PBM 101 Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer radical transparency and instead opt for hidden cash flow opportunities such as rebate masking. 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 flows in the PBM Industry such as formulary steering, rebate masking and differential pricing 
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) vs. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold
 
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.

Targeted Medication Reviews (TMRs) Critical Success Factor for Medication Therapy Management

A Humana study comparing the differences in medication therapy management (MTM) services found that targeted medication reviews (TMR) were highly successful interventions.

“This study highlights how critically important it is for Part D and Medicare Advantage plans to continue to innovate in their efforts to contribute to better therapeutic outcomes for the patients they serve,” Michael Taday, associate vice president of pharmacy clinical strategies and operations for Humana pharmacy solutions, said in a statement.

CMS has designated two medication therapy management interventions, comprehensive medication reviews (CMRs) and TMRs.

CMRs review all of the medications taken by a patient and sends them a cover letter, a full medication list, and a medication action plan to combine with their medications. CMS requires providers to offer CMRs to eligible patients on an annual basis.

TMRs monitor medications constantly to determine that drugs are appropriately prescribed and predict or identify medication-related problems.

The study determined that TMR interventions were more successful at achieving low acute inpatient admissions. Furthermore, patients were far more likely to adhere to their medications when their providers used a TMR. The past year, in particular, proved that TMR patients were less likely to visit the emergency department, the data showed.

In contrast, CMR interventions only reduced acute inpatient admissions when it was clear that the patient had a medication-related condition.

Continue Reading >>

Op-ed: PBMs are Driving Up Costs and Lowering Quality Care in America

While there are certainly other factors that increase drug pricing, such as the lack of competition of generic drugs, fee-for-service care models and an absence of patient consideration at the policymaking level, PBMs have remained a central contributor. The already-complex relationship with PBMs becomes harder to demystify and potentially a cost multiplier because the rebate process is not transparent to physicians or patients.

Click to Learn More

In fact, we don’t know what percentages of rebates are kept by PBMs. That begs the question, was the PBM I worked with suggesting a brand-name drug so they would receive a higher rebate payment without any consideration for the patient’s well-being? My experiences make such a conclusion easy to consider.

If PBMs are consistently causing increases in drug prices, delaying treatment and limiting options for patients, why are they part of our health care system? PBMs were developed with good intentions: to help insurance and pharmaceutical companies provide affordable drugs to patients quickly. Unfortunately, that is not how PBMs operate anymore, which makes me think it’s time we rid our system of these unnecessary middlemen.

Tyrone’s Commentary:

There is no question that non-fiduciary PBMs have learned how to leverage the purchasing power of unsophisticated plan sponsors to their financial advantage. That proposition doesn’t change the fact that PBMs offer valuable services and deserve a reasonable return on those services. The key issue then are the hidden cash flows generated by non-fiduciary PBMs which drive up costs. I wonder if Dr. Price knows that 95% of all self-funded employers have no clue how much they pay a PBM for its services? Before you go there and say PBMs won’t divulge this information that is an excuse. There are PBMs who will offer this level of disclosure you just can’t drink the kool-aid of those who say it isn’t possible. Hence, the solution is not the elimination of PBMs, who offer valuable services, but to stop overpayments. Education is the best solution. It always baffles me when an entity or person suggests a solution to a problem when they stand to gain from their own recommendation. In short, it is self-serving for Dr. Price to suggest PBMs be removed from the supply chain. There are purchasers of PBM services who are better served going direct and there are others who are better off hiring a fiduciary-model PBM. The solutions to the problems in health care are rarely one-size fits all.

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Self-funded employers spend 40% of costs on less than 1% of prescriptions

Willis Towers Watson’s Rx Collaborative, the largest employer-based pharmacy benefit group purchasing coalition in the U.S., disclosed that specialty drugs accounted for less than 1% of all the coalition’s prescriptions last year, yet totaled 40% of its total drug costs. In addition, the top 10 drugs by gross cost accounted for 20% of employers’ pharmacy spend in 2018.

Image result for top five disease states for specialty drugs
Source: Specialty Pharmacy Times

“Pharmacy represents about 20% of employers’ overall health care spend and is expected to reach 25% by 2020. This cost pressure has many employers turning to a drug purchasing collaborative to help control costs and improve pharmacy benefit performance,” said Nadina Rosier, Pharm.D., head of the Pharmacy practice at Willis Towers Watson.

“The successful formula for employers’ prescription drug plans centers on joint purchasing power, tools to manage specialty pharmacy costs, and innovative medical and pharmacy benefit strategies that improve employees’ health.”

Which prescription drugs make this esteemed list? Here’s a quick rundown of the five medicines expected to become the industry’s biggest earners in the next decade. These 5 Prescription Drugs Will Generate a Jaw-Dropping $62.3 Billion in 2024. 

The Top Five

  1. Merck’s cancer-fighting immunotherapy Keytruda tops this list, with a projected revenue haul of $17 billion by the end of 2024. Merck’s Keytruda is also the drug with fastest pace of sales growth on this list, thanks to its ability to grab several key new indications over the prior two years. 
  2. AbbVie’s flagship anti-inflammatory medicine Humira is predicted to slip to second place on this list, with an estimated 2024 revenue forecast of $12.4 billion. In 2018, this drug blew away the rest of the field with a gobsmacking $19.9 billion in global sales. 
  3. Bristol-Myers Squibb and Pfizer’s next-generation blood-thinner, Eliquis, is a close third, with 2024 sales expected to hit a monstrous $12 billion. Bristol and Pfizer raked in a whopping $6.4 billion from Eliquis in 2018.
  4. Bristol’s PD-1 inhibitor, Opdivo, a rival to Merck’s Keytruda, is slated to generate a healthy $11.3 billion by 2024. Once upon a time, Bristol’s Opdivo was widely predicted to top this list, but a major miss in advanced lung cancer opened the door for Merck’s Keytruda to become the undisputed champion of the PD-1 inhibitor space. 
  5. AbbVie and Johnson & Johnson’s game-changing blood cancer drug Imbruvica is set to occupy fifth place, with an estimated revenue haul of $9.5 billion. Now, AbbVie and J&J’s Imbruvica might ultimately slip out of the top five. There are several new drugs gunning for Imbruvica’s most lucrative indications, and Pfizer’s breast cancer drug Ibrance should also bring home no less than $9 billion in annual sales by 2024.  
Tyrone’s Commentary:
Does it make sense to have the same entity manage and approve specialty Rx claims when that entity stands to benefit when these claims are approved? The short answer is heck no! The PA process can be an exercise in complete futility. Additionally, software, like CoverMyMeds, which is supposed to streamline the PA process is far to often a rubber stamp exercise so that the PBMs who own specialty pharmacies can speed time to money. If you’re interested take a look at who owns CoverMyMeds. Employers who are serious about bending the specialty Rx cost trend are seeking alternative methods to reduce cost and improve outcomes. One such alternative is individualized care planning.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 281)

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.

How an Stand-alone PBM Uses Patient Engagement to Improve Cost and Patient Outcomes

As the PBM landscape consolidates around a few monolithic players, it’s become increasingly difficult for independent challengers to carve out space for themselves in a dominantly payer-owned field. Even one of the largest independent pharmacy benefit managers (PBMs) in the United States found they could not compete on cost.

Luckily, some independent PBMs are doing things a little differently. We are incorporating better patient care into our business strategies in pursuit of a vision for lower healthcare costs and greater transparency across the medical and pharmacy benefits.

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At the heart of the vision is a unique program launched with a small network of best-in-class specialty pharmacies, chosen because they offer patient-support services that improve logistics, promote access and adherence, and reduce costly healthcare episodes. And it works. 

These partnerships have upheld the belief that more empowered, knowledgeable, and cared-for patients have better outcomes and use the healthcare system more efficiently. This is how independent PBMs are carving out a true niche as the partner who cares about patients and lowers healthcare costs universally.

Continue Reading >>

Medicare and its beneficiaries could have saved an estimated $17.7 billion if older generics were prescribed, study finds

Medicare and its beneficiaries could have saved an estimated $17.7 billion earlier this decade on generic versions of older medicines instead of paying for newer, chemically similar but more expensive brand-name drugs that companies launched to replace those older pills, according to a new analysis in the Annals of Internal Medicine.

Tyrone’s Commentary:

Click to Learn More

Medication switches are most often thought of as changing a brand-name product to a generic drug. Switching also can mean the changing of one brand name product for another, or the switching of a generic medication to the same drug produced by another generic manufacturer. These can be initiated by the physician, pharmacy or PBM. Switches are done to reduce the overall cost of prescription medications. Generic or therapeutic switching remains one of the great but underutilized opportunities for lowering prescription drug costs. 

  • Medication switches are done to reduce the high cost of  prescription drugs.
  • Generic substitution means that patients prescribed an expensive  brand-name medication are given a less-expensive generic  equivalent in the pharmacy.
  • Therapeutic substitution means switches within a drug class; a  brand-name medication may be replaced by a less expensive brand-name or generic product.
  • The cost savings are substantial, especially for health plans.

One of the biggest mistakes employers make is not continuously monitoring drug spend to identify generic switch savings opportunities. You can’t set it then let it go hoping for the best. In other words, standard PBM reports won’t uncover the wasteful spending. You need a trained set of eyes to catch savings opportunities early and often.

For example, Medicare spent $13.4 billion on the Nexium acid reflux pill between 2011 and 2017, but could have saved $12.7 billion if, instead, prescriptions were written for generic copies of the older version of the drug called Prilosec. Similarly, Medicare beneficiaries spent more than $832 million on Nexium between 2011 and 2015, but could have $690 million if prescribed a generic version of Prilosec.

Download Analysis >>

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 280)

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.

Plan Sponsors Laser Focused on High-Cost Claims

Of the health care initiatives large employers participating in the National Business Group on Health’s (NBGH) latest Health Care Strategy and Plan Design Survey cited, implementing virtual solutions (51%) and developing a more focused strategy to address high-cost claims (39%) were at the top of the list.

The cost of specialty medical treatments is escalating at an unsustainable rate—typically a double digit percent increase year-over-year. Even worse, large employers with self-funded plans are footing the bill for newer high-cost treatments, some in the millions per treatment. Employers have many concerns related to high-cost treatments: the million-dollar price tags and the speed at which the treatments come to market, which can call into question the rigor and timeline of clinical trials.

What’s more, an increasing focus of the research and development pipeline is on treatments for narrow subsets of patient populations with rare diseases—making this an exciting time in health care when patients with certain illnesses, sometimes terminal, are able to receive treatments or even be cured, the report notes.

Large Employers’ Top Health Care Initiatives, 2020

However, as a result of the pipeline of treatments for rare diseases, large employers are increasingly focused on the impact of even one or two cases on their overall annual health care budgets. For example, Zolgensma, a one-time injection to treat spinal muscular atrophy in young pediatric patients, was launched in May at a $2.1M price tag, sending employers into action mode to uncover ways to finance such therapies.

In 2019, about one-quarter of employers are delaying the inclusion of new treatments from their formulary at launch (e.g., for 6 months) to enable the pharmacy benefit manager (PBM) or health plan to better determine the treatment’s efficacy and safety. The other two options—stop-loss insurance and outcomes-based contracting—aren’t as popular an approach, but are being considered heavily for 2021/2022.

In 2018, a majority (56%) of large employers voiced skepticism about the proposed health plan–PBM mergers. Specifically, they were unsure if these newly formed relationships would lower cost, improve quality and curate a better consumer experience. As a followup to that survey question, this year’s survey dove into whether employers are “voting with their feet” by going out to bid in direct result of mergers between health plans and PBMs.

The survey finds 16% of surveyed employers are issuing a request-for-proposal (RFP) due to health plan–PBM mergers. Another 30% are considering doing so in 2021-2022. These numbers are an indication that consolidation is having a profound effect on the health care industry, which could result in a plan change—health plan or PBM—for a number of employers, the report says.

The full report is only available to NBGH members, but an executive summary of the findings is available here.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 279)

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.