Building on the introduction of its point-of-sale (POS) discount program, OptumRx and UnitedHealthcare are expanding their POS prescription drug discount programs to apply to all new employer-sponsored plans. The idea behind the expansion is to make medications more affordable and to improve health outcomes.

Tyrone’s Commentary:

Education is the leading market driver of transparency in the PBM space. Employers click here to learn more.

1) The POS discount program alone doesn’t change the rebate share Optum keeps for itself which is the biggest problem. Optum’s POS rebates may reallocate part of the plan sponsor’s share to another participant (patient) in the US Pharmacy Reimbursement and Distribution System, for example.

2) Patients should be able to benefit from lower costs so I agree with the premise. However, how is the POS rebate calculated and is it consistent? A patient with a 20% coinsurance should receive a larger rebate than a patient with a lower flat copay especially when that flat copay is significantly lower than the OOP for coinsurance. POS discounts or rebates can make the process of getting to true cost or eliminating overpayments challenging to say the least.

3) Reporting. This adds another layer which OptumRx or any non-fiduciary PBM could make it difficult for the plan sponsor to ascertain the patient’s financial benefit, at the POS, which can lead to an increase of opacity.

Bottom line plan sponsors now more than ever need to win radical transparency from their PBM. Now that one additional beneficiary [patient] has been added to the financial flow of money, from rebates, the US Pharmacy Reimbursement and Distribution System is even more complicated.

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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.

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.

Inmaculada Hernandez, PhD, assistant professor at the Pitt School of Pharmacy, and colleagues, studied pricing data from the First Databank, along with pharmacy claims from the UPMC Health Plan. Some 19,000 new and existing oral and injectable drugs used in the outpatient setting between 2008 and 2016 underwent analysis. The group aimed to quantify which therapies were the most significant contributors to changes in cost.

“One of the important reasons we conducted this study is to increase transparency in the drug pricing process,” Hernandez said in an interview with Healio Rheumatology. “The prices of new drugs make headlines, but when you look at all of the drugs available on the market, and where the health care dollars are going, it is not just the entry of these new products that is causing the overall increases.”

In their study, Hernandez and colleagues presented results in a number of ways, including a breakdown of brand name and generic drugs. For brand name drugs, the group reported a 9.2% increase for oral drugs and a 15% increase in injectables; the researchers reported that existing drugs largely drove this increase. For generics, oral drug costs increased by 4.4%, while injectable drug costs rose 7.3%. New drug entry drove these increases, according to the findings.

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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.

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.

Humalog rapid-acting insulin my introduction into the pharmaceutical industry

First things first, get this product on your formulary yesterday! It shouldn’t take six months for a P&T committee review. Now, the primary reason for this blog post.

My career in the pharmaceutical industry began in 2002 with Eli Lilly and Co. I started out as a sales representative in the diabetes care division before electronic prescribing. I don’t know why I added the part about electronic prescribing other than to reflect back on how fast time flies. Not too many employees speak highly of a company once they leave. I do, however, of Eli Lilly and Co. every chance I get.

Before going any further, I need to preempt any attempts to downplay what I’m about to write. Much like Eminem when he battle raps, I know what my competition is going to say before they utter a single word.

Eli Lilly is a great pharmaceutical company who puts patients first. I know, I know…it is a public drugmaker, with shareholders, and generates gargantuan margins from its product portfolio. Hear me out.

1) Back then, in 2002, and still today the sales culture was about putting the patient first always. Of course, the company has to keep shareholders happy but it didn’t do it at the expense of patients. I truly believe this and have more street smarts than most so no I’m not drinking the Kool-aid.

2) In a team meeting, my manager called me into a private room during a break. He handed me a folder and inside was a letter explaining my salary was going from $65,000/yr to $85,000/yr. I got light-headed and nearly passed out. It wasn’t so much about the money instead it was the recognition I appreciated most of all. There are two things of note. First, I had not asked for a raise. Second, I was less than one year into my tenure with Eli Lilly still they cut the check!

3) Less than a year later, I was promoted way ahead of schedule. I’m talking six or seven years ahead of schedule. They recognized my results and rewarded me for them. No red tape, business case, or performance review just you deserve it so here you go.

I write all of this to say I’m not surprised Eli Lilly and Co. announced plans on Monday to sell a half-price version of its popular insulin injection Humalog. True, it is fending off criticism about rising drug prices, especially insulin, yet like my pay raise it didn’t have to do this.

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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.

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

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.

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 trend for specialty drug costs is 14% increase every year to 2025. Worse yet, there is a good chance plan sponsors are significantly overpaying for specialty medications. Don’t fret, there is good news. You have an opportunity to bend the specialty pharmacy cost trend. Consider this recent case study:

Reviewing a high-cost case, one of TransparentRx’s Certified Pharmacy Benefits Specialist and clinical pharmacist identified an unusually high payment for a specialty pharmacy drug. The CPBS notified the client and consulted on appropriate pricing. It was discovered that although the client had performed a medical necessity review, the cost of the drug was not reviewed because an existing discount was already in place. We were able to negotiate with the provider and win both retrospective and future pricing at the CPBS’s suggested cost. Total Annual Savings: $1,623,427.

It is true this is an extreme example yet at the same time it is certainly not unique. The following tips can help brokers, plan administrators and case managers identify and fix overpayments for specialty pharmaceuticals:

Take a proactive approach to prior authorizations.

I’ve been fortunate enough to be a “fly on the wall” listening to the leadership teams of several national specialty pharmacies. And while they preach case management and patient care as the priority if you listen carefully what they really want first and foremost is volume or more prescriptions. I am asking self-funded employers a simple yet very important question. 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?

If 90% or more of PAs are getting approved you might be a victim of rubber-stamping which leads to what? You guessed it – higher costs. Just because you have a PA or step therapy program doesn’t mean it is efficient. Consider carving out the prior authorization process or at a minimum taking a more hands on approach.

Crosswalk “J” Codes to National Drug Codes (NDCs) to identify specialty pharmacy drugs.

J codes are Healthcare Common Procedure Coding System (HCPCS) Level II and mainly used in infusions, injections, and supply codes. J codes apply to drugs that are administered other than orally, typically indicating injection or intravenous delivery. An NDC is a unique 10-digit, three-segment number that serves as a universal product identifier for human drugs in the U.S. The code is present on all nonprescription (OTC) and prescription medication packages and inserts.

If a medication is paid for under the medical benefit, the claims use J codes — they are part of the Healthcare Common Procedure Coding System (HCPCS) — and J codes are blunt instruments compared with NDC codes. There’s often a lag in assigning J codes, so new drugs may share an “unlisted” designation for months. Brand and generic drugs share a J code, and package size is not included. If you need to track medication use and cost, J code data will give you a fuzzy picture; the NDC codes, a high-resolution one.

Implement a short cycle dispensing program.

Do not approve an initial 30 days or even 14 days supply for high cost specialty drugs. Ongoing oversight and approval requirements ensure ongoing treatment is safe and appropriate for the patient and holds the provider accountable for managing supply, preventing waste, and administering the drug appropriately.

Pay really close attention to cost.

Cost is a function of rebates and everyone wants a piece. If your PBM isn’t acting as a fiduciary, bring manufacturer contracting and rebate management in-house! A fiduciary standard requires the PBM to act in the best interests of its clients “without regard to” their own financial gain.

On May 16, 2017 Express Scripts filed a complaint against drugmaker kaleo. The complaint revolves around the opioid overdose treatment, Evzio, which kaleo manufactures. Express Scripts’ attorneys redacted the complaint, but did not redact some information that Express Scripts has long regarded as proprietary thus not typically made available to the public. In the complaint, it is clear ESI was not working without regard to its own financial gain.

Evaluate your internal resources and pharmacy expertise.

• Do you have the expertise in your company to manage the PBM evaluation process and negotiate the PBM contracting process, or do you need to use the services of a consultant?
• How do you want to be involved in the management of the PBM program after it is set up?
• Do you have the expertise and resources to manage the pricing arrangement or do you need to build in the incentives for the PBM to manage your program?
• Who is watching the watcher? No one highly skilled, or without misaligned incentives, was watching Bernie Madoff.