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.

Click to Enlarge

Employees face growing challenges in paying for expensive specialty drugs, according to a new report that examines initiatives by employers and policymakers to control rising pharmaceutical costs.

The National Business Group on Health (NBGH), a Washington, D.C.-based association of 420 large U.S. employers, recently released Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals. The report notes that spending for specialty medicines, including biological drugs manufactured using living organisms, is projected to overtake spending for traditional pharmaceuticals over the next several years.

“With spending on specialty drugs skyrocketing, large employers, and employees who use these medications, are struggling to manage rising costs,” said Brian Marcotte, NBGH president and CEO. “Most employers we surveyed now rank specialty pharmacy as the No. 1 driver of rising costs” for health care.

In November 2015, the AARP Policy Institute in Washington, D.C., prepared a study of 115 specialty drugs and found that:

• In 2013, the average annual price of therapy for specialty prescription drugs was 18 times higher than the average annual price of therapy for brand-name prescription drugs ($53,384 versus $2,960, respectively) and 189 times higher than the average annual price of therapy for generic prescription drugs ($53,384 versus $283, respectively).

• Retail prices for 64 chronic-use specialty drugs increased cumulatively by an average of 161 percent from January 2006 through December 2013. General inflation in the U.S. rose 18.4 percent during the same 8-year period.

Since the study, the rising costs for specialty drugs haven’t slowed, benefit specialists say.

What Can Employers Do?


“Specialty pharmacy is different from other medications in many ways, including having a tendency to be much more expensive—some meds cost in the tens of thousands of dollars per treatment,” said Steve Wojcik, NBGH’s vice president of public policy. “As a result, we are seeing growing numbers of employers, along with their health plans and pharmacy benefit managers, implementing many [cost-control] techniques.”

NBGH’s annual Plan Design Survey of large employers, noted in the group’s report, found that respondents were:

• Putting in place more aggressive use-management protocols for specialty drugs (74 percent of large employers).

• Requiring that specialty medications be obtained through a freestanding specialty pharmacy (69 percent).

• Using a specialty drug tier in the plan design, to require greater cost-sharing by employees (38 percent).

Produced by Katie Wedell

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. effective acquisition cost (EAC)
• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

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.

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.

In a study conducted by Berkeley Research Group, the investigators found that pharmaceutical companies only realize 39% of initial gross drug expenditures.

Prescription drug spending has skyrocketed in the last few years, which has caused many stakeholders to demand increased pricing transparency. Pricing scandals, such as the recent outrage over EpiPen, has caused Americans to become skeptical about the reasoning behind dramatic drug price increases.

Certain measurements of drug costs do not show the whole picture, and can lead to an inaccurate picture of the gross spend by the customer, and an overstatement of the profits made by manufacturers, according to the study.

Although the chain of payment can be complicated, it can be summed up by 3 transactions: initial gross spending on the drugs by patients and insurers, discounts, and rebates/fees paid by the manufacturer. This multi-step chain of wholesalers, pharmacies, and other entities can create confusion about drug costs.

Wholesalers purchase the drugs that are then sold to pharmacies and healthcare providers, and pharmacy benefit managers (PBMs) negotiate lower prices through their buying power for certain health plans or employers.

Due to the lengthy supply chain, prices inflate down the line, which leads to patients paying higher prices for their prescription drugs. However, manufacturers do provide rebates and discounts to certain patients, health plans, or PBMs, which results in lower costs.

Additionally, manufacturers are required to provide significant discounts to government health plans and other government institutions, such as Medicare or Medicaid. This acts to reduce net spending by the government, but also reduces profits realized by pharmaceutical companies, according to the study.

In the study, the investigators considered rebates, discounts, and fees paid, to show a more complex picture of pharmaceutical manufacturers’ profits and spending.

See more at: http://www.specialtypharmacytimes.com/news/pharmaceutical-companies-not-seeing-majority-of-drug-revenue#sthash.HNdgqrIY.dpuf

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.

Click to Enlarge

The report offers insight on developments in emerging specialty therapies. Last year, the FDA Center for Drug Evaluation and Research (CDER) approved 22 novel new drugs. While there was a reduction in novel new drugs compared to previous years, there were several expanded indications for previously approved therapies that allowed these drugs to reach additional patient populations. New approvals included a mix of oncology, immunology, rare diseases, and other disease states.

Although the quantity of novel new drugs was lower in 2016, important new drugs became available in each of the broad disease states covered by specialty pharmacy. Specialty drug products accounted for approximately half of new drugs and biologics approved in 2016, similarly to in 2015. Nine specialty agents were approved for rare diseases.

“The specialty pharmacy industry continues to show exceptional growth,” said Paul Urick, Diplomat’s president. “The development of new drugs, as well as expanded indications for previously approved treatments continues to make the robust specialty drug pipeline one of the major drivers of growth.”

The pipeline is expected to produce more novel new oral oncology drug approvals in 2017 than in 2016, with multiple approvals forecasted in breast cancer and blood cancers.

To view the report, visit http://bit.ly/2jnTRwl.