Transcript Why Have a Pharmacy Benefit Manager Partnership

Why Have a Pharmacy
Benefit Manager
Partnership
Vicki Doss
Product Manager
September 13, 2010
Employer Challenges
• Increasing drug costs
• Injured Employees taking expensive brand
drugs when generics are available
• Lack of adherence to drug therapy
• Over prescribing / Over utilization
Role of a PBM
•Provide retail network
•Provide claims processing
•Provide mail and specialty pharmacy
•Provide reporting and account management
•Provide clinical management
Elements of your PBM Contract
• Contract should be clear and concise
Definitions
Services to be provided by PBM
Services to be provided by client
Audit Rights
Termination rights
Performance Standards
Pricing
How do you Measure the
Performance of your PBM partner?
• Flexibility
Customization of plan designs to meet your unique
needs
• Utilization Management
Improve generic utilization, monitor fraud/abuse,
market trends
• Savings Opportunities
Constant negotiations with retail pharmacies
Drug Pricing Methods, Transparency
& Tools
for Cost Containment
Dennis M. Sponer, Esq.
President/CEO
ScripNet, Inc.
STRIMA 2010 Conference; Prattville, Alabama; September 2010
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Definition of Pricing Terms:
- Usual and Customary: 120% of AWP According to TDI.
- State Fee Schedules: 36 states publish a maximum price for
workers’ compensation medications.
- Average Wholesale Price: Average Wholesale Price (AWP), a
common benchmark for price negotiation and payments between
PBMs and pharmacies and between PBMs and their carrier and
self-insured customers. Medi-Span and First Data Bank have been
the standard publishers of AWP.
- WAC: Wholesale Acquisition Cost
- MAC: Maximum Allowable Cost
- FUL: Federal Upper Limit
- HCFA MAC: Health Care Financing Administration – Maximum
Allowable Cost
- Pharmacy Billed Amount: Cash price?
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Industry Pricing Illustration
Drug Name: Naproxen 500mg TAB #60
National Drug Code
53746019001 53746019001 53746019001 53746019001 53746019001
U&C
$90.55
$93.53
$85.88
$83.52
$104.00
Texas Fee Schedule
$98.33
$101.43
$93.46
$91.00
$112.34
Alabama Fee Schedule
$89.64
$92.24
$85.55
$83.48
$101.40
AWP
$1.26
$1.30
$1.19
$1.16
$1.44
WAC
$0.12
$0.11
$0.11
$0.10
N/A
MAC
$0.15
$0.15
$0.15
$0.15
$0.15
FUL
$0.08
$0.08
$0.08
$0.08
$0.08
Pharmacy Billed Charges
$12.62
$40.99
$25.99
$4.00
$59.34
K-Mart
Rite Aid
CVS
Wal-Mart The Pharmacy
Center
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PBM Pricing Methods & Transparency:
Spread Pricing: Based on a percentage off AWP,
regardless of the PBM’s actual pharmacy costs from their
negotiated network discounts.
Cost-Plus Pricing: Based on a markup of the PBM’s
negotiated pharmacy costs.
Percentage of Savings: Start with the Fee Schedule,
subtract out the negotiated pharmacy rate, and base PBM
fees on a percentage of that savings
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Tools for Managing Costs
• RFPs: ScripNet has authored an article in Risk & Insurance
Magazine, along with our customer, Minnesota Counties Insurance
Trust, on the effective use of RFPs:
www.riskandinsurance.com/story.jsp?storyId=108721524
•Pharmacy Contracts: Pharmacy networks & cost information
sharing with payors.
• Formularies: specify which medicines are approved to be
prescribed under a particular contract.
• Generic Substitution: is the replacement of a brand name drug
with an equivalent generic drug.
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More Tools for Managing Costs
• Pharmacy Audits: Identifies and corrects errors, waste and
fraud and ensures that network pharmacies are correctly following
industry dispensing practices as well as contracted fulfillment,
adjudication and reimbursement procedures.
• Online Claims Database: Tracks, analyzes and reports on
operations and is accessible in real-time to client risk managers.
• Monitoring & Reporting: Key business metrics should be
monitored and reported back to customers, including:
- Network penetration (the percentage of client's prescriptions that are
discounted: i.e., in-network)
- Percentage of prescription filled that were generic versus brand
- Percentage of first fills captured
- Percentage of second fills captured
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More Tools for Managing Costs
•Drug Manufacturer Rebates:
later (maybe).
Pay me now or pay me (much)
•Compounding: The process of mixing pharmaceuticals to the
specifications of a customized prescription and for people who
have unique health needs.
•Repackaging: You get to make up your own AWP!
•Point of Sale Approvals and Escalation Policies for
Adjudication: Pharmacies have online access to patient
information, patient authorization and/or adjudication.
• Drug Utilization Reviews & Physician Outreach: Include a
more extensive statistical analysis of client claims data to identify
and contain potential fraud, waste and abuse, including physician
outreach.
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The PBM:
Can we help your injured worker avoid
addiction, fraud, abuse, drug interactions
and more?
“The price is not the cost”
Dr. Ralph Kendall
Vice President of Clinical Services
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• NEWS FLASH!!!
– ”Opiophobia must go!”1
– ”Drug Sting arrests 29 so far; 37 more coming”2
– “At work, a Drug Dilemma”3
– “New rules for pain doctors”4
– “Woman brought kids along for oxycodone buy”5
– “Former physician sentenced to 25 years & fined $1 million”6
– “Painkiller drug abuse soaring, CDC Chief warns”7
– “Physician’s drug arrest reveals how regulators protect problem doctors”8
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Passik SD, Webster LR, Pain and Addiction Interface, Pain Medicine Vol 9 #6 2008
See [email protected] July 5, 2010 Tampa Bay Tribune
Simon S, August 3, 2010, Wall Street Journal
Stein L, July 25, 2010, St Petersburg Times
Stancil L, August 6, 2010, SunSentinel.com
Girion L, July 30, 2010, LA Times
Kleffman S, July 22, 2010, Contra Costa Times
[email protected], Mudri Associates, Inc. ADEA Consultancy, Dunedin, FL
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Opioid Abuse and Diversion
The US comprises 4.5% of world population1
•
Globally, the United States consumes:2,3
– 65% of all illegal drugs
– 80% of all opioids
– 49% of all morphine
– 99% of all hydrocodone
•
Potential for opioid abuse increases with rate of prescribing
– 85% increase in overall opioid abuse
– 116% increase in hydrocodone abuse
– 166% increase in oxycodone abuse
1 Kuehn BM. Opioid prescriptions soar: increase in legitimate use as well as abuse. JAMA 2007; 297:249-51
2 Manachikanti, Laxmaiah, and Singh, Angelie, “Therapeutic Opioids: A Ten-Year Perspective of the Complexities and Complications of
Escalating Use, Abuse, and Nonmedical Use of Opioids.” Pain Physician, March 2008.
3 Joint Meeting of the Drug Safety and Risk Mangement Advisory Committee, Non-prescription Drugs Advisory Committee, and the Anesthetic
and Life Support Drugs Advisory Committee Meeting, June 20-30, 2009.
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Opioid Prescription Use
Retail Sales of Opioids, 1997 – 2005 (in grams of medication)
1997
2005
% Change
Methadone
518,737
5,362,815
933%
Oxycodone
4,449,562
30,628,973
588%
Fentanyl base
74,086
387,928
423%
Hydromorphone
241,078
781,287
244%
Hydrocodone
8,669,311
25,803,544
198%
Morphine
5,922,872
15,054,846
154%
Meperidine
5,765,954
4,272,520
-26%
Codeine
25,071,410
18,960,038
-24%
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Let’s start with a focus on some terms we misuse!
Is addiction the same as dependence?
•
Addiction is an uncontrollable compulsion (disease) characterized by drug-seeking
and abuse behavior without regard to its negative consequences. Addiction is the
same irrespective of whether the drug is alcohol, amphetamines, cocaine, heroin,
marijuana, opioids or nicotine. The risk of addiction is in part, thought to be genetic.
•
Dependence is a physical state resulting from the body’s becoming accustomed to
having the drug present. When the substance is suddenly discontinued the
appearance of characteristic withdrawal symptoms appear. While opioids,
benzodiazepines, barbiturates, alcohol and nicotine are all well known for their ability
to induce physical dependence, other drugs share this property that are not
considered addictive. This is NOT addiction
•
What is pseudo-addiction? (UNDERTREATMENT)
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What about New & Abuse-Deterrent Opioids
What’s the value?
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Currently marketed NEW opioid products
– Oxycontin (v 2.0) (ODG – "N") "sticky gel" Oradur® technology - "Remoxy"
• Extended release oxycodone
– Exalgo (ODG – "N") NOT an abuse-deterrent opioid
• Extended release hydromorphone
– Embeda (ODG – "Y")
• Extended release morphine plus naltrexone
– REMS ???
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What they can (and can’t) do
•
Can we prevent ADDICTION?
•
What else is being done?
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How valuable are these tools?
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When should new drugs be employed in a case?
STEPS (Safety, Tolerability, Effectiveness, Price, and Simplicity)1
1. Is it really safe? 97% of FDA approvals are based on short-term clinical trial evidence
involving approximately 1,500 patients. What happens long term?
2. Can the patient tolerate the side effects well enough to be adherent to the therapy?
3. We are finding that studies sometimes reduce a clinical risk factor but don’t necessarily
lead to the anticipated benefit. We treat what we measured, but the patient didn’t live
longer or even get better. Is the new drug better than what is currently available?
4. The price; the all important price: A good example might be the fentanyl lollipop. Yes, it is
effective, but at what cost? The adverse effects might be unintended dose escalation, loss
of teeth, death due to respiratory depression or arrest, significant drug interactions.
5. How simple is the drug regimen? The simpler ( one dose per day versus three or four)
creates a better fit with the patient’s lifestyle and greater success of the drug.
What about Drug Interactions
Drugs that modify metabolism of opioids & genetic traits of certain individuals
1 Pegler S, Underhill J, Evaluating the Safety and Effectiveness of New Drugs, Am Fam Physician. 2010;82(1):53-57.
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What should I expect from my PBM?
What is your reporting strategy?
Do you just watch your drug spend happen?
OR
Do you participate in managing your drug spend?
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Drug Plan design
•
Use of the Prior Authorization as an alert flag
•
What sort of interventions will you have available
•
Can you employ some sort of “Fraud Indicators”?
•
What predictive criteria can you use?
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BEST TOOL - Analyze your data
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Data mining/drill down capability
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Isolate relevant information
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Injury types
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Provider trends
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Drug utilization
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Turn awareness into action
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Claims handling
•
Loss control/risk management
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Urine Drug Testing
Here’s a link to some Urine Drug Testing case vignettes.
Try your hand to see if you can tell what’s going on.
http://www.emergingsolutionsinpain.com/theUDT/udt_intro.php
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Predictive modeling
•
Use your data to develop how you will make decisions
•
Evaluate the characteristics that created your best outcomes
•
Your model should predict likely outcomes
•
Develop a process to “rate” your claims (high cost vs. best return to work)
•
Work with your PBM to develop trends and patterns
•
This is a continuous quality learning process
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Questions?
[email protected]
PBM Considerations
for Risk Managers
Jonathan D. Bow
Executive Director
State Office of Risk Management
Risk Manager’s Perspective
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Risk Identification
Risk Analysis
Risk Control
Risk Financing
Monitoring
Procurement
Risk Identification
• Multi-level responsibility for payment / distribution
of pharmaceuticals
– Workers’ Compensation
– Social Services Agencies
– Medical Facilities
• Identify the Cost of Pharmaceuticals
– Generic vs. Name Brand
• Drug Diversion / Abuse / Fraud
• Drug Interaction / Appropriateness
Risk Analysis
• Delivery Mechanisms
– Directly dispensed by State
– Delivery through Point of Sale
• Ability of the State to control access to drugs it
pays for
• Existence of fee guidelines or direct contracts with
providers
• Evidence of Drug Diversion / Abuse / Fraud or a
lack of evidence to conduct the analysis
Risk Control
• Is a PBM appropriate?
– Is the existing cost of delivery of pharmaceuticals greater
than the cost if delivered in a PBM setting?
– Do the controls provided by a PBM address the identified
risks?
– What percentage of the drug deliveries will be subject to
network controls?
– Direct Contracting with supplier / dispensing agent if you
can control distribution point
Risk Financing
• Ideally the use of the PBM should result in net
savings over existing cost of risk to be an effective
choice
• The net cost may be affected by how you access the
PBM
– If you access through a TPA, there will generally be a
markup by the TPA. By contracting directly, a higher
percentage of savings may be realized
• Drugs are generally priced as a percentage of
Average Wholesale Price (AWP), but other
calculations may provide better prices
Monitoring
• Require regular reports
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Network penetration
Generic vs. Name Brand
Results of Diversion / Abuse / Fraud monitoring
Effectiveness of pricing methodology
Provider contracts are properly maintained and
accessible
Procurement
• Consider giving as much leeway as possible for
vendors to bid “solutions” rather than just prices
– Require vendors to disclose the cost of delivery for a
historic sample of your data based on name of drug,
generic availability, distributor, and location
– Require vendor to market and provide notifications /
pharmacy cards to patients as part of implementation and
operations
– If possible make site visits to vendor after selection to
evaluate vendor operations before awarding the bid