Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 199)

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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-Aetna merger is a robber baron’s dream come true

Predicting a merger’s effect on consumers and competition is usually difficult. But in the case of the recently announced $69-billion merger of CVS Health Corporation and Aetna, we have hard evidence from previous health-care mergers that indicate this combination is a bad deal for consumers and competition.

Click to Learn More

If this pharmacy and pharmacy benefit manager (“PBM”) giant and insurance company are allowed to join forces, the results will be higher prices and less choice for payors and consumers. The antitrust cops should just say no to this deal.

History can teach important lessons that undermine CVS’ claims that consumers will win from this deal. Look at CVS’ acquisition of Caremark, one of the nation’s dominant PBMs.

Tyrone’s commentary:

If integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:

  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing

There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.

CVS, a retail pharmacy giant, took advantage of vertical integration through its acquisition of Caremark, a PBM giant, by excluding competition, reducing patient access to vital healthcare services from the pharmacists of choice and driving up prices.

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 198)

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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-Aetna Merger Will Influence Employers’ Benefits Decisions: Aon

CVS Corp.’s proposed purchase of Aetna Inc. will affect decision-making by a majority of large and mid-size U.S. corporations on employee health benefits, a survey by benefits consultant Aon Plc found.

The new Aon survey, which included responses from decision makers at 450 medium and large-size corporations, provided additional insight into how CVS and Aetna customers may view the deal.

  • Sixty-one percent of survey respondents, including ones that are not customers of CVS or Aetna, said the deal would affect their decision-making process on health benefits, with 23 percent saying it would accelerate a reassessment of healthcare strategy and 38 percent saying it would delay any such moves until the transaction’s impact could be understood.
  • Among a smaller group of 210 respondents, 52 percent surveyed by Aon said they planned to keep their pharmacy benefits separate from medical coverage. An additional 15 percent said they are considering separating those contracts.

If integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:

  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices

  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing

There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 197)

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

Consultants warn ‘change or get out of the way’ next year

Certain healthcare industry middlemen including pharmacy benefit managers, drug wholesalers and insurers will get squeezed out if they don’t adapt and reaffirm their value, according to a new report from PricewaterhouseCoopers.

Intermediaries like PBMs that work for payers to negotiate with pharmaceutical companies on the price of their products have been targeted for their role in huge price hikes that have plagued the industry.

These middlemen should increase price transparency, deliver better pharmaceutical and clinical data to boost patient care, and diversify their business lines to secure their place in the industry, PwC’s Health Research Institute said in its annual report issued Tuesday.

Providers must expand beyond their sector or get left behind. They will need to form cross-sector relationships to share data and deliver more integrated care models to survive, the report said.

“Most PBMs and distributors don’t play a specific role in the healthcare ecosystem—some share infrastructure and have an interest in data they could use,” he said. “Unless they use (their role) toward driving wellness through care delivery, finance care or provide new diagnostic tools, they will get squeezed out.”

Tyrone’s comment: Excellent advice for all PBMs to heed including TransparentRx.

[Read More]

Prescription Drugs May Cost More With Insurance Than Without It

There are a lot of bad faith actors, on the PBM sell-side, engaged in concealing the truth. Employers, their brokers and advisors, must be fully engaged to uncover said truth. Full engagement requires a maintenance period which extends for an indeterminate period of time far beyond renewals and reading standard reports. If you read my blog, follow me on LinkedIn or done business with me you know I intend to help.

Reference Pricing for Rx’s (Click to Enlarge)

Consequently, this help comes at a price. It makes me unpopular in the eyes of just about everyone except the commercial payers who benefit from the information I share. To this I say so what…right is right, wrong is wrong. It is stories like the one below which tighten the knot in the pit of my stomach.

This article was written through collaboration between The New York Times and ProPublica, the independent, nonprofit investigative journalism organization.

Having health insurance is supposed to save you money on your prescriptions. But increasingly, consumers are finding that isn’t the case.

Patrik Swanljung found this out when he went to fill a prescription for a generic cholesterol drug. In May, Mr. Swanljung handed his Medicare prescription card to the pharmacist at his local Walgreens and was told that he owed $83.94 for a three-month supply.

Alarmed at that price, Mr. Swanljung went online and found Blink Health, a start-up, offering the same drug — generic Crestor — for $45.89. It had struck a better deal than did his insurer, UnitedHealthcare. “It’s completely ridiculous,” said Mr. Swanljung, 72, who lives in Anacortes, Wash.

Tyrone’s Comment:  That Blink Health struck a better deal is doubtful. Most likely, UHC struck a better deal but tacked on a huge mark-up for itself (it did not pass back all the savings it negotiated). Because the mark-up is hidden in the plan sponsor’s final [ingredient] cost, this is the reason for the higher cost with insurance.

[Read More]

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 196)

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 a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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

Recertification Credit Hours: 2

“…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. effective acquisition cost (EAC)
  • 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.

CVS buying Aetna in deal valued at $69 billion

This is vertical integration at the highest level. The deal forces competitors to deliver more value and clients of PBMs to be even more sophisticated in their contract negotiations. For some tips on what to look out for see my earlier post Specialty Drugs Paid Under Medical Benefit Circumvent Cost Control Measures.

CVS, though, has been mired in a prolonged sales slump — pharmacy same-store sales slid 3.4% in the third quarter — and some analysts believe the Aetna deal has less to do with improving healthcare services than finding other ways to grow amid the threat of competition from Amazon and Wal-Mart Stores.

Source: Managed Care Magazine

CVS Health is buying Aetna for $69 billion in cash and stock in a long-expected deal that reflects a rapidly shifting health care landscape. A key component of CVS’ business is its CVS Caremark pharmacy benefit management subsidiary. The deal could help CVS encourage Aetna’s health plan participants to use the CVS/Caremark mail order prescription system and shop at the pharmacy company’s retail stores, which will be able to offer more in-store health services.

If CVS-Aetna is approved, the union could ignite additional mergers in health care. Amazon is poised to enter the drug business in some fashion, leading to further disruption and uncertainty in the industry.

[Read More]