Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 325)

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.

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 324)

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: Deadlines get deals done

It was about a month ago I was sitting behind the wheel of my automobile listening to sports talk radio. I know…there are much better options, such as NPR, but I needed an escape. My timing couldn’t have been better, however. The segment I caught was about the Dallas Cowboys and their ongoing negotiations with starting quarterback Dak Prescott.

Dak after being told he gets a one year deal
If you don’t know the story and why would you if you’re not a football or sports fan but here is the background. In the NFL, high-performing rookies are essentially locked into less than market value contracts for up to 5 years. A NFL team could extend the contract before expiration if it so chooses. In many cases, they do just that especially when the rookie has outperformed their contract and has stayed out of trouble.
Enter Dak and the Cowboys who opted to franchise tag Dak. A franchise tag is essentially a one-year deal with no long-term guarantees or committment from an NFL team. Does this sound familiar? NFL quarterbacks who are considered franchise type quarterbacks rarely get the franchise tag. Teams try and lock them up for the long-term. But when the team doesn’t trust a player enough to lock them up long-term it uses the franchise tag.
Many self-funded employers are opting to franchise tag their PBM instead of going into 2-3 year contracts. Why, because you don’t trust them! Who wants to go through a bidding process every six months unless it’s absolutely necessary? No one, thus the reason I wrote this blog post. One year deals give PBMs a lot of leverage. Have you ever wondered why it’s like pulling teeth to get access to your own claims data but when the contract is up for renewal it seems to find its way to your inbox?
Jerry Jones, the owner of the Dallas Cowboys, said something I always knew but for some reason this time it really resonated with me. In reference to his negotiations with Dak Prescott and his agent, Jones said, “deadlines get deals done.”  In our world, this is the same leverage PBMs use to get employers into deals which lead to contract opacity and significant overpayments. Pharmacy Benefit Managers are well aware employers must get ID cards into the mailboxes of their employees.
In other words, non-fiduciary PBMs prefer short windows to get service agreements executed. Short windows lead to wasteful and duplicative spending especially on management fees. PBMs will generally provide transparency and disclosure to a level demanded by the competitive market and rely on the demands of clients in negotiating their contracts. Here are some useful tips:
1) Make the contract the centerpiece of any PBM selection process.
2) If the contract is 1A, the benefit design is 1B. Who has control you or the PBM?
The best proponent of radical transparency and lowest net Rx cost is informed and sophisticated purchasers of PBM services. I’m not talking about 1400 SAT or 4.0 GPA sophistication. I’m referring to a high level of sophistication in the PBM arena. If it isn’t your lane don’t play in it find someone who does.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 323)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

 

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.

 
When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Tuesday Tip of the Week: Dose Optimization Interventions Yield Significant Specialty Drug Cost Savings

Dose optimization strategies offer a potentially valid, clinically based intervention in which payers can realize a direct drug cost savings, and indirect medical cost avoidance. Dose optimization programs have been evaluated with once-daily, oral maintenance medications using various methods that produced varied results.
These studies were conducted in medication classes such as gastroesophageal reflux disease (GERD), anxiety and depression, and hypercholesterolemia. While the current literature describes dose optimization in the nonspecialty space, there is limited literature on dose optimization strategies used for specialty products.
Oral Oncology Therapies: Specialty Pharmacy's Newest Challenge
Source: Pharmacy Times
A specialty pharmacy developing a dose optimization program could evaluate the implications and viability for specialty products, since they work closely with payers and providers. A successful dose optimization program within a specialty pharmacy could contribute a significant cost savings for payers, further mitigating the rising costs of specialty medications. Therefore, the goal of this pilot program was to evaluate the scenarios and opportunities for dose optimization within a selected group of oncolytics.
Diplomat Pharmacy’s oncology program delivers comprehensive care management to help patients address complex aspects of their treatment and condition. The crossfunctional oncology team is composed of specialized clinicians, and nonclinicians leveraging evidence-based care for treatment optimization, improved care coordination, and therapeutic cost management.

Channel Management for Specialty: Challenges with Medical Benefit or Pharmacy Benefit

At the point when the vast majority consider getting their meds filled, they take their script to their nearby network drug store or send their script to a mail order pharmacy. As a rule, by far most of prescribed drugs are usually secured under the pharmacy benefit in the interest of the individual’s insurance plan.
Albeit a retail or customary mail channel bodes well for 97% to 99% of non-specialty medications, the other 1% to 3% of scripts are specialty drugs that may should be filled through another channel including home infusion, physician clinic or a hospital. With specialty medications, there is dilemna in which either the medical or pharmacy benefit may be the primary point for dispensing, administration, and reimbursement.
In recent years, as the industry has watched specialty spend grow, I have observed prescription insurance plans’ specialty gross costs represent anywhere from one-third to 50% of their total gross spending while the number of prescriptions being filled for that specialty spend is for fewer than 1% of the health plan’s total pharmacy prescriptions.
According to CVS Health’s 2018 Drug Report and the cohort of insurance plan’s it manages, “Specialty utilization and share of gross cost continues to grow, reaching 45 percent of total pharmacy spend in 2018 as compared to 42% in 2017, despite comprising only 1 percent of prescription claims.”

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 322)

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.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

 
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.

 
When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Tuesday Tip of the Week: When the carrier, PBM and ASO all share the same parent company you are fully insured

Well, I guess it depends on why you moved away from the fully-insured funding option in the first place. There are several pros for self-funding chief among them include:

1) More Control
2) Better Reporting
3) Improved Pricing
3) Formulary
4) Better Health Outcomes
5) Elimination of Rebates to Carriers
6) More Transparency
With that said, I am asking plan sponsors and their independent consultants to consider the following question.
Click to Learn More
A self-insured pharmacy benefit plan should provide better cost control, transparency and technology as well as information and reporting. When your PBM is reluctant to share valuable information to help you manage and evaluate performance are you really self-insured? Health insurers may combine aspects of the two funding options to subsidize pricing (cost-shifting).
For companies with a carved in program, there may be concerns about changing to a carved-out program due to a perception that additional time and resources will be needed, but I have seen that on a day to day basis, there is little difference in having a separate pharmacy program. The farther removed you are from the downsides of a fully-insured pharmacy benefit plan the better off your group will be.