Update on Biosimilar Reimbursement

Biosimilar naming and biosimilar product reimbursement have been key areas for debate since the FDA announced the 351(k) approval pathway.  In November, Centers for Medicare and Medicaid Services (CMS) changed the reimbursement policy for biosimilars, forcing the industry to review the potential impact on marketing and coverage decisions.

Historically, CMS created a single Healthcare Common Procedure Coding System (HCPCS) code, i.e. J-code, and reimbursement rate (Average Sales Price (ASP)) for the innovator and biosimilar products. This strategy provided an incentive for physicians to use lower cost biosimilars, because their reimbursement margin would be higher as compared to the innovator product.  The specific product dispensed was identified by a HCPCS code modifiers, which are shown in the chart below.

Biosimilar HCPCS

Starting January 1, CMS will issue a unique HCPCS code for each biosimilar product.  Physicians will now be reimbursed different amounts, based on which manufacturer’s biosimilar product is selected.  This policy changes physician incentives to prescribe biosimilars and may dampen competition.  Since the innovator will have a higher ASP, the physician will generate additional revenues with higher priced products, due to the standard mark-up factor (ASP + 6%).   Although the HCPCS codes are only used for Medicare Part B reimbursement, it will be interesting to see what impact this change has on commercial reimbursement.  We will watch to see what other unintended consequences arise due to this new CMS policy and report them in a future blog post.


Published December 2017


Ohio’s Prescription Drug Monitoring Program Update

Effective November 20th, 2017, the Ohio Automated Rx Reporting System (OARRS) was updated to enhance navigation and add a tool called NarxCare.  NarxCare will provide 3-digit risk scores for prescribing of narcotics, sedatives, and stimulants in addition to red flags, a prescription graph, and access to patient resources. This tool was developed by the Ohio Board of Pharmacy in partnership with Appriss Health to assist with clinical decision making and promote patient safety.

Feedback from OARRS users identified integration as a top priority to increase utilization.  These updates come after a successful pilot program with Kroger pharmacies. After OARRS data was integrated into pharmacy workflow, pharmacist reviews of OARRS increased from 10% to 50% of all controlled prescriptions. The integration increased utilization of OARRS, gained positive feedback from pharmacists, and reduced controlled substance dispensing.

The Ohio Board of Pharmacy is working with electronic health record and pharmacy systems to integrate NarxCare and OARRS data into clinical workflow increasing efficiency for prescribers and pharmacists. Access to both programs is free.  With these updates, Ohio is one of the first states to integrate prescription drug monitoring data into workflow and is the first to offer a tool like NarxCare statewide.

PHSI supports efforts like OARRS to integrate PDMP data into pharmacy and prescriber workflows. We believe these efforts will increase utilization of PDMPs and prove valuable in managing the current opioid crisis.


Published December 2017

Telepharmacy: Replacing Pharmacists or Extending Reach?

In early November, Hy-Vee, a large Midwestern supermarket pharmacy chain, announced their purchase of two existing telepharmacies in Victor and West Liberty, Iowa. Both rural locations will continue to operate as telepharmacies under the Hy-Vee banner.

As small rural pharmacies face low prescription volumes and look for ways to decrease operating costs, telepharmacy may provide a solution. Currently, twenty-three states permit telepharmacy, six are conducting pilot programs and five more are allowing submissions to start pilot programs. In Iowa, telepharmacy pilot programs began in 2012 with the pharmacy in Victor and legislation allowing telepharmacy was signed in April of 2016.  These telepharmacies must register with the board of pharmacy through a limited use license, be located a maximum of 50 miles from their managing pharmacy, and a minimum of 10 miles from all existing pharmacies. They are permitted to sell over-the-counter products (OTC) and dispense controlled substances. Activities such as OTC sales of pseudoephedrine, OTC product counseling, tech-check-tech, and compounding are not permitted unless a pharmacist is physically present.

Data from the pilot program in Victor and West Liberty showed an average of 50-60 prescriptions per day dispensed from each store. For residents in these small rural towns with other pharmacies twenty minutes or more away, telepharmacy provides pharmacy access and may mean the difference between a patient picking up a refill on time or choosing to go without medication. Supporters say these telepharmacies do not replace retail pharmacies, but rather expand access to areas where volume is not sufficient to sustain a profitable retail pharmacy.

While increasing access and allowing small pharmacies to stay in business are two clear benefits, the risks to patient safety and the profession of pharmacy cannot be ignored. The North Dakota Telepharmacy Project found significantly more medication errors in telepharmacies compared to traditional retail pharmacies.1 Without pharmacists present to monitor operations, rates of medication errors should be closely monitored. Services such as immunizations cannot be offered, and patients must use a camera to communicate with a pharmacist leading some to argue this is a step backwards for the profession of pharmacy, limiting the scope of practice and placing a barrier between patients and pharmacist.

Do you believe telepharmacy is a positive health care service for small rural communities?   Would you be comfortable obtaining your prescription needs without having face-to-face access to a pharmacist?


  1. Friesner DL et al. Do remote community telepharmacies have higher medication error rates that traditional community pharmacies? Evidence from the North Dakota Telepharmacy Project. J Am Pharm Assoc. 2011;51:580-590.


Published November 2017

The End of Generic Deflation

Most people involved in the purchasing and reimbursement of multisource prescription drugs are aware of the deflation of generic drug prices in the U.S.  Factors influencing the deflation include increasing number of generic suppliers and the FDA approving more ANDAs.  Furthermore, the wholesalers and pharmacies have combined their purchasing power and exerted additional pressure on the generic manufacturers to reduce prices.

Why is there constant market pressure leading to generic drug price deflation?  Pharmacies must combat ongoing reduced reimbursement rates from third party payers.  Since pharmacies do not have the negotiating leverage to manage reimbursement rates, they must focus on lowering their cost of goods.  Payers are under continual pressure to win new business and retain current clients by controlling the overall drug spend.  Payers have become more aggressive in lowering generic reimbursement through aggressive MAC pricing.

So, how does the self-reinforcing cycle of generic deflation end?  Which segment will stop this cycle?  At some point, generic manufacturers will determine that certain drugs are no longer profitable and will either stop lowering prices or stop selling the product.  When the number of suppliers is reduced, the inflationary cycle will start again and may lead to rapid price increases as the remaining suppliers take advantage of their new found pricing power.  How and when do you think the generic deflation cycle will end?


Published November 2017

Importing Prescription Drugs

A recent PHSI website poll indicates that 57% of respondents were opposed to allowing US residents to import prescription drugs. Factors that may influence one’s stance on prescription drug importation include drug prices, safety, and regulatory differences. Healthcare providers may be most concerned with the safety of imported prescription drugs. Wholesalers are likely concerned with challenges created by regulation differences. Patients and retail pharmacists may see this as an opportunity for cost savings.

As prescription drug prices become a larger concern for both patients and providers, importation of prescriptions drugs is proposed as part of the solution. Members of Congress have proposed a bill (Affordable and Safe Prescription Drug Importation Act (S. 469/HR 1245)) that would allow importation of prescription drugs from Canada. Introduced in both the Senate and House in February, this bill would allow importation of drugs by wholesale distributors, pharmacies, and individuals. The proposed bill excludes controlled substances, anesthetic drugs inhaled during surgery, and compounded drugs.

According to a September 29, 2016 poll by the Kaiser Family Foundation, 71% of Americans favor allowing prescription drugs to be imported from Canada. Based on recent headlines on brand drug price increases, this support is largely driven by high drug prices. Supporters estimate prices to be 35 to 55% lower when purchasing from Canada. The Harvard Business Review explains prices are lower in Canada due to their single payer health system and concludes that drug importation will not lower drug prices in the United States.

To create safeguards and ensure safety, the bill provides clear definitions of which drugs can be imported, FDA certification of foreign sellers, and supply chain security requirements. Opponents argue imported drugs do not have sufficient FDA oversight to be deemed safe. The FDA describes importation as, “a complex and risky approach- one that evidence shows will not achieve the aim, and is likely to harm patients and consumers.” In addition, the Canadian government does not intend to be responsible for safety and quality of prescription drug exported to the United States.

Both the National Association of Chain Drug Stores (NACDS) and the American Pharmacists Association (APhA) oppose the bill stating, “importation undermines the integrity and security of the US drug supply by posing an unreasonable risk to patient health and endangering public safety.” Furthermore, the bill undermines the Drug Supply Chain Security Act (DSCSA) of 2013 which requires track and trace of prescription drugs, increases the risk of counterfeit drugs, and detracts from value based care. These organizations support improved patient access to safe and affordable prescription medications, but believe drug importation is not the solution.  What are your thoughts on the potential benefits and challenges with drug importation?


Published November 2017

Simvastatin in Multiple Sclerosis

Multiple sclerosis is a debilitating, immune-mediated disease of the central nervous system.  According to the Multiple Sclerosis Foundation, there are an estimated 2.5 million people with MS worldwide.  While novel therapies exist that modify the disease by preventing progression and relapse, these treatments are expensive and come with a host of adverse effects.  Moreover, there are limited treatment options that are FDA-approved for some of the progressive forms of MS.

Researchers are examining existing small-molecule therapies that are not currently FDA-approved for MS to see if they can be repurposed to treat this disease.  For example, simvastatin is an inexpensive cholesterol lowering drug that is being investigated in patients with secondary progressive MS (SPMS).  Preliminary studies have shown that taking high doses of simvastatin correlated with a significant reduction in the rate of brain atrophy over 2 years.  This led to improved disability and quality of life scores.  The phase III clinical trial is underway and expected to last six years, expected to end in 2023.  There are several other generic agents that are being tested in multiple sclerosis in addition to simvastatin including miconazole, minocycline and others. What do you think about repurposing a genericized therapy in a complicated disease state like MS?


Published November 2017

UPDATE: Track-and-Trace Enforcement Delayed

The FDA is delaying the enforcement of the November 27, 2017 Drug Supply Chain Security Act (DSCSA) deadline for manufacturers to place unique product identifiers on their packages.  The FDA draft guidance from June 30, 2017 provides some relief for those manufacturers struggling to prepare for the upcoming deadline.

There is no change to the requirement, but enforcement is being delayed.  Manufacturers that do not include the unique product identifiers on their packages starting November 27, 2017 are not in compliance.  However, the FDA does not intend to take action against these manufacturers before November 26, 2018 (a one year delay).  This delay does not impact any other aspect of the DSCSA implementation.

More information about Track-and-Trace can be found by the following this link:


Published October 2017

CVS’ ScriptPath Prescription Schedule: Simplifying Medication Labeling

CVS Pharmacy has launched a new service called ScriptPath to simplify how patients take their medicine.  ScriptPath Prescription Schedule is phase one of a larger strategy for CVS to improve the medication adherence in its patients.  Any patient who currently takes 5 or more medications a day qualifies to have a schedule printed in a format where each medication is categorized with instructions on when to take it and how much to take in a large, easy to read, color-coded format.  The idea is to make taking one’s medications appropriately as simple as possible.  Phase Two of this plan will launch in January 2018, which will replace all prescription labels with ones possessing a similar appearance to the ScriptPath sheet.  Ideally, these labels will allow a patient to line up their medications in a row and immediately know which drugs to take at what time and dose.

CVS ScriptPath

Photo Source: CVS Health website.

The ScriptPath Prescription Schedule runs on a proprietary software algorithm that analyzes each prescription drug a patient takes then determines when is the best time for the patient to take the drug, depending on dosing, indication, interactions, side effects, etc.  The recommendations are based on clinical data to ensure the medications are taken at the most effective times.  This schedule determination is an automatic process that is triggered whenever a prescription is filled.  Currently, the dosing times are morning, midday, evening, and bedtime.  Medications are also divided into “routine”, “as needed”, and “other” to further highlight when medications should be taken.

This program will help patients manage a multidrug therapy regiment.  Knowing when a patient should take a once, twice, or three times daily dose, medication adherence should increase, ultimately leading to better patient outcomes.  Using icons and numbers, rather than words or abbreviations, allows language or health literacy barriers to be reduced.  The ScriptPath schedule and labels will act to reinforce the appropriate times for a patient to take their medications.  The CVS software system will require frequent updates, as new therapeutic agents and clinical research or guidelines are continuously being released.  CVS has made a considerable commitment in both clinical and IT resources launch and help maintain the ScriptPath Prescription Schedule.

CVS spent a considerable amount of time in developing a product that was not only functional, but also featured a design that was easy to use and understand.  It is PHSI’s belief that ScriptPath is one of many drug packaging and labeling options that will help improve medication use and adherence.  ScriptPath has the potential to improve medication adherence and health outcomes without increasing the workload of the pharmacist.


Published October 2017

Health System Outpatient Pharmacy – Consolidation

ProMedica is a non-profit healthcare system with locations in northwest Ohio and southeast Michigan. As part of its service offerings, ProMedica operated retail pharmacies under the Pharmacy Counter banner in and around Toledo, OH. In September 2017, CVS announced it was acquiring six ProMedica pharmacy locations. They will close five pharmacies and transfer the prescription files to nearby CVS Pharmacy locations. The sixth location will reopen as a CVS Pharmacy in the near future.

Healthcare systems see the value in offering comprehensive services, including outpatient prescriptions to their patients. With declining reimbursement rates, the number of prescriptions needed to profitably operate a pharmacy continues to increase. In situations with a limited patient population, this leads to challenging questions. Do we invest in technology and automation to lower the cost of dispensing a prescription? Are there better opportunities for our healthcare system to spend our limited time and resources?

If your healthcare system operates retail pharmacies and is unsure about sustained profitability and growth in the future, contact Pharmacy Healthcare Solutions, Inc (PHSI). We have helped health care systems conduct a strategic assessment of their retail pharmacy program to answer these critical questions to determine a viable path forward. This assessment evaluates your current situation, project future prescription volume based on improved marketing, and evaluate improvements from investment in automation and technology. PHSI will create an implementation plan and will assist management, when requested, with executing the plan. If the numbers are not promising to create growth and profitability, PHSI can assist in preparing your pharmacy for sale and evaluating offers from potential buyers for your pharmacy locations.


Published October 2017

Electronic Prescriptions and Copay Savings Offers

In the quest to lower patient out-of-pocket costs, some pharmaceutical manufacturers have sponsored targeted copay savings messages to pharmacies during the e-prescribing process. This approach seems like a reasonable alternative to physical copay cards.  One reason is that the physical cards are not always used.  Another reason is that when the card is presented to the pharmacy, it is typically done so after the pharmacy has processed the electronic prescription and adjudicated the claim with commercial insurers.  This situation requires pharmacy staff to rework the prescription to add the copay savings information, which increases the wait time for patients. Therefore, messaging copay savings via the e-prescribing process would be a time saver in the pharmacy workflow process.

EMR system vendors are providing the copay savings information in the “notes” field of the electronic prescription, which was never the intended purpose of this free text area.  The notes field intended use is for the prescriber to communicate information to the pharmacy about the patient and the prescribed medication.  National Council for Prescription Drug Programs (NCPDP) created the Coordination of Benefit (COB) segment in the SCRIPT e-prescribing Standard for communications of benefits coverage information that, when the proper information is entered correctly (BIN, PCN, and Cardholder ID), can be used to communicate to the pharmacy the information necessary to process copay savings programs. EMR providers have not widely supported these fields.  One problem is that the COB segment does not include a method to share with the pharmacy information regarding the details (i.e.: financial benefit to patient) for a manufacturer’s savings program. As a result, EMR providers are utilizing the notes field with copay savings offers from brand manufacturers and discount card providers when brand and generic pharmaceuticals are not sponsored by a brand pharmaceutical manufacturer. Therefore, many electronic prescriptions include some type of discount or copay savings offer depending on the EMR provider.

In August 2017, PHSI used our website “Question of the Month”  to ask: “What percentage of the time do pharmacists and techs react to saving offers when seen with e-prescriptions in the notes field?” Survey results are as follows:

Reaction Rate

Percentage of Respondents











These results confirm anecdotal insights PHSI has received from both pharmacy and pharmaceutical manufacturer clients. The frequency of these offers are creating “alert fatigue” for pharmacy staff overlooking or ignoring information in the notes field, which results in poor uptake for sponsored brand copay savings offers.  For now, EMR system providers are receiving a revenue stream for these virtual messages and recognize proper utilization of the COB fields in NCPDP SCRIPT standard is going to require programming and resources to update. Once the programming changes are made, extensive training will be required for the prescriber and pharmacy to manage this process correctly. PHSI believes there is an opportunity to improve the process for EMR systems to communicate relevant information to pharmacies.


Published September 2017