Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 254)

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 makes dubious case for rebates’ impact on drug prices

CVS faced heat throughout 2018 after revelations that its pharmacy middleman business billed taxpayers far more for Medicaid drugs than it paid to the pharmacies that dispensed them, charging three to six times the standard rate. Critics said that a lack of transparency was at the heart of problems with a system that CVS and other non-fiduciary pharmacy benefit managers said was saving taxpayers hundreds of millions of dollars.

START LEARNING >>

“There is ample evidence via independent studies showing that drug-makers set and raise prices unrelated to the rebates PBMs secure on behalf of their clients,” CVS Chief Communications Officer Kathryn Metcalfe wrote in a letter to the editor.

Asked to support this claim, CVS provided two pieces of what it said was independent research. However, both were done by Visante, a consulting firm founded by a former executive of ExpressScripts, another of the big three PBMs, and one was for the Pharmaceutical Care Management Association, an industry-funded group. Asked who paid for the work and whether it had been peer-reviewed, CVS spokesman Michael DeAngelis punted.

An academic whose research has withstood the rigors of peer review said there is no such work regarding the impact of rebates on the price of prescription drugs — and for good reason. “I can’t point to a study where I can say, ‘Look for this set of drugs. We saw an increase in rebates and look, these drugs, their price went up.’

That study isn’t there because rebates are confidential or private information, so I as a professor don’t have access to data on the drug level on what rebates are there,” said Neeraj Sood, director of research at the University of Southern California’s Schaeffer Center for Health Policy and Economics.

“You and I ask, ‘Is (the amount PBMs are getting) a reasonable number, or should PBMs be making less than that?’ My research didn’t address that question,” Sood said, but he added that he is working on a study to try to find an answer.

Tyrone’s Commentary:

Any number above zero is an unreasonable amount for PBMs to be making off manufacturer revenue or rebates. PBMs deserve a nominal fee for its services not excessive overpayments regardless of the source.

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 253)

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.

Turns out CVS’s “New” Guaranteed Net Cost Pricing Model is More of the Same – That is Bait and Switch

About a month ago I wrote, “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?” Then I outlined a few ideas.

It didn’t take long for someone to present a serious challenge to CVS’s “new” guaranteed net cost pricing model. I’ve followed Dr. Abrams for several years and his research hits the mark. Turns out CVS’s new “Guaranteed Net Cost” model is more of the same that is bait and switch.

[Read Dr. Abram’s Report Here]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 252)

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.

“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.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 251)

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.

Are Biosimilars the Future of Specialty Pharmacy?

Although there are several different types of biological products, which the FDA notes includes proteins, monoclonal antibodies, and vaccines with little in common. For example, biologic drugs are large molecules typically manufactured from living cells and, therefore, are extremely difficult to produce or reproduce.

In fact, there can be variations of acceptable range within the same manufacturing process because biologics are processed using living cell-based technology and the make of these agents is not easily identifiable.

For this reason, they are also highly sensitive to storage and handling processes and typically have a shorter shelf life than your average oral medications. So, why research, develop, and ultimately manufacturer such complex, sometimes costly medications you might ask?

Tyrone’s Commentary:

We’ve seen this movie before, haven’t we? Much like small molecule generic equivalents, biosimilars are a big threat to biologic market share. It just takes time.

Source: Generic Pharmaceutical Association annual savings and access report

Because they are able to effectively treat a variety of medical conditions that previously had limited to no other treatments available, thereby changing the lives of patients with conditions such as rheumatoid arthritis, cancer, and anemia, just to name a few.

[Read More]

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.