Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 250)

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.

Pennsylvania’s Auditor General Demands PBM Contracting Transparency

Pennsylvania Auditor General, Eugene Depasquale, released a report discussing the role of pharmacy benefit managers (PBMs). The report, “Bringing Transparency and Accountability to Drug Pricing,” reviews PBM pricing practices with a critical eye.

If your pharmacy benefits management process doesn’t
resemble the Auditor General’s, blow it up. Here’s how!

The Auditor General makes ten recommendations he believes will improve PBM pricing transparency, stabilize reimbursements to pharmacies, and ultimately lower the cost of prescription drugs for Pennsylvania residents.

1) To ensure taxpayer dollars are being handled effectively and efficiently, the general assembly should immediately pass legislation allowing the state to perform a full-scale annual review or audit of subcontracts with pharmacy benefit managers.

2) To better control costs, Pennsylvania DHS should consider directly managing its Medicaid prescription drug benefits instead of contracting with managed care organizations to do so.

3) The general assembly should pass legislation that increases transparency into PBM pricing practices.

4) So the state pays only for services PBMs render, the general assembly should pass legislation requiring a flat-fee pricing model for compensating PBMs.

5) Pennsylvania’s Department of Human Services should add “good steward” language to all Medicaid-related contracts.

Hmmm…looks like someone has been reading this blog. Get the full Auditor General’s report here.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 249)

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.

Ninety-Two Percent of Self-Insured Companies Lack a Formalized Pharmacy Benefits Management Process

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Click Here To Get Your Plan

This one is the proverbial head-scratcher. Nine out of ten self-insured companies do not have a formalized pharmacy benefits management process. The results from our phone poll were startling, to say the least. During Q1-Q3 2018, I asked the TransparentRx sales staff to pose a question to small, medium and large self-insured employers.

In the qualification stage of our sales process, we asked employers, “do you have a written plan to procure, monitor and evaluate your pharmacy benefits management service?” Of the 1017 self-insured employers who responded, here is what they shared with us.

For the process to be considered “formalized” each employer had to have a written plan. If the employer did not have a written plan we considered them not to have a formalized process. We could’ve easily stopped there as 81% of employers did not have a written plan.

Additionally, employers who professed to have a written plan (19% or 193 employers) were asked if their plan addressed the following seven sub-criteria:

1) Defined Team Roles
2) Reasonable Goals
3) Clear Objectives
4) Dispute Resolution Process
5) Monthly Performance Reviews with the PBM’s Account Manager
6) Quarterly Meetings with the PBM’s Executive Sponsor
7) Recurrent Training of In-House Staff who Oversee Pharmacy Benefits

If they answered no (11% or 112 employers) to three or more of the sub-criteria we found them not to have a formalized pharmacy benefits management process. Because the three primary criteria (procurement, continuous monitoring and evaluation) are not mutually exclusive to overall performance, an employer who did not address each process on its own merits was considered not to have a formalized process.

In summary, 936 out of the 1017 employers we polled did not have a formalized pharmacy benefits management process. This may come as a surprise to my readers but not to me. For me, it’s just disappointing but why is it important? As I conclude this post I’m reminded of a quote from arguably the greatest business mind of our time.

“Ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.” 👉 Steve Jobs 

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 248)

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.

CVS Health launches “New” Guaranteed Net Cost Pricing Model

Source:  Pharmacy Benefits Management Institute 

Under the new model, CVS Health will return 100% of drug rebates to employer-sponsored groups and at some point in the future government health programs. The good news is this moves the entire industry one step closer to radical transparency. The bad news is CVS Health admits it hoodwinked all those clients it sold pass-through arrangements. Those so-called pass-through agreements were nothing more than fee-for-service [opaque] pricing models disguised as pass-through contracts.

It’s safe to assume Caremark’s (CVS Health’s PBM) gross margins will grow next year or worst case remains flat. Shareholders wouldn’t have it any other way. So it begs the question, “how?” Here are a few ideas:

1) Higher admin fees
2) Higher clinical fees
3) Leveraging the DUM toolkit to shift costs to medical drug spend in hospitals, clinics, and home infusion
4) Bigger push into urgent care through their Minute Clinics and overcharge for drugs under the medical spend
5) Larger ANRPs or Average Net Realized Price which represents the list price minus any discounts or rebates
6) Let’s not forget about drug rebates on the medical side. Are these rebates covered under the new model?

There are a host of others but one thing is certain. This new model, which isn’t new at all, doesn’t see the light of day without the acquisition of Aetna. For employers, brokers and benefits consultants there is a trade-off for radical transparency.

Services for which you’ve been accustomed to receiving for “free” will no longer be free. I have been preaching this for a decade and won’t stop even when some balk at our $5,000 price tag for a re-pricing. The truth has value and to this point non-fiduciary PBMs have hidden it [the truth] in rebates, for example.

That claims re-pricing you rely so heavily upon, which often times doesn’t hold as much value as the paper it is printed on, will have much more value. It’s free because it’s junk or at the very least a misrepresentation of facts. With more value comes a price tag which reflects that value.

One might assume with PBMs offering more transparency the burden for purchasers of PBM services to be skilled stewards of the pharmacy benefit has been lessened. Nothing could be further from the truth.

You will have greater access to information but do you have the skills to interpret it? More importantly, do you have a plan to execute on this information? Knowledge and execution will create a competitive advantage for your company.

It’s imperative to understand, beyond a functional role, how to effectively manage pharmacy benefits. We have a saying in this country, “you get what you pay for.”

“Don’t Miss” 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  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
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.

Union takes to task pharmaceutical manufacturer on a $6,000,000 per year specialty drug

Click to read the entire letter to POTUS

On Monday, November 26, 2018, the Trump administration proposed a set of strategies to lower pharmaceutical costs in Medicare Part D. As set out in the proposed rule, the plan has three major new provisions:

1) Providing Part D plans with more flexibility to manage protected classes

2) Updating existing e-prescribing systems to make patients’ costs visible when a prescription is ordered

3) Requiring pharmacy price concessions for drugs at the point of sale

On the heels of this proposal, I want to share with you a letter written by Boilermakers National Health & Welfare Fund (BNF) to POTUS which clearly illustrates why the proposed changes are necessary. I am posting the letter in its entirety with permission from BNF’s COO, Lori Jasperson.

In short, BNF has one family on Strensiq, a new specialty drug manufactured by Alexion Pharmaceuticals, with a projected price tag of $6,000,000.00 per year! Rather than take that price lying down, BNF decided to get the CEO of Alexion on the phone.

In my hood, we have a euphemism for this sort of action “pressure bursts pipes” no pun intended Lori. Read the letter and the result of those phone conversations by clicking here.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 247)

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.

4 Key Factors Employers Must Consider When Evaluating Specialty Pharmacy Performance

A PBMs performance should be measured by the sum of its parts, not the whole. Employers should work with PBMs to understand how its preferred specialty pharmacy compares with industry benchmarks, and determine where the incumbent is exceeding or falling short of those benchmarks.

Source: BCBS Prescription Drug Costs Trend Update Report

Employers must consider the following four key factors in their evaluation of specialty pharmacies:

1. Specialty drug spending at the patient, drug and therapeutic category levels. In this case, employers should compare the rebates passed through by non-fiduciary PBMs and those from fiduciary-model PBMs.

2. Clinical outcomes and the value realized from the specialty drug spend.

3. Savings from unnecessary or avoided hospital, clinic, and emergency room visits.

4. Patient and provider satisfaction.

Ensuring only high-performing specialty pharmacies in PBM pharmacy networks benefits both employers and patients, as a result of improved patient adherence and the elimination of wasteful Rx spending.