Transcript The hidden issues behind increasing pharmacy costs.

Dallas ISCEBS
The Hidden Issues Behind
Increasing Pharmacy Costs
April 10, 2014
7401 Metro Blvd, Suite 210, Edina MN 55439
952-657-5457 | www.excelsiorsolutions.com
What If Your PBM Told You...

That your generic dispensing rate exceeded the contractually guaranteed
minimum rate of 72% by 3% at 75%?

That your actual effective generic discount vs. AWP exceeded the contractually
guaranteed minimum generic effective discount of 73% by 2% at 75%?
…How would you feel about
that performance??
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What If Your PBM Went On To Tell You…

That 2015 will produce the fewest number and lowest value of high-profile
brand drug patent expirations in recent memory?

That the amount that you spent on specialty pharmacy medications doubled in
2013, even though you only added 10 new patients to your specialty pharmacy
pool?
…How would you feel
about what 2015 will
bring?
2
What If Your Boss Then Told You To Reduce Pharmacy
Costs By 5% For Next Year’s Budget?
…How well would you
sleep tonight?
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The Need for “Common Cents”


This initiative is about finding opportunities to achieve material absolute
savings in highly utilized therapeutic classes, even when less specific relative
metrics such as generic dispensing rates and aggregate AWP discounts, on the
surface, appear to be optimal.
The PBM industry does a very good job of keeping your focus on relative
metrics and percentages
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Why the Excitement?


High generic dispensing percentages and deep AWP generic discounts have
combined to create the impression that generic performance is "as good as it
gets.”
Lesson learned: "You don't take percentages to the bank."

Not all generics, even those in the same therapeutic category, are priced
similarly — there is wide variation in unit prices among them.

Variation in unit price is material (20x or more) among “clinically indifferent”
generic alternatives

Are you receiving 20x or more clinical benefit for 20x or more cost??
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“Common Cents” Analysis

Take advantage of the “maturing” generic drug market

What is “Clinical Indifference?”

Volume must be high enough, and delta must be wide enough to create
economically material, clinically reasonable opportunities that justify effort

Focus in on categories where majority of claims
are already deeply discounted generics
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“Common Cents” Tactics

MD/Patient Communication

MAC pricing modification

Plan design and/or Utilization Management changes
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A “Common Cents” Case Study
“Common Cents” Findings

Analyzed claims data from October 1, 2013 through December 31, 2013
(4Q2013)

Analysis based on “Net Plan Paid” amount, to include impact of existing
“Patient Paid Amount” structure

Terms:

“PPU” = Plan Paid per Unit

“PPC” = Plan Paid per Claim
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4Q13 Descriptive High Level Utilization Statistics:
($ and % of Total Net Plan Paid Amount by Target Category)
Total Net Plan Paid Amount:
$ 1.6 million
Target Categories:
Tetracyclines
Combination OCs
Triphasic OCs
ARBs
ARBs + Thiazides
Statins
Nasal Steroids
PPIs
Tropical Steroids
TOTAL
• $19 thousand (1.2%)
• $26 thousand (1.6%)
• $12 thousand (0.8%)
• $12 thousand (0.8%)
• $ 7 thousand (0.4%)
• $31 thousand (1.9%)
• $10 thousand (0.6%)
• $39 thousand (2.4%)
• $12 thousand (0.8%)
$168 thousand (10.5%)
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Combination Oral Contraceptives:

% of claims in class dispensed as generic: 84%

Effective generic discount: 29%

Max Brand PPU: $3.45

Max Generic PPU: $2.26

Min Generic PPU: $0.32

Projected Annual Plan Paid Amt. in category: $104,000

Recommendation: Communicate wide unit price disparity that exists across
class to prescriber community with goal of compressing cost to existing mean
PPU of $1.24

Tactic: Share information with prescribers illustrating that general clinical
indifference that exists among available alternatives across class is not matched
by similar economic indifference

Total Potential Annualized Savings: $28,000 (26.9% )
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ARBs:

% of claims in class dispensed as generic: 63%

Effective generic discount: 91%

Max Brand PPU: $4.07

Max Generic PPU: $2.50

Min Generic PPU: $0.00

Projected Annual Plan Paid Amt. in category: $48,000

Recommendation: Displace entrenched Brand ARB utilization with Generic
ARBs, where clinically appropriate, by providing incentive to patient to ask
physician to consider switch

Tactic: Apply reduced or zero co-pay to all generic ARBs

50% Potential Annualized Savings: $21,000 (43.8% )
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Statins:

% of claims in class dispensed as generic: 86%

Nationwide Market Share for Crestor (all strengths): 10%

Kenosha Market Share for Crestor (all strengths): 13% (HIGH)

PPU for Crestor (all strengths): $4.60

PPC for all generic statins (all drugs & strengths): $0.16

Projected Annual Plan Paid Amt. in category: $124,000

Total Potential Annualized Savings by Eliminating Crestor Market Share
Disparity: $21,000 (16.9% )

Tactic: Create MD communication piece highlighting cost
differential between Crestor and generics
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Nasal Steroids:

% of claims in class dispensed as generic: 81%

Effective generic discount: 78%

Max Brand PPU: $10.52

Max Generic PPU: $4.11

Min Generic PPU: $0.16

Projected Annual Plan Paid Amt. in category: $40,000

Recommendation: Displace entrenched Brand Nasal Steroid utilization with
Generic Nasal Steroids, where clinically appropriate, by providing incentive to
patient to ask physician to consider switch

Tactic: Apply reduced or zero co-pay to all generic Nasal Steroids

50% Potential Annualized Savings: $13,000 (32.5% )
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PPIs:

% of claims in class dispensed as generic: 86%

Effective generic discount: 93%

Max Brand PPU: $9.14

Max Generic PPU: $1.15

Min Generic PPU: $0.14

Projected Annual Plan Paid Amt. in category: $156,000

Recommendation 1: Restrict coverage in class to generic omeprazole or
pantoprazole only

Tactic: Make omeprazole and pantoprazole only PPIs on formulary, others excluded,
except for unique dosage forms to be covered via PA process

Total Potential Annualized Savings: $128,000 (82.1% )

Alternative Tactic: Re-evaluate continued coverage of any PPIs under Rx benefit
since now widely available as OTC – be consistent with non-sedating antihistamine
coverage strategy
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Grand Total Potential Annualized Savings
Tetracyclines
• $ 13 thousand
Combination OCs
• $ 28 thousand
Triphasic OCs
• $ 21 thousand
ARBs
• $ 21 thousand
ARBs + Thiazides
• $ 11 thousand
Statins
• $ 21 thousand
Nasal Steroids
• $ 13 thousand
PPIs
• $128 thousand
Tropical Steroids
• $ 24 thousand
GRAND TOTAL
$280 thousand
(4.4%  Annual Plan Paid Amount)
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The Power of Common Cents

A 4.4% reduction in total annual drug
spend can be achieved by focusing on
only nine highly utilized therapeutic
categories where generics already
constitute the majority of claims.

Similarly derived incremental savings
are achievable across the entire
pharmacy benefit by paying close
attention to the data, by sharing
information with physicians and benefit
administrators, and by using Common
Cents.
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Specialty Pharmacy
Why the Focus on Specialty Pharmacy?
Fastest growing segment in pharmacy today and will grow at least 4fold in the United States through 2015.
Over 50% of Specialty spend falls under the Pharmacy benefit with the
rest covered under the Medical benefit.
Of the total drug spend, only 15-20% derives from specialty
pharmaceuticals.
50% of top 100 drugs and 8 of the top 10 will be specialty
pharmaceuticals by 2016.
The specialty market is not a level playing field, as extreme variations
are seen in patient care management, service, and outcomes.
1.
2.
3.
4.
Goldman Sacs Report – Americas: Healthcare Services: Supply Chain, Sept 27, 2012.
http://www.ajmc.com/payer-perspectives/0213/The-Growing-Cost-of-Specialty-PharmacyIs-it-Sustainable#sthash.
Specialty Pharmacy Times Industry Guide Oct 2013 – Top 10 Trends in SP.
Cohen GM, Calla N, Moore TS. Evolution of a community pharmacist to a specialty pharmacist. Specialty Pharmacy Conference; 2013.
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Best-in-class care
 Coordination of
benefits
 Physician
education on
guideline
updates
 Medical billing
 Side effect and
symptom
management
 Customized
communication
 Injection
training
support
 Support group
enrollment
Clinical Management
 Case
management
coordination
Patient education +
empowerment
Care Collaboration
The most expensive Rx is one shipped to a patient who doesn’t take it . . .
 Motivational
Interviewing
Techniques
 Drug regimen
assessment and
collection of
medication
history
 Adherence calls
 Proactive PA &
Rx renewal
support
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Discussion