News & Events

The entire PHSI team would like to congratulate Bonnie Mattiko on her retirement, effective December 29, 2016.  Bonnie provided administrative support to PHSI consultants for ten years.  Many of you know Bonnie from her emails, telephone calls, and persistent follow-up for scheduling meetings for PHSI consultants at industry conferences.  As Bonnie begins her retirement, she will continue to reside in Pittsburgh, but expand her traveling to visit her sons and granddaughters.  We all wish Bonnie well in her retirement.  Terry Johnston will now be handling PHSI meeting scheduling.

Congratulations, Bonnie!

2017 Winter Newsletter- Biosimilar Interchangeability

2017 Winter Newsletter- 2016 New Drug Approvals

PHSI Vice President Don Dietz presented at the American Society for Automation in Pharmacy (ASAP) 2017 Annual Conference.  Don discussed direct and indirect remuneration (DIR) fees, including the challenges facing pharmacy in calculating net sales and profitability due to DIR and related fees. He also reviewed improved timing and transparency as proposed solutions to improve the current situation. Click here to view Don’s presentation slides. You can access all of the 2017 ASAP Annual Conference presentations at http://www.asapnet.org.

Starting in 2017, there will be 41 million beneficiaries enrolled in Medicare Part D plans.  About 60% of these beneficiaries are enrolled in stand-alone prescription drug plans (PDPs), while the remaining 40% are in Medicare Advantage plans (MA-PDs).  Although the total number of Part D beneficiaries has not substantially changed since 2016, the premiums and deductibles imposed on these beneficiaries is increasing, and plan choices are decreasing.

In the last ten years, PDP premiums have increased over 60%.  The weighted average monthly premiums for PDP plan members are expected to rise by 9% from 2016 to 2017.  This will make the average monthly PDP premium $42.17 (excluding low-income subsidy adjustments), with wide variations from around $17 per month to over $70 per month, based on the plan.  One-third of PDP enrollees do not pay any premiums because of low-income subsidy (LIS) benefits.  The Kaiser Family Foundation projects the 2017 monthly premium distribution to be as follows.

In addition to premium increases, deductibles are expected to rise by 7% in 2017.  Meanwhile, the monthly Social Security benefits will see a 0.3% cost-of-living adjustment.  For senior citizens on a fixed income, these large Medicare premium and deductible increases could severely strain finances for many.

Shifts in cost-sharing for out-of-pocket expenses are also taking place.  Almost all PDPs have five cost-sharing tiers, with two generic tiers, two brand tiers, and one specialty tier.  Although percentage-based coinsurances have been popular for the specialty tier for many years, many non-preferred brand tiers are now implementing coinsurances vs. flat-dollar copays.  In 2017, the threshold for a specialty drug will also increase to $670 for a one-month drug supply.  This limit designates many injectable, high-touch products as specialty drugs.  However, several oral drugs often thought of as retail products may hit this threshold and fall into the specialty tier, including Absorica, Fycompa, Januvia, Latuda, Nucynta ER, Opana ER, and Saphris.  Manufacturers setting or increasing drug pricing should be conscious of this specialty threshold, as patient pay and pharmacy reimbursement amounts can be greatly impacted.

To promote use of lower cost generics, approximately one-third of PDPs have implemented a $0 copay preferred generic tier.  Compared to the models of the past decade, this formulary change shifts more of the costs for non-preferred brands to the patients.  It incentivize them to curtail the use of high-cost medications, when lower cost, equally efficacious options are available.

The average Medicare Part D enrollee had a choice of 22 PDPs in 2017.  Based on the state in which they reside, this number varied from 18 to 24.  Although this is still an acceptable number of choices, it is the lowest number of options since Part D was implemented in 2006.  This decrease is likely caused by several factors, including industry consolidation.

As 2017 approaches, PHSI recommends that pharmacists prepare to discuss increasing costs with patients who may be surprised when their prescription costs change.  Manufacturers should monitor their products’ tier placement and evaluate if any significant copay/coinsurance changes will affect their business.  2017 promises to be an interesting year for healthcare, so stay tuned for more updates in our coming newsletters.

2016 Fall Newsletter – Drug Exclusion Lists 2017 Update Article

PBMs and health plans have finalized their 2017 drug formularies, and payers have announced the products on this year’s highly anticipated formulary exclusion lists.  While many of the drugs remain the same as the previous year, the increased presence of biosimilars and generic specialty drugs has caused some interesting changes for the exclusion lists.  The hyperinflation of drug prices has also prompted payers to evaluate the medical necessity of these drugs.

For CVS, a unique hyperinflation drug category now exists on the exclusion list.  CVS has stated that they will evaluate drug price increases on a quarterly basis and potentially remove these items from the formulary when clinically appropriate alternatives are available.  There are ten items identified as “hyperinflation drugs” on CVS’s 2017 formulary exclusion list, including DexPak and Zegerid.  Valeant, who grabbed headlines earlier this year with many of these drug price hikes, markets both of these products.  Interestingly, Express Scripts (ESI) includes none of these ten hyperinflation items on their 2017 exclusion list.

One of the most meaningful changes to the CVS Health formulary exclusion list is the preference for biosimilars and follow-on biologics over their comparator brands.  The exclusion of Gleevec, Lantus, and Neupogen in favor of generic imatinib, Basaglar, and Zarxio sends a strong statement.  CVS is looking for significant savings by removing these high cost biologic or specialty products in favor of covering newer, generic alternatives.  CVS is also excluding brands Crestor and Nexium now that generic version of the drugs (rosuvastatin and esomeprazole) are available.  These changes could help to control rising premiums and costs if a portion of the realized savings are passed on to the patients.

For Express Scripts, one of the most interesting exclusions is alogliptin and alogliptin/metformin, the generic versions of Nesina and Kazano.  Earlier this year, Takeda entered into an agreement with Perrigo to launch authorized generic versions of their alogliptin and alogliptin combination products, Nesina, Oseni, and Kazano.  Takeda hoped that by launching a generic in an all-brand category, they could capture preferred formulary status.  However, likely due to launch prices, it is clear that this did not happen, as both the brands (Nesina and Kazano) and their respective AGs (alogliptin and alogliptin/metformin) are now listed on Express Scripts’ 2017 exclusion list.  Interestingly, neither Oseni nor its alogliptin/pioglitazone AG are included on the exclusion list, but this could change as Express Scripts evaluates products in the future.

The chart below lists new products on the CVS Health and Express Scripts 2017 drug exclusion lists that were not present on the 2016 lists.

2016 Fall Newsletter – 2017 Medicare Part D Prescription Drug Plan Trends Article

PHSI Consultant Ann Johnson contributed to the November/December 2016 edition of ComputerTalk for the Pharmacist.  In her Viewpoints article, Ann reviews recent market and regulatory changes taking place with controlled substances. The article focuses on new CDC opioid guidelines, increased availability and utilization of prescription drug monitoring programs (PDMPs), and electronic ordering of CIIs using the DEA’s Controlled Substance Ordering System (CSOS). Click here to read the article entitled “The Changing Dynamics of Opioid Prescriptions.”

PHSI President Tim Kosty and Vice President Don Dietz discuss the two broad types of pay-for-performance networks in the September/October 2016 edition of ComputerTalk for the Pharmacist.  Their Viewpoints article reviews the types of performance networks and the different strategies employed to drive measurements designed to improve patient outcomes. Click here to read the article “Performance Networks.”

PHSI President Tim Kosty discusses the final AMP rule in the July/August 2016 edition of ComputerTalk for the Pharmacist.  In his Viewpoints article, Tim reviews the regulatory changes within the final AMP rule and its impact on the various market segments. Click here to read the article “Final AMP Rule: Industry Implications.”

FOR IMMEDIATE RELEASE

PHSI Celebrates 20 Year Anniversary

Pharmacist-led consulting firm reaches milestone during NACDS TSE

Pittsburgh, PA, August 4, 2016 – Pharmacy Healthcare Solutions, Inc. (PHSI), a pharmacist-led business consulting firm, will celebrate their 20th anniversary on August 7th, during the NACDS TSE Conference in Boston. Founded in 1996 by President Tim Kosty and Vice President Don Dietz, PHSI has assisted retail pharmacies, pharmaceutical manufacturers, payers, and software companies by applying its extensive pharmacy and pharmaceutical business knowledge to provide solutions on strategic business and marketing issues.

PHSI’s team of seven pharmacists and a comparable sized support staff leverage emerging trends to help clients increase sales, reduce costs, or improve operating efficiencies within their organizations. PHSI’s custom solutions have helped over 300 clients in the last two decades.

“PHSI has been fortunate to serve a diverse client base over the years as the dynamic pharmacy market has required innovative solutions to their challenging business issues. The NACDS TSE Conference provides an outstanding forum to meet with industry leaders to discuss market trends and issues,” according to Tim Kosty, PHSI President.

Not many small businesses achieve a 20-year anniversary milestone. PHSI attributes their success to their dedicated team. “The commitment to excellence by PHSI employees has led to positive outcomes for our clients”, stated Don Dietz, PHSI Vice President. “We are very proud of our 20 year anniversary, as only 10-20% of all businesses reach this milestone. We invite our industry colleagues to visit us at Booth #1758 during the NACDS TSE Conference in Boston”.

The 2016 NACDS Total Store Expo is the industry’s largest gathering of its most influential leaders. It is a combination of both strategic and tactical business meetings between existing and new trading partners and is attended by industry decision makers. A tradeshow and senior-level conference blended into a powerful appointment-based show, retailers and suppliers will find innovative and cutting-edge programming designed to promote strategic and tactical collaboration across departments within their companies. It provides companies with a unique opportunity to gain new insights into today’s evolving marketplace set course for the future.

About Pharmacy Healthcare Solutions, Inc.
Pharmacy Healthcare Solutions, Inc. is a Pittsburgh, PA based consulting company. PHSI consults with pharmaceutical manufacturers, PBMs, retail pharmacy chains, and software companies on strategic business and marketing issues. Consulting projects across these market segments provide PHSI with the latest information on emerging trends, as well as new products and services. Our consultants have extensive retail, mail service, and managed care experience to create actionable recommendations for our clients’ challenging business issues. For additional information, please visit www.phsirx.com.

The recent push to focus on value-based healthcare through accountable care organizations (ACOs) is changing incentives for physician practices and health care systems. Incentivized care is also now moving into the pharmacy world.  With more focus than ever on managing outcomes, improving adherence, and preventing adverse reactions, pharmacies are becoming contractually responsible for whether or not patients meet their goals.

Star Ratings have measured patient outcomes in Medicare Part D for almost ten years. There are five active pharmacy-based performance measurements from the Pharmacy Quality Alliance (PQA).  These measurements include:

1. Adherence for oral diabetes medications
2. Adherence for cholesterol medications (statins)
3. Adherence for blood pressure medications (renin-angiotensin system antagonists)
4. High-risk medication use in older adults
5. Appropriate treatment of blood pressure in patient with diabetes

Although pharmacists have been dealing with adherence and safety issues for many years, pay-for-performance models put new focus on these issues by providing direct financial incentives or disincentives.  Medicare plans have been using adherence ratings to help determine eligibility for preferred pharmacy networks, and the commercial world is now looking to adopt these metrics as well.  Using Pharmacy Quality Solutions’ (PQS’s) Electronic Quality Improvement Platform for Plans and Pharmacies (EQuIPP) system, pharmacies can track their performance, and health plans can provide bonuses to the top pharmacies.

CVS/Caremark Silver Scripts plans implemented Pay-for Performance in 2014 when they provided bonus checks to pharmacies who out-performed their competition.  The pharmacies were evaluated using four of the star measures, and the plan paid bonuses based on the pharmacies’ scores and number of patients served.

Another bonus-based plan, the Inland Empire Health Plan (IEHP) instituted one of first large-scale pay-for-performance pharmacy programs.  Working with PQS, the California health plan has enacted eight measures that track adherence, asthma control, generic dispensing rate, and use of high-risk medications in the elderly.  In this rewards-based system, pharmacies receive points when they meet or exceed the benchmarks, and the plan’s payout to the pharmacy is based on the points received.  Pharmacies who do not meet the benchmarks are not penalized, but they do not receive additional rewards payments.  This well-laid out plan may serve as a model for other pay-for-performance payers, since the benchmarks are easy to follow, and the EQuIPP system makes it simple for pharmacists to track their progress on an ongoing basis.  Click here to read more about the IEHP’s 2015-2016 pay-for-performance plan.

Recently, Humana announced an amendment to their Pharmacy Provider Agreement covering the 2017 part D plan year.  Humana plans to withhold $5 from each eligible claim and then provide pharmacies with the opportunity to earn Pharmacy Performance Payments based on achieving the three adherence measurements noted in the above list (adherence to diabetes, cholesterol, and hypertension medications).  Pharmacies not wishing to participate will be considered out-of-network.  Humana notes that the “percentile performance” will be evaluated for each pharmacy based on the number of members they service in each measure.  Unlike the Inland Empire Health Plan described above, Humana’s plan financially penalizes pharmacies until they show they can achieve adherence results, which may be outside of their control.  Humana will payback, or potentially reward, the top-performing pharmacies. Pharmacies need to be in the top 20 percentile to earn an incentive payment.  Pharmacies below 50% will be penalized, as they will not receive any of the amount withheld.  Although PHSI is not against pay-for-performance pharmacy plans, PHSI fears that redistribution vs. reward pay-for-performance plans may disadvantage pharmacies serving at-risk patients.

It is important that pharmacies are now being viewed as more valuable team members in helping to ensure medication adherence.  However, PHSI feels that it is important that adherence be viewed from a shared stakeholder perspective.  No one healthcare segment is solely responsible.  For example, although a pharmacy may wish to keep a patient compliant on their medication, without a refill authorization from a physician, this may not be possible.  Physicians and pharmacists must work together to truly improve these metrics, and health plans need to consider this collaboration when structuring their rewards programs.

As more pay-for-performance models emerge, pharmacies must decide whether to participate and if so, how to handle these patients.  Pharmacies may wish to flag those patients affect by adherence measures to increase their standards of care for that population.  While it is doubtful that care would fall for patients not enrolled in one of these networks, if the incentives to perform well in a pay-for-performance network are high enough, this could elevate the level of care for targeted patients, creating an unintended consequence of two levels of patient care.  As more rewards-based plans and redistribution models emerge, expect other health plans to test new incentive strategies in the near future.

14,267- This was the number of pharmacy degrees awarded last year.  As new pharmacy schools open and graduate more pharmacists, the job market is shrinking.  The Pharmacy Workforce Center (PWC) monitors pharmacists demand through use of the Aggregate Demand Index (ADI), where a value of 1 indicates high surplus, and 5 indicates a high demand.  In January 2016, the ADI was 3.05, which means that pharmacist demand and supply are equal.  The ADI is pharmacy-specific and has been steadily declining over the last ten years, as shown in the chart below.  When the ADI falls below 3.0, pharmacist supply will outpace demand.  Based on this trend, what does the future hold for pharmacists?

Pharmacists have known for years that the days of sign-on bonuses and company cars are over, but it may now be more difficult for new graduates to simply find a job.  However, the situation is not as dire as many have painted it, and a recent 2013 study still found that over 80% of students had a job or post-graduate program (residency, fellowship, etc.) lined up prior to graduating.  One effect from the increase in pharmacy graduates, for better or worse, is the proliferation and increased popularity of residencies and fellowships.  Whereas residencies were traditionally only geared towards those pursuing clinical pharmacy positions, residencies have now become a viable alternative plan for some students who are not otherwise able to find employment to augment their skills.

What is concerning in the last decade is the number of new pharmacy schools that have opened, which have more than made up for the pharmacist shortage.  The total colleges offering pharmacy programs is now over 130, with 16 new pharmacy schools opening in the last five years alone.  With six years of high tuition, opening a pharmacy school is lucrative for the school when all openings are filled.  However, few of these new schools have any regard for the effects their actions have on the profession.  In addition to difficulty finding employment in many geographic areas, the increased number of pharmacy schools is also putting a strain on pharmacies practice locations that act as rotation sites.  Geographic locations with multiple pharmacy schools may not have enough rotation sites to support the student population.

Absent moving to the south or western regions of the country where pharmacy demand remains high, pharmacists can seek additional certifications to improve their skills and make themselves more marketable.  While gaining provider status may help alleviate some of the job-shortage problems because of the potential for clinical service reimbursement, without sufficient payment, utilization of pharmacist-provided services will not significantly increase pharmacist demand.  As the baby boomer population ages, there should be a greater need for pharmacists providing clinical services, leading to a greater demand for pharmacists.  When the clinical services prove cost effective, the payer community will embrace them.  Cost effectiveness studies are underway, and initial results are promising.  In the meantime, pharmacists can only better themselves through certifications, uncovering new career opportunities, and advocating for the profession in government, at universities, and in our communities.