In 2020, spend will nearly double and specialty will represent half of all drug spend. The market estimated to grow from $336 billion in 2018 to a predicted $475 billion to $505 billion by 2023 across developed markets.

As the fastest growing, most expensive segment of pharmacy spend, specialty drug trend is driven by the number of units, or utilization, and the cost per unit. Both utilization and prices are increasing in specialty.

One strategy for mitigating and managing costs with specialty pharmaceuticals is drug utilization management or DUM. Drug utilization management programs can be broken down into several key categories:

• Prior Authorization (PA), which requires select prescriptions meet defined criteria before they are covered by the plan. The clinical assessment may include a diagnosis/age review, safety review, lab data validation, and pharmacogenomic protocols. Prescriptions are flagged at point-of-sale and prescribers are required to confirm that the use of an affected drug is medically necessary.

• Step edits, which promote safety and cost savings by encouraging patients to try a first-line agent, before coverage is provided for a second-line, more costly drug. This could include a non-specialty to specialty step edit in which the patient needs to try and fail with an appropriate non-specialty drug before accessing a specialty medication.

• Specialty generic step edits, which require the trial and failure of a lower-cost specialty drug option(s) before accessing the brand drug.

• DURs or drug utilization reviews from the first day of drug launch. This will ensure safe, effective, and appropriate drug utilization in accordance with FDA-labeling for all new-to-market specialty drugs. New drugs would reject for PA upon launch and be reviewed in accordance with FDA-labeling, bridging the gap until drug-specific criteria are available.

• Quantity management or short fill programs are aimed at reducing waste and apply to a defined list of specialty medications with a high prevalence of adverse events (AEs) and potentially poor tolerability, which can lead to high discontinuation rates at the initiation of therapy. The goal of the short fill program is to minimize medication waste, while managing patient adherence and AE management, thereby potentially improving care and providing savings for patients and payers.

Drug utilization management is not created equally between pharmacy benefit managers. A PA program, for example, at one PBM often performs differently at another. Here are a few questions to consider:

1) Are your PAs properly enforced?
2) Are your current PAs effective?
3) Do you receive proper reporting on PA approvals and denials?
4) How often do you require PAs?

Once the prescription has been written, many specialty pharmacies primary objective is to get the product out the door. In other words, PAs often become a check-the-box exercise don’t allow that to happen in your plan.

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As part of its ongoing efforts to help patients and pharmacists cope with the COVID-19 pandemic, APhA has released guidance for patients and caregivers on how to ensure adequate supplies of medication if they become unable to get to the pharmacy.

The guidance recommends that:

• Patients and caregivers talk to their pharmacist about medication supply concerns. Hoarding or stockpiling, APhA warns, is not necessary and could lead to drug shortages.
• Patients and caregivers contact their health insurance plan, associated pharmacy benefit manager, or both to determine if benefits include early refills—normally the patient or pharmacy would contact the prescriber when refills are needed—or supply limits.
• Patients and caregivers inquire about delivery options if picking up prescriptions at the pharmacy becomes prohibitive. Delivery options could include designating another person to pick up the prescription, getting home delivery, or receiving prescriptions by mail.

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.

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.

Then-Gov. John Kasich’s administration responded by ordering greater transparency in the next round of contracts between PBMs and the managed-care companies handling Medicaid. And the General Assembly eventually barred “spread pricing,” requiring PBMs instead to be paid only a set fee per prescription filled.

But that didn’t end the flow of excess profits to PBMs, either. They still had wide latitude to set the terms of prescription coverage, and because most have parent companies that also own pharmacy chains, a new gambit emerged: arbitrarily designate certain drugs as “specialty” medications, jack up the price substantially and decree that they can be filled only at the parent-company pharmacy.

Tyrone’s Commentary:

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How can a PBM arbitrarily designate certain drugs as specialty medications you ask? The same way a non-fiduciary PBM might designate a generic drug as brand. It’s all about the contract definitions. In every scenario where a plan sponsor has shared their success with reducing pharmacy costs, they’ve mentioned the contract. The mention is usually very subtle unless of course you have a trained-eye then it sticks out like a sore thumb. Leave opaque definitions in your contract and you are bound to get screwed. I’ve supplied here a  transparent definition of ‘Specialty Drug’ and one we use in our Certified Pharmacy Benefits Specialist curriculum.

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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.

Pepsi is one of the eight companies in the contract. Others include Chevron, ExxonMobil, Sodexo, Solvay USA, and Yum! Brands. The remaining two have declined to be publicly identified, says Sossa.

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“To change the nature of how we contracted with PBMs, we needed to take rebates off the table,” Sossa explains. “Instead, we negotiated with Express Scripts from the acquisition cost, net of rebates and net of the average wholesale price.” In other words, the contract is built around Express Scripts’ actual cost of medications. “We pay what Express Scripts pays for drugs,” he says. “That’s the starting point that we haven’t seen in other contracts with PBMs—at least not yet.”

The employers and Express Scripts also agreed to the clinical and financial guarantees. “Rather than chasing rebates or price, we wanted to change the motivation and the nature of the partnership with our PBM,” says Sossa.

Tyrone’s Commentary:

Given the projected growth of both traditional and specialty pharmacy costs, employers must be better educated when working directly with its PBM. The companies referenced in this article understand radical transparency is key to lower drug prices. Accounting for the PBMs take home is paramount to achieving any reasonable level of transparency. Do you understand this or are you still putting the most emphasis on AWP discount and rebate guarantees? Ongoing education in the PBM space improves appropriate use of prescription drugs and eliminates wasteful spending. Employers, large and small, should strive for a relationship that provides the best outcomes and lowest net cost – that starts with education.

In negotiating financial performance guarantees based on per-member-per-month spending levels, the employers agreed to a two-sided risk contract with Express Scripts. If costs are lower than an agreed-upon amount based on what the employers spent on pharmacy benefits in 2018, then the employers pay Express Scripts a bonus. If costs are above the baseline, the employers pay less.

When negotiating the contract terms, Express Scripts worked out the details with each of the eight companies separately, says Snezana Mahon, the PBM’s vice president of clinical programs. “We agreed on the risk parameters client by client, and the outcomes we agreed to achieve are based on the specific needs of each client’s population, meaning we are customizing this program to the plan.”

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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 flows streams in the PBM Industry
• How to calculate the EACD or earnings after cash disbursements
• Basic to intermediate level PBM terminologies
• Pros and cons of PBM price benchmarks
• Cost-containment strategies to implement today

Figure 1.

Patient assistance generally comes in 2 forms:

1. 1. Copayment assistance: These programs help reduce the patient’s OOP responsibility, including coinsurance and deductible support, depending on treatment setting.

1. Replacement drugs: The hospital pharmacy provides the prescription medication to the patient for free, and the drug manufacturer replaces the product back to the provider at no cost.

One of the challenges in securing PAP aid is proactively monitoring changes in patient eligibility and documentation requirements. Most PAPs require an application, yet no 2 programs are the same, and the amount of information required varies.

Tyrone’s Commentary:

Two examples of caution when it comes to PAPs. First, some programs provide assistance for the purchase of high-cost drugs that have no generic equivalents or close therapeutic substitutes. In such cases, assistance programs can expand access to therapies that represent the standard of care but can also promote use among patients who do not place a high value on the health benefits associated with these therapies.

Patient-assistance programs may lead to higher drug prices as a result of the interplay between patient demand and prices. Economic theory predicts that if patient demand becomes less sensitive to prices, manufacturers of on-patent drugs will respond by setting higher prices. Despite these two downsides PAPs have more pros than cons.

Some programs require detailed medical and financial information (see figure 1), and others ask for very little. In addition, although all require a physician’s signature, some programs require the doctor to complete a portion of the form, and others only need a signed prescription.

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