV 89135
866-499-1940 Ext. 201



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.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 349)

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.   

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 348)

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. 

Tuesday Tip of the Week: It is a Myth That Any Pharmacy Benefit Manager Offers Better Price Savings Because of Their Size

It is a myth that the Big 6 (ESI, CVS, Optum, Humana, MedImpact and Prime) offers better price savings just because of their size. The myth is often perpetuated by the old guard who for a long time have personally benefited from overpayments received from opaque PBM business practices. We can’t expect the old guard to bite the hand that feeds them, can we?


Sure, the Big 6 have more purchasing power, but their clients often don’t realize the full benefit. For example, if our rebate aggregator pays us, TransparentRx, a $3000 rebate for drug “A” every penny goes back to the client with an audit trail. The audit trail includes claim level detail (e.g. claim number, NDC, date and rebate amount) for every drug which earned a rebate payment. 


The Big 6 might earn $4000 on that same drug, but retains $1200 in-house, for instance. The plan sponsor pockets an additional $200 working with a radically transparent, albeit smaller, PBM. Without an audit trail a PBM could earn a rebate on a drug and not share any of those dollars with the plan sponsor who actually earned it. A similar scenario plays out in mail, specialty and retail pharmacy networks.

Price quotes (RFPs etc…) are simply an estimate of what the plan sponsor would have spent had the historical utilization matched that of the proposing PBM (a lot in this sentence). Furthermore, the future actual cost is unknown. As a result, the plan sponsor’s PBM contract is the most important tool to address the actual level of spend – not cost projections. Non-fiduciary PBMs know full well what you like to see in proposals. When contract language is opaque, the non-fiduciary PBM starts to eat away at the proposed savings, i.e. discount and rebate guarantees, as soon as you go live.

If you’ve never considered the PBM management fee in how you procure pharmacy benefit management services, watch this free webinar. The PBM management fee isn’t what you think it is. It is largely the undisclosed fee a PBM charges for providing their services to plan sponsors. For non-fiduciary PBMs, the bulk of this fee is buried in the final plan pharmacy cost. It goes without saying, the contract is king.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 347)

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.

Tuesday Tip of the Week: Expanded Drug Lists are an Excessive Pharmacy Cost Driver

There is disagreement around the watercooler whether or not the prescription drugs presented on a PBM’s expanded drug list are required by law. Here is a link to the IRS notice which explains that HDHP expanded list of drugs are permissible and not required. Furthermore, if a pharmacy benefit manager offers a separate expanded drug list or EDL they are usually very careful to use phrases such as ‘may be covered’ or ‘if your plan covers.’ This a clear signal that coverage for these prescription drugs is optional and that the plan design ultimately determines if a patient gets access to these drugs. 
It’s also important to note that the IRS notice specifies only the therapeutic categories (e.g. diabetes) which are treated as preventive care. The PBMs themselves are then left to decide which drugs to sell, within these categories, to their clients as part of an EDL. PBMs who profit from poor product mix or overutilization have done a masterful job making the EDL look like something that is going to add incremental value to its groups and help patients.
Consumer Reports wrote, “If you’re like most Americans, you probably start your day with a hot shower, a cup of coffee—and a handful of pills.” Plan sponsors who design benefits that require neither a copayment nor a deductible for drugs listed on an EDL are subsidizing a crisis similar to the opioid epidemic. When drugs are free to members a role reversal occurs, for instance. Instead of the physician diagnosing then prescribing a medication based upon that diagnosis, members self-diagnose then go into the PCPs office and ask for a medication they know is free to them. Many times patients will leave with the medication they came for.
Click to Learn More

Things can get much worse from there. Almost 1.3 million people went to U.S. emergency rooms due to adverse drug effects in 2014, and about 124,000 died from those events. That’s according to estimates based on data from the Centers for Disease Control and Prevention and the Food and Drug Administration. Today, those numbers are likely far higher. Other research suggests that up to half of those events were preventable. The amount of harm stemming from inappropriate prescription medication is staggering. 
All of that bad medicine is costly, too. An estimated $200 billion per year is spent in the U.S. on the unnecessary and improper use of medication, for the drugs themselves and related medical costs, according to the market research firm IMS Institute for Healthcare Informatics. In short, plan sponsors will do more harm than good when you create an environment where the relationship between physician and patient becomes transactional.
It is TransparentRx’s position that the formulary should not be circumvented to accommodate EDL drugs. Simply put, there should not be a separate drug list. Fraud, waste and abuse (FWA) of prescription drugs aside, what about rebates? If your contract calls for full pass-through of formulary rebates, are you paid rebates on a drug listed on the EDL? The PBM is keeping a larger share of those rebate dollars just as sure as the sun will rise every morning in the East. 
Worse yet, many of the drugs on an EDL are brand drugs and even very high cost specialty drugs. TransparentRx’s formulary is designed to provide our clients with a choice of pharmacy products that meet all of the essential clinical conditions while addressing economic needs, and providing quality of care, affordability and choice. Circumvention of our formulary or any really good formulary is likely to result in wasteful and/or duplicative spending. 
If a drug is approved by the P&T committee to be placed on the formulary and also happens to be on the EDL, the benefit is fully applied. Moreover, when the deductible is waived for prescription drugs on the EDL and this same drug is also on the ACA drug list the member pays zero out of pocket. This is a loophole. I get that adherence goes up when member cost share goes down. This is especially true when there is zero OOP (out-of-pocket) costs for members. But, there is a downside when member cost share is too low and that is more fraud, waste and abuse. 
A PBM’s primary responsibility is to help our clients contain prescription drug costs. A close second and third responsibilities are to help members get better and to protect them. Your members are over the moon when they get “free” prescription drugs heck who wouldn’t be. Yet, there is a dark side. Don’t circumvent your formulary with a separate, expanded drug list it will save your company money and possibly a life.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 346)

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.

Study Finds Non-Fiduciary PBMs are Draining Florida’s Medicaid Funds

A study exploring Florida’s prescription drug costs through the Medicaid program found that pharmacy benefit managers (PBMs) profited $89 million dollars, mostly from a spread pricing contract scheme that charges the state higher cost than will be disbursed to the pharmacist.

Click to Learn More

Florida’s Medicaid program is contracted out to private healthcare companies like CVS Caremark, Humana, etc. Those private companies then take Medicaid dollars and draw up contracts with pharmacies around the state. PBMs play the role of negotiating drug prices between pharmacy suppliers and payers; they have an outsize stake in what consumers pay for their prescription drugs.

PBMs in Florida operate in 2 ways depending on the county – pass-through or spread. Pass-through pricing reimburses pharmacists the cost of the drug, while PBMs take a small fee. Spread, on the other hand, reimburses a pharmacy a different amount for the drugs than what it charges the state. Kevin Duane of SPAR (Small business Pharmacies Aligned for Reform) who finds it “indefensible” that the PBMs under pass-through contracts filled 2 million more prescriptions and made tens of millions of dollars less than those under spread contracts.

Commissioned by the state Agency for Healthcare Administration (AHCA), the study found that spread pricing contracts pay pharmacists less in reimbursement and keep, on average, 9.5% of the transaction, whereas pass-through models take a $1.45 administration fee and reimburse pharmacists the full cost.

<<Continue Reading >>

Internal Email Shows Big Three PBM Was Overcharging – And Knew It

Starting with its predecessor, a company called Catamaran that OptumRx acquired, the PBM administered prescription drugs for workers injured on the job. In all, OptumRx overcharged the bureau on more than 1.3 million claims for generic medications, the lawsuit says.
The contract, in effect from mid-2009 until the fall of 2018, called for the PBM to charge the lowest of four potential prices for generic drugs, including a measure from the Centers for Medicare and Medicaid known as the Federal Upper Limit, or FUL for short. But in a series of May 2015 emails marked as “confidential,” John Spankroy, Director of Public Sector Account Management for Catamaran, said the Federal Upper Limit was never applied, despite the contract.
Click to Read Article

Tyrone’s Commentary:
How does this go on for nearly a decade? Pharmacy Benefit Managers will provide transparency and
disclosure to a level demanded by the competitive market and generally rely on the demands of prospective clients for disclosure in negotiating their contracts. The best proponent of transparency is informed and sophisticated purchasers of PBM services. The purchaser needs to understand not only what they want to achieve in their relationship with their PBM but also the competitive market and their ability to drive disclosure of details on services important to them. Assessing transparency is done more effectively by a trained-eye with personal knowledge of the purchaser’s benefit and disclosure goals. The reason plan sponsors are overcharged is due to a gap you have in one or more of these areas:

1. Information Symmetry
2. PBM Industry Training
3. Lack of understanding in pharmacy benefit design or plan goals

Far too many brokers, PBM consultants, CFOs and HR executives are unfamiliar with the phrase “lesser of logic.” Worse yet, when given pricing sources such as AWP minus, MAC, U&C and Copayment 99% of  decision-makers, who select a PBM vendor, can’t accurately calculate their own cost with lesser of logic. That’s why something like this can go on for a decade. It really just makes me sick to my stomach. It’s time to move on from the PBM, large or small, that puts profits over doing the right thing for their clients. Find a PBM partner who proactively corrects these “mistakes” for no other reason than it’s the right thing to do.

He told Susan McCreight, Senior Director of Public Sector Account Management, “Per BWC contract we are supposed to be using pricing logic that includes lower of FUL for generics. None of the BWC price schedules has FUL as a cost source.” In a separate email, Spankroy told Bryce Owens, the Illinois-based PBM’s manager for pricing and analytics, “We do not see FUL included as a cost source option.” Spankroy also acknowledged: “BWC is not aware of this (yet).”

[Free Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

The reason so many PBMs are reluctant to offer radical transparency is in doing so their revenues would be cut in half! How many businesses do you know will voluntarily cut their revenues in half? Instead, non-fiduciary PBMs seek out arbitrage opportunities to foster top-line growth. 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 on 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 flow streams in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals
  • Strategies to significantly reduce costs and improve member health

Sincerely,
TransparentRx
Tyrone D. Squires, MBA
10845 Griffith Peak Drive, Suite 200
Las Vegas, NV 89135
866-499-1940 Ext. 201



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.