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Archive for December, 2011

Is PBM Spread Pricing Increasing The Cost of Your Self-Funded Employee Health Plan?

December 28, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Terrance Killilea, Pharm.D. and Scott Haas, 12.08.11

Pharmacy benefit managers (PBMs) are contractors hired by health plans to administer health plan pharmacy benefits, and PBMs that practice spread pricing, charge plan sponsors (employers) more for prescription drugs than what’s actually paid to the pharmacy.

Spread pricing is largely unknown to employers and those who pay health bills. The practice is occasionally understood by some participants in the health system (health plans, brokers), but often not acted upon due to relationships. Spread pricing has a significant impact on health plan costs. For example, when a PBM pays a pharmacy a minor amount (say $6) for a prescription, but charges the employer and patient a much higher price (say $30). This higher amount is reflected in both the co-pay and the billing to the employer.

Clearly, this has an impact on the cost of a self-funded program, but it also impacts the premiums of fully insured programs through experience. Health plans providing fully insured coverage, where spread pricing is occurring, either do not know about spread pricing or know about it and share in the revenue. This revenue sharing often amounts to a per prescription fee paid to the health plan by the PBM. This arrangement occurs in both self-funded and fully insured situations. Regardless of the setting, spread pricing increases the cost of prescription claims above the actual cost paid to the pharmacy.

Health plans often use terms such as “transparency” or “pass-through” to explain pricing, but this does not address the actual issue of spread pricing. Elimination of spread pricing lowers claim costs for patients and plan sponsors, increases the affordability of medications, and is likely to improve overall health outcomes.

Until recently, spread pricing did not affect members of a health benefit plan. When a PBM reported a claim cost of $45, paid the pharmacy $12, and charged the member a $10 co-pay, the member was not affected by the higher claim cost. The plan, however, experienced a charge of $33 more than what was actually paid to the pharmacy. In this type of copayment  design, it’s the plan sponsor (employer) who bears the increased cost of spread pricing. 

Now, with increasing frequency, employers are establishing high deductible health plans (HDHP). An estimated 18 million Americans were covered under this type of plan in 2010*. A HDHP typically has an annual deductible of at least $1,200 for individual coverage and all expenses (except some preventive visits), including pharmacy costs, go toward the deductible. In the most common claim scenario, it’s the prescription drug cost that accumulates to satisfy the member’s deductible and out-of-pocket expenses. In some families, the prescription cost is the primary source of medical care cost, particularly in plans where maintenance check-ups and other wellness services have no co-pay or out-of-pocket exposure.

Spread pricing results in higher consumer costs. It is not unusual for generic prescription charges to be $30-$50 above the actual claim cost.** But more important, may be the affect on compliance and cost of care. While not being specifically studied, it’s reasonable to believe that compliance diminishes as the cost of prescriptions increase by 400% or more. The impact of multiple members of a family, on multiple medications, can be dramatic. The effect of high patient prescription costs on decreased adherence to therapy was the subject of a 2010 Wall Street Journal article.*** Spread pricing was not mentioned as a factor.

If higher medication costs lead to lower compliance, it’s likely to be more significant in patients with multiple or complex disease states. While the extent of lower compliance is variable, higher cost results in lower affordability and is likely to affect disease outcome. This is particularly true in situations where members are paying all of the drug cost, such as in a HDHP.

According to a recent Consumer Reports poll, 48% of adults have taken steps to save money due to the economy. Included among the actions taken were:

  • Putting off a doctor’s visit (21%)
  • Delaying a medical procedure (17%)
  • Taking risks to save on medications (28%), including;
    • Not filling a prescription (16%)
    • Taking an expired medication (13%)
    • Sharing a prescription with someone else (4%).

When one considers that a complex patient with hypertension, hyperlipidemia, and type-2 diabetes can be effectively treated with generic drugs cumulatively costing less than $300 per year, substantial compliance and successful treatment is likely. The likelihood of compliance decreases, however, when spread pricing drives the cost of that same therapy up to $2,000.

Finally, prescription cost increases due to spread pricing, places members and their families above the deductible ceiling quicker. Thus, the cost of therapy impacts the plan sponsor sooner, and negates the fiscal value of a HDHP. While this may not have a direct impact on care, it certainly increases net costs to plan sponsors, in spite of the establishment of a HDHP.

While spread pricing has been a common practice in the PBM marketplace for years, the impact on member costs and member quality of care is now greater. It’s advisable for all plan sponsors to assess the extent of spread pricing that is occurring in their pharmacy benefit and examine methods to eliminate it.

Footnotes

  • *American Association of Preferred Provider Organizations. APPO 2010 study of consumer-directed health plans.
  • **Based on competitive claim analysis where a transparent PBM has reported actual costs paid to pharmacies. There is no reason to believe that a larger PBM would be paying the pharmacy more than the smaller PBM for which the actual claim price is known.
  • *** http://online.wsj.com/article/SB10001424052748703927504575540510224649150.html

About the Authors

Dr. Killilea and Mr. Haas both work in the Portland, OR office of Wells Fargo Insurance Services USA, Inc.  Terrance Killilea, Pharm.D. is Vice President, Integrated Healthcare Metrics -Clinical and Fiscal Integration.  Scott Haas is Vice President, Integrated Healthcare Metrics.

Over-the-Counter versus Prescription Drugs

December 14, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Navitus Clinical Journal – December 2011

Hundreds of drugs are available over the counter, including, but not limited to, cough and cold medications, pain relievers (aspirin, ibuprofen) and heartburn drugs. Over-the-Counter (OTC) drugs are drugs that you can buy without a prescription. Many of these drugs have been available for a very long time and have long track records for safety. Others are newer and often started out as prescription drugs. Some drugs that have become available as OTC in the past few years include heartburn drugs – Zantac, Pepcid, Prilosec OTC – and the allergy drug Claritin.

Why do drugs become OTC?
Drug manufacturers have an incentive to make their product(s) available OTC, since it is easier for patients to purchase a drug over the counter rather than via a prescription from their doctors. Because of the availability of OTCs, switching a drug to OTC can increase the drug manufacturer’s sales.

Drug manufacturers may also want to have their product available OTC as part of a larger strategy to protect and increase their profits. This usually happens when a prescription drug’s patent is about to expire. For example, when Prilosec’s patent expired, the manufacturer petitioned the Food & Drug Administration (FDA) to make it available over the counter, while at the same time introducing a “new,” chemically similar prescription drug, Nexium.

Regulation and safety of OTCs
The FDA regulates OTC drugs, just as it regulates prescription drugs. The FDA decides whether to allow a drug to make the switch from prescription to OTC. To approve a drug as an over-the-counter drug, the FDA must find that:

  • Its benefits outweigh its risks. In other words, the improvements to the patient’s health from taking the drug are more valuable than any negative side effects.
  • Its potential for misuse and abuse is low. The drug should not be habit-forming and should not encourage people to overuse it.
  • Consumers can use the drug for self-diagnosed conditions. The drug is not intended for a condition that needs testing or a doctor’s diagnosis, such as high cholesterol. Instead, the drug treats a symptom that is obvious to the average consumer, such as headache or allergy.
  • The drug can be adequately labeled. The warnings and instructions for use are clear and easy to understand without any training.
  • The drug does not need a doctor’s supervision, and the drug is easy to use. For example, the drug does not need a doctor to monitor and change the dosage.

In general, the risks or side effects of OTCs are low, how to use them is clear, they treat conditions that patients can easily recognize, and they give consumers greater choices.

Are OTC’s less expensive than prescriptions?
It depends. OTCs may be covered by your plan sponsor. If that is the case, you may only need to pay a copay for these drugs. Depending on your plan sponsor’s plan design, the copay may be less expensive than the cost of the OTC. Alternatively, your plan sponsor may not cover the OTC you need, but it may cover a generic version of that drug. In this case, the generic version is likely less expensive than the OTC.

As dozens of blockbuster drugs begin to lose their patents in the next few years, we can expect to see more switches from prescription-only to OTC.

Lipitor Goes Generic, As Good as Crestor, But Pfizer Markets to Extend Brand Revenues

December 12, 2011 By: Nadia Category: Cholesterol, HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: USA Today, 11/15/2011

On November 30, 2011, the cholesterol medication Lipitor (atorvastatin) converted to generic status. For the first six months, two companies, Watson Pharmaceuticals, Inc. and Ranbaxy Laboratories, Ltd., will produce the generic. After May 2012, several generic manufacturers are expected to enter the market.

Pfizer Inc., the maker of Lipitor is marketing hard for people to keep buying its brand-name version for the next 6 months. Pfizer is offering

  • patients a discount card to get Lipitor for $4 a month, and
  • rebates to insurance companies that cover Lipitor for the next 6 months.

This action by Pfizer will result in the costs of Lipitor being below generic prices and Pfizer will get 70% of the proceeds from one of the two versions sold now.

USA Today reported, that large doses of Lipitor and Crestor did about equally well according to a study of 1,385 patients presented at the annual meeting of the American Heart Association in Orlando. Crestor, made by AstraZeneca, “will be the last major statin not on patent,” said Cam Patterson, chief of cardiology at the University of North Carolina-Chapel Hill, who was not involved in the study. “The market for Crestor will go close to zero.”

Study findings

At the end of the two-year study,

  • Two-thirds of patients had less plaque in their arteries.
  • Both statins shrunk the size of plaque in the coronary artery by about 1%.
  • Patients on Crestor had a low-density lipoprotein (LDL) level of 63 milligrams per deciliter, while those who took Lipitor had a level of 70.
  • Patients on Crestor had a high-density lipoprotein (HDL) level of 50 milligrams per deciliter, compared to 49 for those who took Lipitor.

Nehal Mehta, a cardiologist with the University of Pennsylvania’s School of Medicine, says there’s no way to know if such a small change actually matters, in terms of preventing heart attacks and saving lives. And relatively few patients would even benefit that much. Only about 20% of patients are taking such high doses — 40 milligrams daily of Crestor or 80 milligrams daily of Lipitor, says Mehta, who wasn’t involved in the study.

Such minor differences in cholesterol levels are unlikely to affect heart disease risk, Patterson says. “The bottom line is that there isn’t a difference” between drugs,” he says. “You should make your decision on other factors, like which one is least expensive.”

About Lipitor and Crestor

Cholesterol medications are the leading class of prescription drugs in the USA, with 255 million prescriptions a year. Lipitor — the country’s best-selling drug, with sales of $7.2 billion last year — will be available as a generic Dec. 1, at a fraction of its current cost. Patterson says there will be no reason for insurance plans to pay for Crestor — the eighth-leading drug in the USA, with $3.8 billion in annual sales. In fact, by next month, nearly all statins will be available generically. Generics now account for 78% of all retail prescriptions sold, according to IMS Health.

Tips for Traveling with Medications

December 06, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Eli Trathen 12.6.2011

Everyone looks forward to vacation, and a good deal of planning goes into most trips to make the experience as relaxing as possible. This planning may involve booking a hotel, purchasing traveler’s checks, and packing the sun block. However, one more concern that must be remembered affects millions of Americans. Namely, people need to be aware of how to travel with prescription medications, and what one should expect if the need for a prescription medication arises while away. When away from home for an extended time, it is advisable to think about your medications.

Before You Go
Prepare a list of all of your medications and a list of contact information for your doctor(s). Carry the name, location, and phone number of your pharmacy as well. If questions arise about your medications, or if you lose your prescription, you will have the needed information.

If you are flying, keep your medications in your carry-on luggage. That way, you will have access to them during your flight and will not lose them if your luggage is lost. Also, keeping your medications with you helps prevent exposure to extreme temperatures in the baggage compartment. Extreme temperatures can change the drug’s effectiveness.

If travelling with needles and syringes, carry information that proves the syringes were prescribed for a medical reason by your doctor. A copy of your prescription and a label attached to the product is sufficient proof. The American Diabetes Association recommends that people with diabetes be prepared to provide airport security with copies of prescriptions for diabetes medications and supplies, as well as complete contact information for your doctor. Make sure all prescription medications have the name of the drug, the name of your doctor, and your name on the label.

Airport security requires that medications are transported in their original, labeled containers. The labeled vial from the pharmacy that contains your pills meets this requirement. Check the Transportation Security Administration (TSA) website prior to travel for the most up-to-date information about travelling with medications. Airport security may ask you to prove that the name on your prescription bottle(s) matches your identification. According to the TSA:

  • Medications must be labeled, so they are identifiable.
  • Medications in daily dosage containers are allowed through the checkpoint once they have been screened.
  • Medication and related supplies are normally X-rayed. TSA allows you the option of requesting a visual inspection of your medication and supplies, which you must arrange before the screening process begins. The X-ray process has not been found to affect drug products.

Long Distance Travel
Consult with your doctor or pharmacist if traveling over many time zones to work out a plan to adjust the timing or dosage of your medications. He or she will also be able to determine whether a plan is necessary given the medications you are taking.

If you are visiting a foreign country, be wary of buying over-the-counter (OTC) medications. Many medicines that are available by prescription only in the United States are available OTC in other countries. Beware of these medications, as they may have been manufactured in facilities that do not meet Food and Drug Administration code. You may receive a medication with less effectiveness; or, even worse, you may receive the wrong drug. Taking these medications could put you at risk.

Extra Medications
Take along more medication than the number of days of your trip. A good rule of thumb is to have at least an additional week of medication on-hand. Unexpected delays can happen, and it will be easier for you to have one less thing to worry about should this happen. It is best to have all of your medications refilled before you travel. If it is too early to get a refill before you leave, but you will need more medication while you are gone, ask your doctor and pharmacist if they will refill early as a special circumstance. If you are not leaving the country, remember that large, national pharmacy chains allow you to refill your prescription wherever you happen to travel nationwide.

While You’re There
If you are visiting a hot, humid climate, try to keep your medications in a cool, dry place and out of direct sunlight. While many people assume bathrooms are a good place to store medications, this is not necessarily true. The heat and humidity in bathrooms can cause a drug to lose effectiveness. Be aware of medication storage requirements for the medications you take on your trip. All medications are labeled with an ideal range of temperatures for storage. Some medications require refrigeration when stored. This may be done by packing the medication in a small cooler with ice and a thermometer to ensure the temperature is kept at an appropriate level. Likewise, you may ask your hotel if a small refrigerator is available to help with your drug storage. Check with your doctor or pharmacist about the best method of travelling with these more sensitive drugs.

Another climate consideration is increased sensitivity to sunlight. Some medications can cause a rare side effect, called photosensitivity, which could cause inflammation of the skin (similar to sunburn). Products like ciprofloxacin (for infections), Bactrim and doxycycline (antibiotics), and diclofenac (for pain) have this potential. Ask your pharmacist if any of the medications you are or may take on vacation could cause photosensitivity. Try to avoid excessive sun exposure, and cover up with SPF 30 or greater sunblock.

Hopefully, using the above tips for traveling with medications will allow you the relaxation you deserve on your next vacation.

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