The latest Rx Price Watch report by Leigh Purvis and Dr. Stephen W. Schondelmeyer finds that retail prices for widely used prescription drugs increased by an average of 4.2 percent in 2017. In contrast, the general inflation rate was 2.1 percent over the same period. Tyrone's Commentary:  If what you're doing right now isn't bending the Rx trend, try something different. In 2017, the average annual retail cost for 754 brand name, generic, and specialty prescription drugs used to treat chronic conditions was almost $20,000 per year. This average annual cost was nearly 20 percent higher than the average Social Security retirement benefit ($16,848). The annual drug cost was also more than three-quarters of the median income for Medicare beneficiaries ($26,200) and almost one-third of the median US household income ($60,336). Continue Reading >>

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.

A non-fiduciary PBM would prefer that its clients not know just how much revenue or hidden cash flow it generates as a service fee. There are three primary methods in which a non-fiduciary PBM will look to drive revenue. The three primary methods are: spreads, rebates and benefit design. Spreads and rebates are much talked about benefit design not so much at least not where overpayments are concerned. Usually, the benefits design conversation is about keeping employees happy or limiting disruption to their benefits experience. It's an appropriate conversation to have but certainly not the only one to be had around benefit design. If an employer closes off spread and rebate overpayments to a non-fiduciary PBM, sure enough the non-fiduciary PBM will look to make up for that lost revenue in the benefit design. The Pacific Business Group on Health commissioned an excellent report, "Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans" which you must read. Here are a couple of recommendations from that report. Source:  Pacific Business Group on Health Non-fiduciary PBMs are good at this game! I had this discussion with a seasoned benefits consultant who couldn't believe that this actually happens. That a PBM would poorly design a pharmacy benefit plan so to protect its revenue. He was surprised to learn that a PBM would take this route to protect its margins. I was taken aback that he was clueless to this ballooning tactic. A good benefit design is one that is both cost-effective and gets medically appropriate drugs in the hands of patients. Cost-effectiveness is the act of saving money by making a product or performing an activity in a better way. It is easy for a PBM to get a medically appropriate drug in the hands of a patient yet that drug may not be cost-effective, for example. One last word on #10 above. If your finance or accounting teams have not been properly trained, preferably by someone with PBM insider experience, then they too will leave money on the table. It's a game of whack-a-mole with big stakes. Without training from a PBM insider, a non-fiduciary PBM will always beat you at that game. Download Full Report >>

"No one is immune from monetary temptation. We have a system that rewards oncologists and their chemotherapy offices with more money for giving more expensive chemo. This has to change," said Vincent Rajkumar, MD, a professor of medicine and a hematologist/oncologist at the Mayo Clinic, Rochester, Minnesota. "Last week a myeloma patient told me his oncologist had switched him from Zoledronic acid (ZA) to a 'new, easier' option: denosumab. A recent @ASCO guideline in @JCO_ASCO said both were options. ZA is ~$70; Denosumab is ~$2000. The oncologist gets 6% of the drug he/she chooses." Distorted Model Drugs that are administered by infusion or injection in physician offices and in hospital outpatient departments are covered by Medicare Part B, as are certain products furnished by suppliers. Under the current system, oncology practices must buy the chemotherapy drugs up front. The cost for drugs may vary; in the United States, Medicare reimburses costs on the basis of the average sales price (ASP) plus 6%. The 6% is meant to cover any variation in the acquisition price, as well as overhead. Source:  Academy of Managed Care Pharmacy Tyrone's Commentary: A big chunk of overpayments made by self-funded employers to PBMs can be eliminated by uncovering the most important objective of the PBM. Is their primary objective to make money or to help clients? Yes, you can still make money and put clients first. There are PBMs telling clients that therapeutic substitution is a bad thing. In other words, PBMs who engage in therapeutic substitution programs do it only to drive rebates for themselves. The truth is some do and some don't. More important, is the PBM's primary objective this ultimately drives financial and sometimes clinical decisions. Avoid the "Happy Ears" syndrome and trust your PBM training and education not what the PBM tells you. This story highlights why therapeutic substitution programs are a valuable drug utilization management tool when used appropriately. It is applicable to both the pharmacy and medical drug spend categories. By the way, how much time are you allocating to monitoring the medical drug spend outside of reviewing standard reports? If the answer is little to none you might want to take a serious look. You will likely discover gross overpayments. As Rajkumar noted in his Twitter thread, that means that providers will be paid more money for prescribing a more costly medication, even if a less costly and equally effective alternative is available — such as the case he highlighted with the myeloma patient being prescribed denosumab (Xgeva, Amgen) in place of zoledronic acid. Continue Reading >>

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.

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.

Earlier this month, a Medicare recipient with drug coverage filled a prescription at a Concord branch of a major pharmacy chain. The pharmacist, one of many with heart, soul and concern for customers, ran the numbers and pointed out that it would be $80 cheaper if the patient paid for the drug out-of-pocket instead of using her insurance co-pay. Until recently, pharmacists were banned from alerting customers to such savings by contracts with pharmacy benefit management companies. Untold millions were secretly siphoned away from unwitting patients by the legal, but deceitful, tactic. A bill passed by Congress last year freed pharmacies from PBM gag orders.“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket,” Sen. Susan Collins of Maine, a sponsor of the bill, told colleagues. “Clawbacks” earned by overcharging patients are just one of the sins of an industry that evolved in the 1990s as middlemen between pharmaceutical manufacturers, insurers, employers and plan beneficiaries. They have become, it seems, akin to lampreys, the parasitic eel-like fish with rasping mouths that attach to their piscine victims and suck their blood, weakening but not killing them. Tyrone's Commentary: A non-fiduciary PBM salesperson, click here to wipe that smile off his face. There are a lot of bad actors in the PBM industry and I mean a lot. Much can be done by non-fiduciary PBMs to improve the level of transparency provided to purchasers of PBM services. For instance, most PBMs consider themselves transparent when they disclose, in contracts, their cash flows. The problem here is twofold. Without a trained-eye reviewing the contracts, most companies don't recognize the "hidden" cash flow streams embedded in contract language. Second, the exact amounts of cash flow to non-fiduciary PBMs aren't disclosed. Any PBM that doesn't disclose its service fee (admin fee + undisclosed cash flow amounts) falls short of providing any reasonable definition of transparency to its clients. I'm not taking purchasers off the hook either you need to get smarter about how you procure and manage pharmacy benefits. The more sophisticated you are as a purchaser of PBM services the less one overpays. With all this being said, I'm convinced that PBMs are low hanging fruit. It's easy to put most of the blame on us for high Rx costs. Afterall, purchasers and their agents have a direct line to us whether by phone or email. In most cases, no such direct line exists between self-funded employers, their agents and pharmaceutical manufacturers. The research is clear drugmakers keep 70% of Rx profits, pharmacies 15% and PBMs 5%. Also, if I'm being honest most purchasers of PBM services don't know enough about the industry to negotiate a fair and transparent deal for themselves. Twenty-years experience in HR, finance or as a broker will only get you in more trouble unless you've had extensive and formal PBM training from an insider. Even with…

Danish pharmaceutical company Novo Nordisk is facing a $1.75 billion lawsuit brought by a group of pension fund shareholders who allege the company engaged in insulin price fixing and issued misleading statements about the health of its US insulin business. According to the complaint, Novo Nordisk allegedly colluded with pharmaceutical firms Sanofi, Eli Lilly, and Merck to increase the prices of their insulin drugs. It said the prices of the companies’ insulin products “skyrocketed over the past decade in a suspiciously close and synchronized manner.” The lead plaintiffs include the Central States Pension Fund, Southeast and Southwest Areas Pension Fund, Oklahoma Firefighters Pension and Retirement System, Boston Retirement System, Employees’ Pension Plan of the City of Clearwater, and the Lehigh County Employees’ Retirement System.  The plaintiffs say that during the class period, which is between April 30, 2015, and Oct. 27, 2016, Novo Nordisk reported “impressive revenue, operating profit growth, and sales growth.” They also said the company told investors that it would earn revenue and operating profit growth of between 5% and 9% in 2016, as well as 10% operating profit growth over the long-term. Tyrone's Commentary: Source:  www.aarp.org For those who believe the supply chain would be better off without PBMs think again. All you need do is read this single paragraph from the complaint. It reads, “In truth, Novo Nordisk was experiencing significant pricing pressure in the US and was only able to report ‘flat pricing’ for its drugs because the company entered into collusive agreements with its purported competitors,” said the complaint. “What’s more, the company’s reported revenue, operating profit, sales growth, and margins were overstated in that they were based on collusive price fixing.” That pricing pressure comes primarily from PBMs and our consolidated purchasing power. If that purchasing power becomes fragmented what do you think will happen? The key then, as a purchaser of PBM services, is to extract as much of that negotiated savings as possible from PBMs. In order to accomplish this, your team must have trained-eyes for the procurement and management of pharmacy benefits. The best PBM training comes from insiders. According to the complaint, while some of the company’s competitors acknowledged that insulin revenue would decline as a result of increased pricing pressures from pharmacy benefit managers, Novo Nordisk assured investors otherwise. Continue Reading >>

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.