Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
PROPRIETARY AND CONFIDENTIAL
PRESCRIPTION DRUG COSTS
AN EXPENSE TOO TOUGH TO TAME?
Presented By:
Todd Kurth, Principal & Senior Consultant
June 7th, 2018
PROPRIETARY AND CONFIDENTIAL
“THE ONLY PLACE
WHERE SUCCESS
COMES BEFORE WORK
IS IN THE DICTIONARY.”~ Vidal Sassoon~
1
PROPRIETARY AND CONFIDENTIAL
AGENDADISCUSSION POINTS AND TOPICS
• Pharmacy Benefit Manager (PBM) – What do they do?
• Pharmacy Benefits No Longer a Throw in Benefit
• Common Myths
• Why So Complicated?
• How Does a PBM Make Their Revenue?
• Formulary – Rebates or Lowest Net Cost?
• Growth of Specialty
• Carve In vs. Carve Out?
• Takeaways
• Questions
2
PROPRIETARY AND CONFIDENTIAL
PHARMACY BENEFIT MANAGER
WHAT IS A PHARMACY BENEFIT MANAGER?
• A organization that helps:
▪ Manage the purchasing, reimbursement and dispensing of prescription
drugs for employers, plan sponsors or health plans
▪ Create and maintain pharmacy networks
▪ Create formularies that influence physician prescribing patterns to aid in
securing drug manufacturer rebates
▪ Negotiate with all parties in distribution chain for discounts, rebates, etc.
▪ Administer clinical and disease management programs to manage utilization
3
PROPRIETARY AND CONFIDENTIAL
10,000 life group
PBM MARKETSHARE
4
PROPRIETARY AND CONFIDENTIAL
PHARMACY BENEFIT TRENDS
Today’s pharmacy benefits are demanding
more time and expertise than most
employers and unions are able to provide
due to many factors:
• New drug therapies
• Complicated benefit designs
• Double-digit annual increases
• High-cost specialty medications
• Predatory industry practices
5
PROPRIETARY AND CONFIDENTIAL
Mail Order saves you money
Transparency is transparent
High rebates mean low costs
The FDA reviews the safety and efficacy of compound drugs
Coalitions focus on the cost of the drug
RFPs bind the PBM
The drugs you cover drive low net cost
TRUE OR FALSE?
6
PROPRIETARY AND CONFIDENTIAL
WHY SO COMPLICATED
• Pharmacy is multi-faceted and unregulated
• There is a lack of transparency & disclosure
• For a PBM, revenue or shareholder value is the #1 priority; #2
priority is the customer
Solution: Educating the buyer is key
THE MORE YOU EXPLAIN IT, THE MORE I DON’T UNDERSTAND IT MARK TWA IN
7
PROPRIETARY AND CONFIDENTIAL
PBM OPTICS: FULL DISCLOSURE
Spread vs Pass-through
Pricing
Administration Fees
Average Wholesale Price
(AWP)MAC Pricing
Mail OrderSpecialty Network
Pharmaceutical Rebates
Add-on Services
“Branded” Generics
Pre-Settlement
AWP
Claims Re-pricing
Client Contract
8
PROPRIETARY AND CONFIDENTIAL
FORMULARY – BACK TO THE FUTURE
• Formulary drives to low net cost?
▪ If true, then why are more expensive drugs listed as preferred? Formularies
can be greatly influenced by rebates the PBM receives from drug
manufacturers
▪ Each PBM selects its own list of drugs, which results in different drugs on each
PBM’s list
▪ Therapeutic interchange programs are used to allow the PBM to switch a drug
to a formulary medication instead of a non-formulary medication
▪ Option –Select a PBM vendor that is not driven by rebates
▪ Or, throw out the formulary
9
PROPRIETARY AND CONFIDENTIAL
BRAND VS GENERIC DRUG PRICESDRUG COST IS CASH PRICE AND DOES NOT REFLECT PBM DISCOUNT
Treats Cholesterol
Lipitor 40mg $475 to $550
Atorvastatin 40mg $50 to $150
Treats Asthma
Singulair 30 tablets $228 to $280
Montelukast 30
tablets$14 to $63
Treats Heartburn
Nexium 20mg $265 to $325
24HR OTC –
Nexium 20mg$16 to $25
Esomeprazole 20mg
$41 to $90
Treats High Triglyceride
Levels
Lovaza 30 caps $80 to $120
Omega-3-acid
ethyl esters 30 caps
$28 to $35
Treats Blood Pressure
Diovan HCT 160mg
$230 to $300
Valsartan 160mg $50 to $150
10
PROPRIETARY AND CONFIDENTIAL
Non-Essential Drug ListNon-Essential Drugs are drugs that meet the following criteria:
• a price increase of more than 75% in the past 12 months,
• have generic alternatives that are most cost effective
• do not have any clinical relevance combo drugs, pain patches, etc.
Drug Name Cost Alternative Cost
Metformin 1000MG HCL Modified Release
$3,607Metformin 1000MG HCL $44
Duexis $993Famotidine $10
Ibuprofen $5
Lidothol $1,490Lidocaine Patch $370
Menthol $10
Vimovo $1,490Naproxen $43
Esomeprazole Magnesium $17Jublia $1,719 OTC Products $20
11
PROPRIETARY AND CONFIDENTIAL
PRICE VS COST
LOWEST NET COST REQUIRES MUCH MORE THAN “GOOD RATES”
Mix Management:
Which drugs / treatments?
Utilization Management
How much?
Channel Management
Where?
Total Cost
12
PROPRIETARY AND CONFIDENTIAL
GROWTH OF SPECIALTY DRUG COSTS
13
PROPRIETARY AND CONFIDENTIAL
Hepatitis C• Treatment for Hepatitis C can range from $55K to $90K per treatment.
• Zepatier is currently the lowest net cost for the most common genotypes at $55K
per treatment
• 4 - 5 new Hepatitis C medications are slated to be released in 2018
• Mavyret and Vosevi were recently released (lowest net cost) at $31K
14
PROPRIETARY AND CONFIDENTIAL
SPECIALTY DRUG TRENDS
SPECIALTY MANAGEMENT STRATEGIES PRODUCE RESULTS
• 13.6%
• Specialty
• Increase
Tightly Managed Employers
• 27.8%
• Specialty
• Increase
Unmanaged Employers
15
PROPRIETARY AND CONFIDENTIAL
PIECES OF THE SELF-FUNDING PUZZLE
16
PROPRIETARY AND CONFIDENTIAL
Disadvantages Advantages
Account team is focused and trained on medical benefit to
detriment of Rx benefit.
Better outcomes are often limited and not effectively
reported to the employer
Reporting often provides less Rx detail than stand-
alone PBM provides
Less transparency, and no stand-alone PBM contract;
pricing (discounts) is rarely guaranteed.
Rx discounts disappear as bundling takes place. Rx pricing
becomes a function of admin fee only.
Terms, definitions, calculation methodologies are not
articulated in ASO contract.
Rebates are rarely shared at 100%; exclusions of drugs is
typically not allowed
Relationships w/ physicians due to PPO contracts make
specialty med negotiation difficult.
✓ One vendor and one account team may simplify
vendor and benefit management
✓ Potential for combining Rx and medical data for
better medical outcomes
✓ Already established relationships with physicians
✓ Potential for more effective management of population
health
✓ Bio-metrics are under one roof if lab results; physician
visits; Rxs are all integrated for outcome
✓ Marketing is easier at renewal
CARVE IN
17
PROPRIETARY AND CONFIDENTIAL
CARVE OUT
Disadvantages Advantages
Two companies, two account teams – more administrative
work?
Focus on Rx outcomes does not realize potential value of focus on
combined medical and Rx
May limit opportunity for real-time exchange of medical and
drug data and eligibility for CDHP
Paid claims data must be integrated for re-insurance or DSM
programs or lifetime maxes
Two invoices to pay
May require 2 ID cards if medical payor insists
✓ Use Rx data to focus on Rx outcomes with results
✓ Some PBMs combine elements of medical data for improved
clinical management information
✓ Detailed reporting specific to the needs of the employer
✓ Flexibility with clinical programs and administration
✓ Likely more rapid implementation of leading-edge technology
and capabilities
✓ Separate contract for Rx only that discloses more
information on PBM practices
✓ Easier to mange Rx benefit and administration
18
PROPRIETARY AND CONFIDENTIAL
PIECES OF THE SELF FUNDING PUZZLE
19
PROPRIETARY AND CONFIDENTIAL
TAKEAWAYS
BE INNOVATIVE
• 15% to 25% of a Health Plans Expense is directly related to
Pharmacy
• Data is Power - Carve Out allows you to see your Rx Plan Data
• Discounts only go so far – Plan Design, which drugs you cover
and changing member behavior help reduce Plan Costs
• Specialty Drug/Biologics sales has and will continue
to explode
• Be an educated buyer
• Get Contractual Guarantees
20
PROPRIETARY AND CONFIDENTIAL21
PROPRIETARY AND CONFIDENTIAL
Todd is a Principal and Senior Pharmacy Benefit Consultant with over 20 years’ experience in the
healthcare industry—13 of which are in pharmacy benefits. Todd has significant experience in, and
knowledge of, the PBM industry having held a position with The Segal Company as a Senior Pharmacy
Benefits Consultant for their National Health Practice and heading up the Western Region. Todd also
worked for Caremark as a Senior Underwriting Analyst where he analyzed, provided recommendations
on client pricing, and financial terms within the client contracts.
As a Senior Pharmacy Benefit Consultant at ScripPoint, Todd is an expert in PBM pricing methodologies,
contract evaluations and negotiations, electronic claims audits, PBM RFP development and analysis,
PBM training, and benefit design modeling. Todd has extensive experience working directly with clients in
the Taft-Hartley and employer group markets administering prescription drug plans and serving as the
main point of contact between the benefit plan and the PBM.
Todd also spent seven plus years working for the State of Illinois in employee benefit administration,
serving the last year as the Director of Local Government Health Plan. In this role, Todd served as the
marketing representative and spokesperson, analyzed PBM RFP’s, managed administrative functions
and worked with the actuary to develop sound funding strategies and plan designs.
Todd resides in Phoenix, Arizona. He holds a Bachelor’s Degree from Washington State University and is
a Master’s Degree Candidate in Public Health, and he is a Veteran of the U.S. Air Force. Todd is also a
nationally recognized pharmacy expert who has contributed to articles published in several trade
journals.
Todd KurthPrincipal & Sr. Consultant
PBM CONSULTINGindustry veterans on your side
22