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.” Continue Reading >>

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.

Potential Specialty Generic Drugs 2020

The worldwide Specialty Generic Drugs Market is foreseen to reach USD 190.9 billion by 2025. Specialty Generics drugs are the generic forms of pharmacological drugs. These medications are monetarily less expensive as opposed to brand medications. All things being equal, the turn of events and commercialization of specialty generics drugs are much more complex when contrasted to non-specialty generics drugs. Organizations are going into the specialty nonexclusive medications market to manufactuer generic forms of drugs by framing new medication formulations. Moreover, the worldwide capacity non-specialty generics drugs is driving organizations to look for more current chances.

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 321)

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.

Tip of the Week: Pass-Through and Transparent PBM Business Models are Small Ideas

All of the different PBM business models will profess how much money they can help plan sponsors save or ways to improve your pharmacy benefit plan. But what one thing none of them are doing is sharing with these same employers how much money they are making off your group. Only two business models will do that - fiduciary or radically transparent PBM models. I mean who are we kidding? Traditional, pass-through and transparent PBM business models are for the most part the same. Do any of them reveal how much money the PBM is being paid for servicing your group? Think about this for a second. The contracts pharmacy benefit managers enter into with pharmaceutical manufacturers and pharmacies are pretty much set in stone. Unless a PBM significantly outperforms its contract, the terms between us and manufacturers won't change until the contract has come to an end. For a PBM to outperform a contract with a pharmaceutical manufacturer or rebate aggregator would require doubling the number of lives covered, for example. If you believe this and you should, then what plan sponsors are really negotiating for come renewal is what part of the discounts a PBM has secured you will allow that same PBM to keep. Click to Learn More The amount of dollars a PBM keeps for itself is referred to as the PBM's service fee. In other words, it is the fee a PBM is charging you for the services it was hired to perform. PBM service fees are a primary driver of PMPM or PEPY costs. While rebates, clinical management, and discount guarantees are important, they are also being used to distract purchasers from a key driver of their final plan costs - PBM service fees. Don't confuse the service fee with the admin fee. The service fee is the amount of money a PBM keeps in its bank acount after the bills are paid. An admin fee is usually a per claim, PEPM or PMPM fee which is easily quantifiable. I don't want to confuse you but the admin fee I'm referring to is different than a manufacturer admin fee. That is a topic for another day. In many cases, the non-fiduciary PBM will offer an artificially low admin fee knowing full well acceptance means you've essentially given it a blank check for service fees. Pass-through and transparent PBM business models don't let you in on what their service fee amounts to. That is a big big problem. Unlike admin fees, service fees are not easily quantifiable primarily because non-fiduciary PBM don't want you to know just how much their fees are contributing to your costs! The full-disclosure and fiduciary-model PBM will let employers in on their service fee or the part of negotiated discounts it will keep. The lower this fee the less employers pay plain and simple. A fair PBM service fee will bend the cost trend. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser…

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 320)

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: 3 Ways to Prepare for the Inevitable Rise in Pharmacy Benefit Costs

While the full impacts are yet to be resolved, specialists are foreseeing that the coronavirus will have an enduring, incessant effect on survivors. As per a Willis Towers Watson examination, in addition to health concerns, these people also face monetary concerns: medical and prescription drug costs for individuals with COVID-19 could spand $250 to $100,000. An ongoing report by the Integrated Benefits Institute (IBI) additionally found that the complete expense of COVID-19 to employee benefit plans could surpass $23B, excluding auxiliary costs, for example, paid family leave time. This is notwithstanding other health insurance bills businesses were at that point confronting prior this year. Nonetheless, it is conceivable to lessen the expense of pharmacy benefits without increasing employee cost share or reducing benefit levels. Carve-Out the Pharmacy Benefit   PBM programs typically function in two ways. They are either “carved in”, provided by the health insurance company or “carved out”, provided independent of insurance. Whether the pharmacy benefit plan is self-funded or fully insured, any employer with more than 100 active employees should consider and investigate a carve-out strategy for their pharmacy benefits. A carved out program provides better cost control and transparency, technology and services, as well as information and reporting. Health insurers may bundle the two programs and subsidize some of the pricing from one service with that of another. 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 PBM program. The functions are the same. Forgoing retail pharmacy rebates for admin fee credits on the medical side is another non-fiduciary pricing game. With opaque contract language and subsequent hidden cash flows, the PBM and/or carrier will recoup those credits you thought were going to reduce costs. Among the advantages of a carve-out are the following: 1.  Better Contract Terms 2.  Carved-out Specialty Rx  3.  Customized Clinical Programs  4.  Lower Pharmacy Costs 5.  Better Data Rights  6.  More Detailed Analytics 7.  More Transparency    As you can clearly see, there are significant advantages to pursuing a carve-out strategy, both for the plan sponsor and plan participants. 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. The best proponent of radical transparency or lowest net Rx cost is informed and sophisticated purchasers of PBM services. Make a Good Formulary   A formulary is a list of drugs favored by the PBM for their clinical effectiveness and cost savings. Pharmaceutical manufacturers of specialty and branded drugs often promise financial incentives to have their drugs featured on the formulary. Drug formularies can be open, incented, closed or hybrids. There are five factors necessary for the makings of a good formulary. These include: 1. Multiple enforcement mechanisms 2. A minimum 5 tiered list of drugs 3.…

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 319)

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.

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

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 See you Tuesday, July 14, at 2 PM ET!   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.