The suit also alleges that CVS pharmacies charge customers a “co-pay” that’s instead additional money CVS shares with the PBM. It works like this, according to the complaint:

Click to Learn More

The lead plaintiff in the case is a woman named Megan Schultz, and she claims that she bought a generic medication at CVS that cost $165.68 under her insurance but would’ve cost only $92 had she paid in cash without using her insurance.

Here’s why, according to the complaint:

The PBMs can control which pharmacies are “in network” for their clients, the insurers.
Since CVS pharmacies want those sales from in-network patients, they offer the PBMs a cut of the drugs they’re selling to those insured patients. What’s more, Schultz says she had to find this out on her own because no one at CVS could legally give her a heads-up. From the complaint:

“These agreements with PBMs are based on secret, undisclosed contracts, under which CVS agrees to specific amounts it will charge and collect from insured customers — but the customers can neither see nor learn about these agreements or their terms from the pharmacies, the insurance companies, or anyone else. The linchpin of the scheme is that the customer pays the amount negotiated between the PBM and CVS even if that amount exceeds the price of the drug without insurance.”

CVS said the allegations were “built on a false premise” and “completely without merit.” Here’s a statement the company emailed Business Insider:

“Co-pays for prescription medications are determined by a patient’s prescription coverage plan, not by the pharmacy. Pharmacies collect the co-pays that are set by the coverage plans. Our pharmacists work hard to help patients obtain the lowest out-of-pocket cost available for their prescriptions. Also, our PBM CVS Caremark does not engage in the practice of co-pay clawbacks. CVS has not overcharged patients for prescription co-pays, and we will vigorously defend against these baseless allegations.”

Tyrone’s comment: If I were a Director of Benefits or CFO I would be looking into this with every resource at my disposal. If it was discovered that my company was a victim of this practice [clawbacks] I would be asking my advisers how could you let this happen? As the saying goes, where there is smoke there is usually fire. Those of you who follow me know that I don’t mince words so this next sentence should not come as a surprise. The truth is most employers are overpaying (when you boil it down a clawback is an overpayment) because their advisers are overmatched and/or are in bed with PBMs so they have little incentive to eliminate hidden cash flows like clawbacks. Since the contracts employers sign permit these opaque practices, in the end the plaintiff will likely lose or the case will be dropped. This isn’t CVS’s first rodeo. The good news is there is a solution should you choose to fight back.

The lawsuit claims that this doesn’t happen with every prescription, just a select number. However, the drugs named in the suit — including Tamiflu, amoxicillin, and Viagra — are pretty common. Three large PBMs control about 80% of the market in the United States. One of them, Caremark, is owned by CVS, and another, OptumRx, is owned by UnitedHealth. The largest of all PBMs, though, and the only stand-alone one, is Express Scripts.

[Source]

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.

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)

Recertification Credit Hours: 2

• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

Some commentary from the LinkedIn post

A young husband was diagnosed with advanced melanoma and tumors attached to his brain. Waiting on the other side of his oncology clinic’s pharmacy counter was a potentially life-prolonging drug. But his Pharmacy Benefit Manager pumped the brakes, instead requiring that he and his wife order the medication from the mail-order pharmacy owned by that PBM — and submit a $1,000 co-pay.

By the time his wife was able to procure co-pay assistance, the young man could no longer swallow pills and passed away in the ICU. Medication that was critical to treating his cancer remained just on the other side of the clinic’s pharmacy counter, with access denied by the couple’s PBM.

It’s a heartbreaking story. Patients should never be delayed or denied access to needed care. But such instances are becoming more common because of large PBMs — powerful middlemen that manage health care benefits for more than 260 million Americans. PBMs decide what drugs are covered by insurance, how much they should cost, and how they get into patients’ hands.

PBMs use their outsized power to reap tremendous profits, particularly through a variety of different fees with different names known broadly in the industry as “Direct and Indirect Remuneration” or “DIR” fees. DIR fees are charged to pharmacies months after a patient buys a prescription.

Ostensibly in place to incentivize pharmacy performance, DIR fees only serve to increase PBM profits. In fact, they have no basis in regulation or law and are just part of an already convoluted system that PBMs have rigged to boost their bottom line at the expense of patients.

What is particularly galling is that the DIR fees PBMs charge pharmacies are ultimately paid for by our most vulnerable patients — the sick and the elderly on Medicare. What happens is that:

• a patient buys a drug based on an inflated price that includes DIR Fees at a pharmacy;
• the PBM is reimbursed by Medicare for the original, lower price of the drug;
• months later, the PBM gets paid again after demanding a DIR fee from the pharmacy that sold the drug, “clawing back” up to 11 percent of what the pharmacy charged.

Shouldn’t those savings on pricey cancer drugs have been reimbursed to the patient or never passed on in the first place?

Meanwhile, the inflated price of the drug is counted against the patient on Medicare — helping to push them straight into the “donut hole,” where they are responsible for 100 percent of prescription costs. It’s hard to believe, but this deliberate fleecing of Medicare patients is completely legal.

And this is just one of the many ways PBMs manipulate the health care system to pad their own pockets, drive neighborhood pharmacy competitors out of business, and contribute to a toxic culture that puts profits over patients.

For Americans battling cancer, PBMs and the barriers to quality, affordable, and accessible care they present are particularly horrifying. Most of the 1.5 million diagnosed with cancer each year will obtain the lifesaving treatment they need in the community practice setting. That’s why it is so vital to keep this cancer care in community settings, rather than the PBMs practice of diverting patients from the support they need to beat this devastating disease.

Today, many oncology clinics have specialty pharmacies on site with staff that goes above and beyond for patients — providing counseling on taking these powerful medications with potentially dangerous side-effects, lining up financial assistance, and ensuring the medications get to patients quickly.

After this hard work, PBMs often swoop in and demand that a cancer patient switch to the PBM-owned mail-order pharmacy, which can result in unnecessary and dangerous delays. You already know why: There’s money in it.

PBMs are multi-billion dollar corporations with a powerful lobby in Washington, D.C. With legislation pending to address PBM abuses practices such as DIR fees, we can’t let lawmakers forget the stakes. Congress needs to take action now to stop PBM abuses before it’s too late for another patient in need.

by Jeff Vacirca, MD
Dr. Vacirca is the CEO of New York Cancer Specialists and president of the Community Oncology Alliance

New programs offered by pharmacy benefit managers seem poised to take off industry-wide. The most promising program targets high-cost specialty drugs, using the co-pay coupon to offset the drug’s total cost instead of the consumer’s co-pay. Pharmacy-benefit managers are able to do this, and to offer the program for free, by requiring that health plans exclusively deal with a certain specialty drug pharmacy.

Before the program, a patient using a coupon would very quickly meet her health plan’s out-of-pocket requirements, at which point the coupon would no longer be necessary.

Under the change, however, the coupon could be used many more times and the patient would pay more out of pocket, making the co-pay coupon more expensive for the drug maker and reducing the health plan’s total drug costs by an estimated 1% to 3%.

Prime Therapeutics, a pharmacy-benefit manager owned by 14 Blue Cross and Blue Shield plans, began rolling out such a program at the start of this year across several states, according to Chief Clinical Officer David Lassen.

“That deductible is meant to be applied. That member is meant to pay something out of pocket,” he said. “By ensuring that that coupon does not apply to the out-of-pocket max, we’re helping to ensure that we’re lowering overall health-care costs.”

Koulianos, of the National Hemophilia Foundation, said that she knows of about 50 people affected, and that the number is growing. “While we agree that this is in theory a good mechanism to help patients consider, ‘I better take the lower-cost drug’… in this case there is no lower-cost drug,” she said. If patients can’t afford their medications, they could end up in the hospital, or worse, she said.

Another new co-pay coupon-circumvention program has a similar goal — taking advantage of drug makers’ coupons — but approaches it differently.

The manufacturer coupons are often valued at far more each year or per drug than patients pay out of pocket. So pharmacy-benefit managers adjust the co-pay amount patients pay for certain drugs up to coupon thresholds, to take advantage of the coupon’s total possible value.

Only certain drugs will be affected, with expensive cancer and hepatitis C drugs likely targeted, amounting to estimated drug-cost savings of 2% to 4%. But because the program requires making changes to a health plan, it’s expected to have reduced or limited interest. It also raises questions about how those who don’t use co-pay coupons might be affected.

Still, some say that, like an endless game of whack-a-mole, the battle over co-pay coupons is unlikely to end anytime soon. “While there may be countermeasures put into place, it will just continue to evolve,” said Premera Blue Cross’s Murphy. “I don’t know if we’ll ever fully solve the issue.”

[Source]

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 Learn More

Specialty drugs have significantly changed the healthcare world and provide value to patients with previously incurable diseases. While these drugs improve treatment, they come with a large price tag, with specialty spending expected to reach $400 billion within the next 3 years.

Results from a large survey conducted by Anthem, Inc and C + R Research suggest that large group employers are currently struggling to afford specialty drugs and they are using unconnected tools and techniques to manage the trend.

Included were 303 large group employers surveyed between December 2015 and January 2016.

The authors discovered that the costs of new specialty drugs were the most concerning to employers, with 90% reporting that the costs were “somewhat challenging” or “very challenging,” according to the survey.

Additionally, a majority of employers indicated that specialty drug spending increased since the previous year, with the drugs accounting for an average of 35% of pharmacy costs. Employers also indicated that obtaining rebates and drugs administered in outpatient settings provided cost-related challenges.

Since more employees are receiving treatment with specialty drugs, employers must spend more time managing the benefits. One-third of the time respondents spend on health benefits was specifically for specialty drugs, according to the survey.

Importantly, employers are looking for innovative ways to control spending on specialty drugs, as there is not a single approach that can work for all. In the survey, employers were asked to rate the importance of specialty drug management techniques and tools they used, with nearly all tools ranking somewhat or very important.

Utilization management was ranked important by all surveyed, with 74% of employers ranking it as very important, according to the survey.

These results suggest that employers are using more approaches to manage specialty drug spend. Many are not using tightly managed strategies, which may create savings, but can limit drug or pharmacy choices, according to the study.

The authors noted that while employers are adopting individual tools and techniques, there has yet to be a standard strategy adopted for specialty drug management.

Previous studies suggest that integrating medical and pharmacy benefits can improve patient outcomes and improve cost management. This may be key for specialty drugs since they are generally covered under both benefits, according to the study. The authors recommend that employers pursue this approach.

While 70% of employers considered themselves to be very knowledgeable about specialty drugs, nearly all expressed an interest in obtaining additional education.

In the future, the authors suggest that employers should play an active role in specialty drug management, including how and where it’s administered and where the prescription is filled.

Another initiative the authors urge employers to adopt is to ensure that reporting for medical and pharmacy benefits is accurate and coordinated. Inconsistent reporting across both benefits can lead to uninformed decisions, according to the study.

Employers are enouraged to ensure that drug management should be clinically appropriate by focusing on drugs with beneficial clinical and real-world outcomes. While a drug may come with a higher upfront cost, it could actually lower overall spending due to hospitalization avoidance.

Employers should also evaluate channels and sites of care that are appropriate and cost-effective. Additionally, care management should be included in a comprehensive management strategy, and can include outreach from health plan case managers or care management specialists from a specialty pharmacy, the study concluded.

[Source]

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.