CASPA Fall 2017 Conference Presentation

This presentation discusses PBM practices and guidelines on better ways to judge PBM performance, as well as information about why it may make sense to take some initial steps, like carving out specialty pharmacy.

Transcript

1. slide 1 PBM contrac+ng The Good, The Bad & The Ugly
2. slide 2 What does a PBM (Pharmacy Benefit Manager) do? •  Contracts a network of pharmacies •  Contracts with Pharmaceu4cal Manufacturers for “REBATES” •  Processes claims •  Some4mes is a provider (pharmacy)
3. slide 3 A liAle more about the PBM industry… Did You Know… •  That 4 PBMs control about 75% of market? •  50 PBMs make up the remaining 25% •  THERE ARE 3 TYPES OF PBMs: 1.  Tradi4onal 2.  Transparent 3.  Pass-Through Do you know which type you have?
4. slide 4 Rx Cost Are Trending Up…Again. • Rx cost used to represent 5% of health plan spend, yet oXen exceeds 20% today • Direct-to-consumer marke4ng drives costs up • Na4onal Rx trend index in 2015 = 8.6% • Na4onal Rx trend index in 2016 = 11.2%
5. slide 5 Who is to blame for escala+ng drug cost? PBMs? Pharmaceu4cal Manufacturers?
6. slide 6 PBMs view of Pharmaceu+cal Manufacturers Pharmaceu+cal Manufacturers view of PBMs
7. slide 7 The reality is it could be both PLUS Specialty Pharmacy AND Aging Popula?on AND Employee Decisions AND Company Decisions
8. slide 8 PBM Terminology that misleads you AWP = Average Wholesale Price (also known as…) “Ain’t What’s Paid” SpreadHEATING
9. slide 9 The current way most PBMs are judged •  By AWP Discounts, which are inherently a flawed and misleading way of judging PBM performance •  Why?...
10. slide 10 Atorvasta?n 20 mg •  There are 77 different NDCs (AWP prices) for the drug •  These prices range from $0.45 - over $14.00 per pill! •  Your PBM is guaranteeing AWP – 70 % (but 70 % of which per unit price??) An example of the misleading “AWP discount” promise
11. slide 11 RETAIL GENERICS (2016) AWP Discount Cost per pill AWP Discount vs. Unit cost Company ONE 76.61% $ 0.551 Company TWO 80.22% $ 0.299 Difference $ 0.2511 So for every 1,000 lives Group ONE is paying about…… $ 100,000 MORE Annually!
12. slide 12 •  Get a market check with defined parameters •  Look at per unit cost •  Monitor changes and note Rx industry trends (or have someone do all this for you!) A beAer way to judge PBM performance
13. slide 13 •  Things change •  Your current PBM contract may not protect you financially •  Know what language to look for (and know what’s missing!) You need to monitor PBM performance!
14. slide 14 Example of a monitoring “catch” Generic Name Atorvastatin Calcium Tab 40 MG Mail ICU (2015) Mail ICU (2016) Difference Lisinopril Tab 10 MG Omeprazole Cap 20 MG Gabapentin Cap 300 MG Simvastatin Tab 40 MG Metformin HCl Tab 1000 MG Tamsulosin HCl Cap 0.4 MG Lisinopril Tab 20 MG $0.2340 $0.0714 $0.0800 $0.0513 $0.5865 $0.0304 $0.1082 $0.0283 $1.6599 $0.3823 $1.4146 $0.4147 $1.2114 $0.3084 $1.2363 $0.2887 $1.4259 $0.3109 $1.3346 $0.3634 $0.6249 $0.2780 $1.1281 $0.2603
15. slide 15 PBM Myth # 1 Mail order is always cheaper than retail. Not true. PBM Mail Service Channel 1 $1.7498 $1.3809 2 $1.3445 $1.0423 3 $1.9516 $1.7025 5 $1.8686 $1.7793 Total cost per unit 4 $1.1419 $1.0433 Retail Service Channel
16. slide 16 PBM Myth # 2 When you get “100% of your rebates” you are ge]ng 100% of available rebates. Not true. Quote from a PBM contract: “Rebates” means retrospec4ve rebates that are paid to XXXX, or otherwise retained by XXXX, pursuant to the terms of a rebate contract nego4ated independently by XXXX with a pharmaceu4cal manufacturer, and directly akributable to the u4liza4on of certain pharmaceu4cals by Enrollees. Rebates do not include administra4ve fees paid by pharmaceu4cal manufacturers to XXXX, or product discounts or similar remunera4on received by subsidiary pharmacies of XXXX.”
17. slide 17 PBM Myth # 3 Bigger is always beAer. Not true. Bigger PBMs may buy better, but are you getting all of the value of their buying power? The model (Transparent or Traditional) doesn’t matter. What matters is: •  What are you actually paying •  Your Contractual Terms •  Service
18. slide 18 Specialty Rx 40-50% of the Drug Spend 1% of popula4on Rest of popula4on Tradi?onal Rx 50-60% of the Drug Spend 30-40% of popula4on Rest of popula4on Should it be managed the same way that traditional pharmacy has been managed?
19. slide 19 Specialty Pharmacy costs can be mi+gated •  Analyze medical and pharmacy claims to see poten4al for drama4c savings in site of care/ appropriate use/proper dosing •  Use cost-plus pricing •  Consider “carving out” Specialty Pharmacy
20. slide 20 Examples of physician and member choices that cost you $$ Vimovo (Naprosyn and Nexium) •  Cost of Vimovo for 90 days = $4,279 •  Cost of both generics for 90 days = $40! Cuprimine (Naprosyn and Nexium) •  Cost of Cuprimine = $50,000/mth •  Available in Canada = $250/mth!
21. slide 21 9 Things You Can Do to Save 1. Hire a consultant/firm with NO financial 4es to a PBM 2. Review and Improve your PBM contract 3. Manage the Benefit Design 4. Get your members engaged 5. Carve out Mail Order (Preferably cost plus based) 6. Carve out Specialty (Preferably cost plus based) 7. Carve out Rebates 8. MONITOR YOUR PBM 9. Have a Market Check with TEETH (CCRx can do all this for you.)
22. slide 22 Please Contact Us for a Complimentary Consulta+on. Tim Thomas, R.Ph President, Crystal Clear Rx Tim.Thomas@CrystalClearRx.com 303-955-7827 www.CrystalClearRx.com