{"id":14595,"date":"2019-06-10T16:02:31","date_gmt":"2019-06-10T16:02:31","guid":{"rendered":"http:\/\/ec2-3-93-62-9.compute-1.amazonaws.com\/pharma-mkting.com\/?p=14595"},"modified":"2019-06-10T16:02:32","modified_gmt":"2019-06-10T16:02:32","slug":"in-pbms-search-for-survival-transparency-is-the-answer","status":"publish","type":"post","link":"http:\/\/ec2-54-175-84-28.compute-1.amazonaws.com\/pharma-mkting.com\/articles\/in-pbms-search-for-survival-transparency-is-the-answer\/","title":{"rendered":"In PBMs\u2019 Search for Survival, Transparency is the Answer"},"content":{"rendered":"\n

Within the last couple months, President Trump reiterated his intention to end the opioid crisis, notably adding, \u201cwe are holding big Pharma accountable<\/a>.\u201d<\/p>\n\n\n\n

Drug manufacturers and pharmacy benefit managers (PBMs) were already feeling pressure prior to Trump\u2019s recent announcement, and it looks like that dark cloud isn\u2019t going away any time soon. In a recent poll by the Kaiser Family Foundation, 68%<\/a> of Americans said they wanted Congress to do more to reign in high prescription drug prices, and legislators on both sides of the table are listening<\/a> and taking action. This is especially true where the opioid crisis is concerned\u2014recently, almost 60 clinicians and pharmacists were charged<\/a> by federal prosecutors for allegedly pushing opioids and committing healthcare fraud.<\/p>\n\n\n\n

There are two things that members of the\npharma industry can do right now. The first approach\u2014though it\u2019s the least\nlikely to succeed\u2014is to deny, deny, deny, while covering up any potentially\nincriminating evidence of their wrongdoing. The preferred, and most profitable\nway to deal with ever-increasing scrutiny, is to actually right those wrongs.<\/p>\n\n\n\n

The opportunity to do this is especially ripe for PBMs thanks to transparent pharmacy benefits, which wise, self-insured employers who forgo well-regarded, mainstream insurance carriers and pay for their employees\u2019 medical expenses on their own, make sure to include in their employee health plans. Transparent PBMs focus less on how much of a profit they can pull and more on how they can work with health plan administrators to get potentially life-saving drugs, like insulin<\/a>, for example, into consumers\u2019 hands for as few dollars as possible. Not only is this the right thing to do, it\u2019s also a smart thing to do. Greater transparency is where healthcare is headed, and the PBMs that get ahead of that trend now will be the ones to come out on top later down the line. <\/p>\n\n\n\n

A good starting point for PBMs hoping to steer clear of current criticism is reevaluating the contracts they make with payers, aka insurance carriers and\/or employers. In their PBM-payer contracts, most PBMs misleadingly list drugs\u2019 average wholesale price (AWP)<\/a>, the average price a retailer like CVS would pay to buy the drug from a drug wholesaler or supplier. (Retail pharmacies do this rather than purchase directly from a manufacturer because purchasing from multiple drug companies can be time-consuming, and bulk-order drugs take up space.)  <\/p>\n\n\n\n

Nontransparent PBMs use the AWP as a reference\npoint in showing insurance carriers and\/or employers how much of a discount\nthey can get off certain drugs\u2019 AWP. The greater the discount, the more an\nemployer or insurance carrier will want to work with them. However, pharmacies\u2019\naverage actual cost (AAC)\u2014and therefore the usual & customary (U&C)\ncash price that patients without insurance must pay\u2014could be much less than the\nAWP after discounts like states\u2019 estimated acquisition cost (EAC) Medicaid\nreimbursement. And even though AWPs are already higher than what most\npharmacies actually pay, some PBMs still mark them up higher so that their discounts\nappear more impressive.<\/p>\n\n\n\n

This is how spread pricing happens. In a spread pricing situation, a PBM charges an insurance carrier and\/or employer less than a drug\u2019s AWP to show them some \u201csavings,\u201d but more than the pharmacy\u2019s AAC. The PBM pays the pharmacy more than their AAC so they turn a profit, and then keep the remaining for themselves. For example, a PBM might tell an insurer\/employer that a drug\u2019s AWP is $500 even though the pharmacy\u2019s AAC is only $100, then say they can get them a 50% discount so the drug only costs $250. Then, the PBM will take that $250, pay the pharmacy $125 ($25 more than their AAC) and pocket the extra $125. In 2018, PBMs made more than $123 million<\/a> by doing this.<\/p>\n\n\n\n

By comparison, transparent PBMs will truly act\nin insurance carriers\u2019 and employers\u2019 favor. They\u2019ll shop around to find drugs\nthat are affordable and equally, if not more, effective and they\u2019ll keep\nemployers in the loop about costs and commissions.<\/p>\n\n\n\n

Some PBMs have already embraced this approach. BeneCard<\/a>, for example, holds itself accountable by covering any pharmaceutical costs that surpass its set, predetermined, per-person fees. Another PBM, Southern Scripts<\/a>, saved the Terrebonne Parish Council in Louisiana $1.2 million by passing, not pocketing, its savings along to policyholders.<\/p>\n\n\n\n

If today\u2019s PBMs hope to stay competitive and\nprofitable despite growing public pushback, transparency will have to be a top\npriority. Their days of secretive practices are numbered, but contrary to\npopular belief, that doesn\u2019t mean PBMs can\u2019t still serve a purpose. Transparent\npharmacy benefits are their redemption, and those who make the switch now will\nbe the ones with the advantage in the years to come.<\/p>\n","protected":false},"excerpt":{"rendered":"

Within the last couple months, President Trump reiterated his intention to end the opioid crisis, notably adding, \u201cwe are holding big Pharma accountable.\u201d Drug manufacturers and pharmacy benefit managers (PBMs) were already feeling pressure prior to Trump\u2019s recent announcement, and it looks like that dark cloud isn\u2019t going away any time soon. In a recent […]<\/p>\n","protected":false},"author":16,"featured_media":14629,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6,2],"tags":[],"topic":[],"acf":[],"yoast_head":"\nIn PBMs\u2019 Search for Survival, Transparency is the Answer - Pharma Marketing Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/ec2-54-175-84-28.compute-1.amazonaws.com\/pharma-mkting.com\/articles\/in-pbms-search-for-survival-transparency-is-the-answer\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In PBMs\u2019 Search for Survival, Transparency is the Answer - Pharma Marketing Network\" \/>\n<meta property=\"og:description\" content=\"Within the last couple months, President Trump reiterated his intention to end the opioid crisis, notably adding, \u201cwe are holding big Pharma accountable.\u201d Drug manufacturers and pharmacy benefit managers (PBMs) were already feeling pressure prior to Trump\u2019s recent announcement, and it looks like that dark cloud isn\u2019t going away any time soon. 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