Potential Solutions in Reducing Specialty Pharmacy Costs So, how do we contain the costs associated with specialty pharmacy drugs and actually begin to reduce spending? Care coordination – Care coordination is key not only between providers and payers but also between medical and pharmacy benefits. Currently, specialty pharmacy benefits are provided both under medical and under pharmacy programs and these tend to be done within their individual silos. In some instances, the cost to the patient is less with pharmacy benefits than medical while others the opposite is true. Integration between pharmacies and medical records can increase the coordination of care and provide higher quality care to patients and ultimately lower healthcare spending. Patient education – patient education is essential in particular with the administration of specialty pharmacy drugs. These drugs can be in the form of injectables and are often administered by a provider, which can be quite costly. Providing education to the patient as well as their family can enable these to be taken in the comfort of the patient’s home. This can help reduce healthcare spending as the cost of a doctor’s visit may not be necessary, no appointment needs to be made, and no billing/coding needs to occur. Providing care in the appropriate place – If assistance is required to administer these drugs, it is much cheaper to administer for example in a primary care setting than an emergency room or outpatient clinic which may be associated with a hospital. It is the same medication, but education as to the less expensive alternative is critical. Changes to the payment policy/reimbursement – under current fee-for-service model, providers are incentivized to prescribe more expensive medications, whether the patient really needs those particular drugs or not. Additionally, some providers are incentivized based on the total cost of the drug, in which they are reimbursed a percentage. There is also a trend of providers to purchase specialty pharmacy drugs from manufacturers and then sell them at a premium price. These incentives are not aligned to decrease healthcare spending and should be reviewed and revised. The use of bundled payments has become a trend as of late. The idea is to control the total cost of care through bundling certain services, thus lowering healthcare spending. Transparency in pricing is critical to controlling healthcare costs as well. Providers, payers and consumers should know the price, what that includes, and how the price was determined. As mentioned, specialty pharmacy drugs are not new. Cancer treatments, for example, have been around for a long time. However, the costs associated with these drugs are contributing to the out of control healthcare spending trends. In order to reduce these costs, many mechanisms can be put into place. Providers, payers, and patients working together can begin to make a dent in the costs and increase the quality of care.

Why is this document 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 healthcare reform.  The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Pharmacy costs is one of the fastest-growing components of health care expense and is expected to increase by 15% per annum with no end in sight. It is estimated that 75% of employers plan to increase prescription drug spend year-over-year. Unfortunately, most organizations are unaware of their excessive remuneration for PBM services. While there is no magic pill to managing the pharmacy benefit, the following five key performance indicators can help to identify a path to lower pharmacy costs while still improving member outcomes. 1.  Dump the Legacy RFP Process.  Employers must instead create their own airtight fiduciary contract and put it out for bid. How is it that a plan sponsor, regardless of size, can sign a deal which doesn't hold its PBM accountable to a client-comes-first standard of care? from Wikipedia...   A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.   Case closed.   2.  Promote Limited (Preferred) Pharmacy Networks.  Most plans offer access to more than 60,000 retail pharmacies nationwide. The reality is that at any given street intersection 3 of the 4 corners are filled with pharmacies including CVS, Rite-Aid, Walgreens or others. Instead of allowing access to countless options, an employer can save 2 percent or more by narrowing the number of network pharmacies.    After cost-sharing, establishing preferred pharmacy networks has been a popular approach to cost management. Limited pharmacy networks, not talked of much before 2010, are much more of a consideration after the contract dispute between Walgreens and Express Scripts.   Providing the broadest access to members may no longer trump the more favorable pricing of a narrowed pharmacy network. A large and growing supply of retail pharmacies makes the limited pharmacy network approach possible.   Caveat emptor - Ballooning is a black box tactic whereby one PBM profit center drives an unusual amount of fees when another is being squeezed. It turns out payers’ cost for mail pharmacy services may increase, when a limited pharmacy network is selected, to offset the negotiated retail pharmacy network.    3.  Implement Specialty Therapy Management.  We know specialty therapies improve outcomes but we also know patients do not take medications the way they should, or in the way it was studied to produce published results. Disease specific algorithms enable us to: Ensure standards of care are consistently followed thereby reducing waste  Monitor therapy to detect and resolve problems; identify opportunities for referral to MTM, PFA or clinics  Pro-actively identify opportunities to keep patients on therapy  Help patients become better informed about their therapy so they can more…

Why is this document 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 healthcare reform.  The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

The fundamental attribute of nearly all the major health care sectors is the relentless pursuit of profit without consideration of the larger social consequences.  Some may call that "amoral greed," but the reader can apply his/her own terms.  Add to this reality the fact that some health care competitors also act in a manner that is clueless, while others exhibit varying levels of laziness, arrogance and spinelessness. Consider the payer segment of health care.  These are mainly the public and private insurers and the self-funded employers that provide coverage for most Americans.  An unstated but implicit message of several postings here is that unless pharma gets its strategic orientation in order and brings its public-be-damned pursuit of profit under control, the payers will give them a thrashing. That would seem to follow because the premise behind both Obamacare, as well as the private health care market, consists of giving payers de facto charge over system.  The Affordable Care Act/Obamacare does it by requiring everyone to get health insurance.  The thinking there was that this would oblige payers to justify their place in the system by controlling costs and improving quality as a result of constraining providers and manufacturers. Any lingering notion that an insurance/payer-driven approach could work in the U.S. now seems increasingly improbable because most private insurers decline to take the initiatives required of them if they are to push American health care toward an affordable, effective system. An example of that comes from sources at several large health insurers, including some Blue Cross/Blue Shield companies.  They make the point that their managements either remain indifferent to pharma pricing or mistakenly see it as benign. Rather than actively managing their populations, their participating providers and the health care manufacturers, the insurers prefer to operate in the old, insurance sales mode of passively making money on the float while allowing costs to escalate.  By and large, they feel their recourse lies in passing higher costs along to policy holders in the form of premium increases. A source at one BC/BS said his colleagues rarely even give any thought to pharma because they outsource that concern to their Pharmacy Benefits Management (PBM) company.   Another health insurance manager related the astounding fact that his company's director of strategic planning actually considers pharma as a constructive force for controlling health care costs. This strategic planner told the people reporting to him that their company's absolute amount of “medical loss” over the past couple of years has remained fairly level.  At the same time, the relationship among the factors contributing to those medical loss expenses has changed, so that hospital expenses have declined as a percentage of the total, while pharma costs have risen substantially. Demonstrating an incredible piece of fallacious, post hoc reasoning, the planning director then concluded that spending more on pharma decreases the larger amounts paid to hospitals. For that reason, he sees rising pharma expenditures as a good thing! Even those private payers not challenged by basic logic shrug…

Why is this document 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 healthcare reform.  The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Specialty drugs have been a house divided. Oral medications have been managed under the pharmacy benefit while medications that are infused or injected have been managed as a medical benefit. Self-injected medications have been a muddle, landing on both sides of the benefit divide. Common sense and convenience recommended this arrangement. If health plans and other payers were paying providers under the medical benefit for injection and infusion services, why not cover drug being injected or infused as part of the same claim? Besides, specialty drugs have been a secondary concern, so the medical–pharmacy benefit split just hasn’t been that big a deal. Until recently, oral medications have been the category in need of management, and they are clearly the province of the pharmacy benefit, accounting for the lion’s share of pharmacy expenditures. And the oncologists, rheumatologists, and other specialists who regularly prescribe and administer specialty drugs haven’t been complaining. When they buy medications and bill for them, that has added an income stream into their practice. For some, that stream has turned into a torrent as the number and cost of the specialty drugs has increased. Now that specialty drugs have become budget busters, health plan executives and pharmacy benefit managers are questioning the wisdom of covering specialty drugs in two different ways and, more particularly, whether more medications should be moved from the medical benefit to the pharmacy benefit as one way to rein in costs. According to the 10th edition of EMD Serono’s Specialty Digest, the switch is under way. A survey of 91 health plans that provided the data for the digest found a significant shift to the pharmacy benefit for the medications for hemophilia, respiratory syncytial virus, and, as a group, the intravenous immune-modulating medications for rheumatoid arthritis, Crohn’s disease, and psoriasis (figure, below). Shift from medical benefit to pharmacy benefit (2011, 2013) % of plans with RX benefit coverage Source: EMD Serono Specialty Digest, 10th Edition Moving medications to the pharmacy benefit won’t win prizes for innovation or box-departing thinking. The fact is that it has been talked about for years. Patrick Gleason, PharmD, director of health outcomes for Prime Therapeutics, the Minnesota-based pharmacy benefit manager, says there have been fewer changes than all the talk might suggest: “It isn’t so simple. That’s why it hasn’t happened very much.” Four advantages There have been some early adopters, such as Blue Cross & Blue Shield of Rhode Island (BCBSRI). The insurer acted well before the current trend, moving many specialty medications over to the pharmacy benefit six years ago. BCBSRI contracts with Walgreens to supply and help to manage the specialty medications, while Catamaran pays the claims as the pharmacy benefit manager. Control of the formulary stays with the health plan, says Donna Paine, PharmD, MBA, a specialty pharmacy program manager for Blue Cross & Blue Shield of Rhode Island: “It’s our formulary. It’s our criteria for coverage.” Four themes emerge when Paine and others talk about the advantages of moving specialty drugs to the…

Why is this document 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 healthcare reform.  The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.

Three conditions — hepatitis C, diabetes, and cancer — show how budgets can be busted (and patients harmed) if providers and payers don’t astutely manage the use of costly new drugs Every profession has its maxim for survival. For academics, it’s “Publish or perish.” For lawyers, it’s “Bill or move on.” What should the maxim be for employer and health plan executives in charge of providing and paying for prescription coverage benefits?  Recent drug developments make the answer clear: Monitor — and comprehensively address — marketplace changes or imperil your plan’s assets and your participants’ health. Too long for a bumper sticker, for sure. Perhaps “You snooze, you lose” might be better. But regardless of the maxim’s length and pithiness, what’s clear is that in the fast-changing, high-cost prescription drug market, pharmacy benefit managers (PBMs) and payers must continually monitor and quickly and wisely respond to new drug developments. A look at three therapeutic categories proves the point. The continual stream of new drugs for hepatitis C, diabetes, and cancer has created astronomical cost exposure for payers. Therefore, PBMs and payers must scrutinize all drugs, determine those few that have demonstrated they are better than less expensive alternatives, and then implement well-grounded formulary decisions and effective prior authorization, step therapy and quantity limit programs. If payers are to control their costs, they must also ensure that their PBMs are providing and passing through the strongest available discounts and rebates, maximizing the benefit of coupons, and taking full advantage of patient-assistance programs. High cost of new diabetes, cancer drugs Eight of the newly approved drugs during the past two years were for diabetes, including four last year: Farxiga (in January), Tanzeum (in April), Jardiance (in August), and Trulicity (in September). Those approvals followed FDA approvals in 2013 for Invokana, Kazano, Nesina, and Oseni. Given that about 29 million Americans have diabetes — and that several manufacturers launched extensive promotional campaigns for their new diabetes drugs — large numbers of plan beneficiaries are already taking these drugs. However, all these drugs are far more expensive than the tried-and-true generic diabetes medications, including metformin and the three sulfonylureas (glyburide, glimepiride, and glipizide). The generics may cost health plans from $4 to $50 per 30-day prescription. The new drugs are likely to cost several hundred dollars for the same treatment period. Comparing the average wholesale price (AWP) by unit: For metformin, the unit AWP ranges from $0.70 to $1.44 (depending on dosage level); for Jardiance, it’s $12.04; and for Invokana and Farxiga, it’s $12.48. Drugs to treat cancer are also putting enormous financial pressures on health plans, patients, and their families. According to a recent newspaper investigation, the FDA approved 54 new cancer drugs during the past decade. Those drugs had an average monthly cost of $10,000, with four priced at more than $20,000 and one at $40,000 (Fauber 2014). While politicians, providers, and payers raised a hue and cry about Sovaldi’s $1,000-a-day price tag, there’s been barely a murmur about the cost of…

Why is this document 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 healthcare reform.  The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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 pharmacy cost 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.   Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.