PHSL Newsletters

New FDA Guidance Will Impact Supply Shortages

As hospitals continue to battle and get the COVID-19 pandemic under control, drug shortages have been a consistent problem.  The FDA has seen an increase in the number of drugs that are failing to meet the demand to treat these patients.  FDA-approved products are being used to treat both intubated and non-intubated patients.  Hospitals have been struggling to get these medications, and the need for these FDA-approved products is now becoming more urgent.  The FDA normally mitigates drug shortage issues by looking into the global pharmaceutical supply chain.  Pharmaceutical manufacturers are stepping up by reviewing their own supply chains, evaluating how they can increase capacity or otherwise help fill gaps in the market, all while working on potential vaccines and treatments for COVID-19.

However, due to the severity and unknown stress that the pandemic will cause on the pharmaceutical supply chain, the FDA is finding other ways to solve these drug shortages.  The FDA has decided to release temporary guidelines for both FDA registered outsourcing facilities and compounding pharmacies.  The FDA hopes that increased flexibility on the rulings to produce these FDA-approved products will help to alleviate supply issues.  This relaxation will allow for outsourcing facilities and compounding pharmacies to produce drug products for the hospitals in dire need of drug products to treat COVID-19 patients.

FDA guidelines have been released for FDA-registered outsourcing facilities and compounding pharmacies.  The FDA is relaxing the rules, and both parties can essentially compound exact or nearly exact copies of FDA-approved drug products used to treat COVID-19 patients. The copy can only contain one of the active ingredients and must be from the list of drug products currently in shortage used to treat COVID-19 patients. There are 15 drug products currently listed in shortage, as shown below.

Drug Products in Shortage

The FDA requires that the hospitals have documentation proving that the drug products have been difficult to obtain and that the hospital is using the drug products to directly treat COVID-19 patients. For compounding pharmacies, a patient-specific prescription from the hospital is not needed, and hospitals must simply confirm and provide information that the medication will be used to treat a COVID-19 hospitalized patient. The FDA would like the compounding pharmacy to retrieve de-identified information from the hospital regarding which patients received the compounded drug products.  This could aid in tracking adverse events needing to be investigated. The FDA also provided guidance on expiration dates and stability testing for these drug products and has streamlined the process for outsourcing facilities.  Although the beyond-use-dating and expiration dating guidance will reduce some barriers and help compounding pharmacies to supply drug products that hospitals need, stability programs and testing must still be in place to protect patients.

For outsourcing facilities and compounding pharmacies, this is an opportunity to help with the current COVID-19 drug shortage problems. The reduced regulations will allow additional stakeholders in the pharmaceutical drug chain to produce these products. These rules can be retracted by the FDA at any point in time and are not permanent, so for manufacturers that originally produced these drug products, it will be important to update the FDA on when supply can meet the demand. The original manufacturers will want to have their drug products taken off the list as soon as possible. For other manufacturers struggling to meet supply for drug products for COVID-19 patients, these guidelines show that the FDA is willing to allow other sources to produce the drug products. Currently, there is a list of outsourcing facilities that are producing some of these drug products in shortage.

For the time being, the pharmaceutical drug supply chain will be strained during COVID-19. The relaxation of rules and regulations on the sourcing of drug products for hospitals will allow for drug shortages to be mitigated. However, the rules will put pressure on the original manufacturers to regain control of their product supply and meet the demand. Based on the current drug shortages and importation challenges, expect to see more manufacturers focus on their US operations in the coming years.  Manufacturers may begin seeking alternative active pharmaceutical ingredient (API) sources or moving finished pharmaceutical manufacturing to the US.  As the COVID-19 pandemic begins to slow down, how will the drug supply chain change in the near future, and will it need to be prepared for a potential second wave?

 

Posted June 16, 2020

2020 Summer Newsletter:

Surescripts Real-Time Prescription Benefit for Pharmacy Tool: Big Advance or a Non-starter?

Surescripts Real-Time Prescription Benefit for Pharmacy Tool: Big Advance or a Non-starter?

In early June, Surescripts announced the launch of its new Real-Time Prescription Benefit for Pharmacy Tool, which allows “pharmacists to access information on out-of-pocket prescription costs and therapeutic alternatives at the point of dispensing.”[1]   Surescripts promotes that the tool will enable pharmacists to “collaborate with patients and prescribers on choosing an alternative medication that is both clinically appropriate and affordable.”  The tool accesses the patients’ prescription benefit information to provide days’ supply constraints and potentially less expensive formulary alternatives.

The premise behind this service is the pharmacist is willing to provide therapeutic substitution recommendations to the prescriber and patient at the point of dispensing.  If this tool gains momentum, expect drugs with a prior authorization to be placed at a significant disadvantage.  In many cases, the pharmacy patient will have just come from the provider’s office with a prescription, where the expectation is the provider should have had this discussion with the patient prior to writing the prescription.  We expect pharmacists to continue to submit prescriptions to the payers for adjudication and only suggest therapeutic substitutions if a claim is rejected and/or the patient voices a concern, which is standard operating procedure today.

The new Surescripts tool provides pharmacists with the opportunity to evaluate options before contacting the prescriber.  The cost to the pharmacist is unknown at this time.  More than likely, the pharmacist will contact the prescriber and let the prescriber evaluate and prescribe a different product if warranted. With continued reductions in pharmacy reimbursement, we do not expect widespread adoption of this new tool in pharmacy practice.  This new tool repackages the Real Time Benefits Check (RTBC) available to prescribers and will likely be a non-starter in pharmacy practice.  As is currently seen in the prescriber space, the validity and usability of this tool will depend on payers’ ability to provide updated formulary and pricing information to Surescripts in a timely manner.  If prescriber uptake of these RTBCs occurs, the use in pharmacies would not be needed.

[1] https://surescripts.com/news-center/press-releases/!content/surescripts-empowers-pharmacies-with-benefits-based-prescription-price-transparency-tool, Accessed June 15, 2020.

 

Posted June 16, 2020

2020 Summer Newsletter:

New FDA Guidance Will Impact Supply Shortages

Coronavirus Preparation Tips

The novel Coronavirus (COVID-19) pandemic is occurring during a time that overlaps with cold and flu season, as well as seasonal allergies. For mild illnesses, including those associated with Coronavirus, supportive care may be the best option. PHSL recommends keeping the following items on hand in case your household is impacted by illness. Many of these items can be purchased at your local pharmacy, grocery store, retailer, or online, which may provide an option for delivery.

Over-the-counter (OTC) medications for symptomatic treatment of respiratory illnesses include:

  • Tylenol (acetaminophen) for fever and aches
  • Mucinex (guaifenesin) to loosen chest congestion
  • Robitussin DM (dextromethorphan) or Delsym for cough
  • Sudafed (pseudoephedrine) or Sudafed PE (phenylephrine) for head congestion

Parents should ensure that they have an adequate amount of infant or children’s strength Tylenol (acetaminophen) and cough medicine. Parents or caregivers should consult a physician before using cough and cold medicine in children under 6 years of age. Also consider keeping alternative remedies, such as honey, for sore throat and saline drops for nasal congestion on hand.

Having a humidifier to run in the room while asleep will increase moisture in the air and may help with cold and respiratory symptoms.  Vick’s VapoRub or equivalent vaporizing rub ointments that contain camphor, eucalyptus oil and menthol can also be beneficial. Additional supplies to keep on hand include a thermometer, tissues, and drinks containing electrolytes, such as Gatorade or Pedialyte, to prevent dehydration. If your local retailer does not have electrolyte solutions available, the World Health Organization (WHO) recommends the following combination to create your own: one level teaspoon of salt, eight level teaspoons of sugar, one liter of clean drinking or boiled water and then cooled.

In addition to OTC medications and supplies for supportive care, you may want to consider purchasing the following items so you do not run out in a time of isolation:

Being prepared during this time is the best way to care for yourself and those around you. If you are uncertain if your illness requires additional treatment, always contact your healthcare provider or utilize telehealth services for assistance.

 

Posted March 20, 2020

2020 Spring Newsletter:

Key Questions and Answers about Ibuprofen Use for COVID-19

COVID-19 have you Quarantined? – Weekend Activities for your To-Do List

Market Effects from COVID-19

Market Effects from COVID-19

Prescription volume dispensed by retail and mail service pharmacies has increased dramatically in March as a result of COVID-19 concerns.  It is common knowledge that the first week of the month is the busiest in retail pharmacy departments.  Medicare checks are received by seniors and updates are made to the Medicaid eligibility files, leading more patients to obtain their needed prescription medications.  This is what pharmacies experienced the week of March 1 to 7.  However, instead of the normal drop-off the week of March 8 to 14, we are aware of pharmacy dispensing volume being 5 to 10% greater than the first week in March.

In a Reuters report published in U.S. News & World Report on March 13th, it was noted that doctors, insurers, and the CDC were urging patients, especially those with chronic conditions, to get enough medicine to last a long period.  Insurers were recommending patients that typically receive only a 30-day supply of their medications talk to their pharmacist, and if needed, their doctor, about getting a 90-day supply. Some insurers were allowing early refills of prescriptions to accommodate their patients’ needs.  All of this created the spike in prescription volume seen in the second week of March.

The increase in prescription volume will lead to an increased demand for prescription drugs and PBM services.  The increased demand will likely create strains on resources, both product materials for manufacturers and services via PBMs.  We believe that this will also lead to an increase in adherence measures, as calculations may be artificially inflated due to early refills and 90 days supply prescriptions.

Will there be a drop in prescription demand when this pandemic is over?   We suspect that patients will increase the days’ supply that they keep on hand, leading to a “new normal” for consumers.

All of this has put more pressure on suppliers to keep more product on hand, for manufacturers to ramp up production, and for raw material suppliers to keep up with demand.  This will require close monitoring in upcoming weeks and months.  The most important thing our industry can do right now is to try to keep up with patient needs and ensure that those in greatest need have access to the supplies they require and medications they take.

In the end, there will be much to learn from this crisis.  Governments, manufacturers, health-care systems, and retailers (not just pharmacies), will all need to look back on the lessons learned to devise and implement processes and procedures to put in place, should we ever encounter something like COVID-19 again.  Furthermore, entities in each of these sectors should work together to develop best practices that are in harmony and will ultimately promote and provide the best patient care and outcomes possible.

Finally, best wishes to all of those on the frontline in healthcare– they are our heroes in this fight against this virus.  It is for their sake that steps are taken to ensure that the supplies and medications needed are always available.

 

Posted March 20, 2020

2020 Spring Newsletter:

Coronavirus Preparation Tips

Key Questions and Answers about Ibuprofen Use for COVID-19

COVID-19 have you Quarantined? – Weekend Activities for your To-Do List

COVID-19 have you Quarantined? – Weekend Activities for your To-Do List

As millions of Americans quarantine themselves in their homes, numerous sources have touted “fun activities you can do at home” and “10 ways to spend the weekend indoors”.  Instead, what about crossing a few forgotten items off your to-do list?  PHSL has five ideas for you to improve your health and increase your sense of accomplishment by checking another item off your list.

  1. Clean out your Medicine Cabinet – When is the last time you’ve cleaned out your medicine cabinet and removed expired OTC medications and unused prescriptions? As you’re thinking about purchasing supplies for a prolonged quarantine, it is important to first inventory the products you have on hand to determine what you actually need.  In order to ensure everyone gets the medications they need, it’s important to not stockpile excessive amounts of OTCs.  Instead, review your current supply to determine where gaps exist in your personal inventory.  Although the DEA’s Prescription Drug Take Back Day scheduled for April 25th has been canceled, many retail pharmacy locations have drop boxes where expired medications can be deposited.
  1. Establish your Healthcare Power of Attorney (HCPA) – A HCPA, sometimes referred to as an Advance Directive, is a legal document that allows another individual to make medical decisions on your behalf when you are incapacitated. The named healthcare power of attorney acts as a healthcare proxy and is called upon to communicate with a patient’s doctor to inform them of the patient’s wishes.  A HCPA can be a family member, friend, or even an attorney.  A lawyer can help you establish an HCPA, or there are many online providers that can execute the required documentation.
  1. Setup your Online Health Record – Many insurance providers and doctor’s offices have online portals available where you can access information on your office visits, medications, vaccine history, diagnoses, lab results, and more. In order to have quick access to this information and avoid needing to call your physician’s office, it is recommended that you set up a username/password and familiarize yourself with the system.  Being able to provide your own information in the event of an illness, can save valuable time for you and your healthcare team.
  1. Review Child Safety Procedures – For those with kids who may now be home from school, the weekend is an excellent time to review safety procedures with your child. Do your kids know what to do in case of an emergency?  Can they provide your address or phone number to a trusted adult?  The weekend also provides ample time to do a walk-around of your home and identify any potential hazards such as missing electrical outlet covers, lack of cabinet locks, lose stair gates, or exposed cords or wires.
  1. Be Active – Go for a walk outside, start seedlings for your spring garden, or stream an online exercise class. Being stuck at home doesn’t mean there aren’t ways to stay fit and be active.  With the current pandemic, a number of companies are offering free subscriptions, so do a little online research, and find something that interests you!

 

Posted March 20, 2020

2020 Spring Newsletter:

Coronavirus Preparation Tips

Key Questions and Answers about Ibuprofen Use for COVID-19

Market Effects from COVID-19

Key Questions and Answers about Ibuprofen Use for COVID-19

If I am experiencing symptoms consistent with coronavirus, should I take ibuprofen?

With the most current information available, the World Health Organization (WHO) has stated they are not recommending against taking Ibuprofen. This means that you can still take ibuprofen to manage symptoms. Please refer to the diagram below for the WHO statement.

 

If I am experiencing symptoms consistent with coronavirus, should I take naproxen or other NSAIDs?

Yes, as long as you follow normal guidelines for daily intake of these medications. There has been no information that naproxen or other NSAIDs have an adverse impact with respect to COVID-19.

 

WHO Ibuprofen Announcement

These questions arose after a March 17th WHO announcement where they recommended against the use of ibuprofen (Motrin, Advil, among other brands) for patients with COVID-19 symptoms, due to a concern that anti-inflammatory drugs could worsen the COVID-19 infection. Likewise, acetaminophen (Tylenol, among other brands) is still safe to use as directed.  The theory hypothesized that ibuprofen could increase an enzyme, ACE2, that is used by the virus to infect the host. There is no evidence that other medications impacting that pathway, such as ACE inhibitors and ARBs, play any role in COVID-19 either.  Patients should continue to use prescribed medications as directed by their physicians.

 

For more information from WHO about COVID-19, visit https://www.who.int/news-room/q-a-detail/q-a-coronaviruses.

 

Posted March 20, 2020

2020 Spring Newsletter:

Coronavirus Preparation Tips

Market Effects from COVID-19

COVID-19 have you Quarantined? – Weekend Activities for your To-Do List

 

Priority Review and Rare Diseases Reign Supreme for 2019

Based on the FDA’s count, there were 48 novel drug approvals in 2019 with 60% receiving FDA fast track status, priority review, or accelerated approval.  This count does not include vaccines, plasma products, or gene therapy products.  When the majority of drugs are being reviewed in an expedited time frame, it is a strong indicator that the market is shifting towards the specialty drug space.  The high number of expedited approvals begs the question, “how much of an advantage is an expedited approved when everyone else is getting the same treatment?”

Many of the newly approved agents are first-in-class and indicated for rare disease states.  Oncology approvals continue to outpace approvals for other disease states, with approximately 20% of drugs approved for the oncology space, whether for diagnosis or treatment.

Three new infectious disease agents were approved in 2019, which is a positive step in developing new therapies to combat antibiotic resistance.  Because of the Generating Antibiotics Incentives Now Act (GAIN Act), three agents (Fetroja, Recarbrio, and Xenleta) received priority review as Qualified Infectious Disease Products (QIDPs).  With the rise of antibiotic resistance, the need for new antibiotic innovation is increasingly important, and the FDA’s Safety and Innovation Act (FDASIA) seeks to promote their development.

What does 2020 hold?  PHSL highlights five top trends to watch out for in this year’s drug approval space:

  1. Digital Drugs – expect to see an increase in the approval of digital therapeutics and digitally enabled drugs, as technology moves into the mainstream pharmacy space.
  2. NASH Drugs – Drugs indicated to treat nonalcoholic steatohepatitis (NASH), or a fatty liver, are expected to be approved in 2020. With a high price tag and potentially huge patient market, payers should monitor these approvals closely.
  3. Gene Therapy – targeted therapies based on patients’ genetic factors promises to be a key area. This high-dollar space may be a cash cow for those targeting disease states with a sizeable patient population.
  4. Biosimilars – Will 2020 be the first year that an “interchangeable” biosimilar is approved? If not, we expect the number of biosimilar approvals to steadily increase, creating a more commodity-like atmosphere in the biologic space in products with multiple biosimilar competitors.
  5. Expedited Reviews and Approvals – As seen in 2019, expect the FDA to continue approving many products via the fast track, breakthrough, priority review, or accelerated approval processes. With the high number of specialty drugs being approved, this may become the new norm of drug approval.

A full listing of 2019 approvals, by approval type, is shown in the chart below.

2019 FDA New Drugs

 

Posted February 2020

Last Call for USP Chapter <800>

On December 1, 2019, changes will go into effect that impact pharmacies, pharmaceutical manufacturers, and wholesalers. The United States Pharmacopeia (USP) introduced its new chapter <800> on handling hazardous drugs. Regulatory agencies worldwide will begin enforcement on December 1, 2019.

The USP initially announced a June 1, 2019 rollout for chapter <800>, but a six-month extension has provided pharmacies, long-term care facilities, and other affected entities increased time to bring their facilities and standard operating procedures up to code.

Several important considerations exist for pharmacies and other entities that handle hazardous drugs:

  • New requirement for externally vented, negative pressure labs for manipulations (other than counting or repackaging) of hazard drugs (HDs)
    • Splitting/crushing (HD) tablets no longer allowed in regular workspace
  • New requirements for designated areas for receipt, unpacking, and storage of HD

For more information on compounding and handling hazardous drugs, full chapters are available for free download at: https://www.usp.org/compounding.

While facilities dedicate significant energy, time, and resources into finalizing compliance, new regulations on hazardous waste (HW) disposal from the Environmental Protection Agency (EPA) have already gone into effect. August 21, 2019 marked the federal effective date of EPA’s Resource Conservation and Recovery Act (RCRA) Part 266 Subpart P policy on hazardous waste pharmaceuticals.

New requirements for HW management under Subpart P may prove costly for both pharmacies that produce over 220 lb. of hazardous waste in one calendar month and for manufacturers that function as reverse distributors.  Key takeaways include:

  • Sewer prohibition: HW pharmaceuticals may not be disposed of down the drains or flushed
  • Requirements for EPA-approved HW transporters for shipment of non-creditable HW pharmaceuticals
    • Non-creditable HW pharmaceuticals —defined as pharmaceuticals that do not have a reasonable expectation to be used/reused or reclaimed—must be shipped using an EPA-approved HW transporter
    • Potentially creditable HW pharmaceuticals—those in original packaging, undispensed, and expired less than one year–have a reasonable expectation to receive manufacturer credit. Potentially creditable products can be shipped from healthcare facilities using common carriers (e.g., UPS, USPS, FedEx)
  • New standards for residues remaining in “empty” containers:
    • “Empty” containers are defined as empty vials, syringes, unit-dose, and stock/dispensing bottles smaller than 1 liter or 10,000 pills
    • Residues of empty containers are not regulated as HW, but containers larger than these sizes are deemed as HW.

PHSI’s view is that manufacturers and distributors of bulk package-sized hazardous drugs, such as warfarin and spironolactone, should take a closer look at the new EPA and USP <800> regulations. Buyers may become more hesitant to purchase large quantities of hazardous pharmaceuticals. Hazardous drugs deemed broken/leaking, repackaged, dispensed, and expired past 1 year automatically become classified as non-creditable HW. An increase in generated hazardous waste each month may result in a healthcare facility becoming required to abide by all sections of Subpart P.  Subpart P went into effect on Aug 21, 2019 in Iowa, Alaska, Indian Country, and some U.S. territories. Remaining states have until July 21, 2021 to adopt the new regulations. Check with your state for specifics.

PHSI would like to thank our student, Carissa Dolan, LECOM Pharm.D. Candidate, for her contributions to this article.

 

Posted November 2019

2019 Fall Newsletter:

2020 Formulary Exclusion Lists

2020 Formulary Exclusion Lists

2020 Formulary Exclusion Lists:

A Review of Express Scripts, CVS Caremark, and OptumRx

It’s that time of year again, PHSI’s annual review of the PBM formulary exclusion list updates!  Express Scripts (ESI), CVS Caremark, and OptumRx have published their formulary exclusion lists for 2020.  Based on PHSI’s calculations, OptumRx leads the way with 246 new formulary exclusions.  Of those 246 exclusions, 169 (69%) were for brands that have covered generic equivalents.  CVS Caremark added 100 new exclusions; 32 of those 100 exclusions (32%) were for brands with available generics.  ESI will exclude an additional 35 drugs, 13 (37%) of which are multisource brands.  The new 2020 exclusions, as researched by PHSI, are as follows:

Chart 1 New Formulary Exclusions

Excluded multisource brands with available generics are as follows:

Chart 2 New Formulary Exclusions - Brands with Generics

During the review, PHSI made the following observations:

  • OptumRx seemed to pay more attention to the topical corticosteroids class this year, excluding an additional 13 agents that may not have specific generic equivalents. Examples of excluded agents include Psorcon cream, Ultravate lotion, and Cloderm cream.
  • With the 2020 additions, OptumRx more than tripled the number of drugs on its list of excluded brand-name medications with generic equivalents. The total number of drugs on OptumRx’s list of excluded brand-name medications with generic equivalents is now approximately double that of ESI’s list.  Optum indicates that “these brand-name medications have been identified as having available generic equivalents covered at Tier 1 on the formulary.”  This change may signal OptumRx’s increased commitment to reduce unnecessary drug spend.
  • ESI seemed to focus on the hematological class for 2020, with approximately 14% of the new exclusions coming from this category. ESI’s list of agents excluded for 2020 includes Jadenu, Jadenu Sprinkle, Nuwiq, Granix, and Mulpleta.  PHSI believes that ESI may be leading the PBM charge as it relates to hematological agent exclusion.  With many new hematological products expected to launch, we anticipate that this will become a more tightly controlled category in subsequent years.
  • CVS focused heavily on the dermatological category for 2020 exclusions, with an additional 19 dermatology agents being added to the exclusion list. Examples of excluded agents include mupirocin cream, Acanya, Finacea Gel, and fluocinonide cream 0.1%.
  • CVS is making a strong push to exclude high cost dietary supplement agents. Twenty-five dietary supplements were added to the exclusion list for 2020, with folic acid being the preferred on-formulary alternative.  Because these products are not FDA-approved and often have high costs, this can be an effective way to manage plan drug spend.  Examples of excluded dietary supplements include Xyzbac, Mebolic, Dexifol, and Vasculera.
  • CVS Caremark is becoming manufacturer-specific in their formulary exclusions; they note five products where specific NDCs are excluded. For example, CVS’s formulary excludes benzonatate NDCs 69336-0126-15 and 69499-0329-15.  Excluded NDC 69336-0126-15 has a per-unit WAC of $71.42, while pharmaceutically equivalent GPI competitors have WAC pricing of $2.20 per unit.  For a product that may be reimbursed at a non-MAC rate, choosing the correct manufacturer’s product can have impactful reimbursement consequences for payers.
  • With the launch of lower cost generic tadalafil, all three major PBMs have chosen to exclude brand Cialis in 2020.
  • As mentioned in our 2019 Exclusion List Review, ESI continues to use indication-based management for the “inflammatory conditions” drug class. Reviewing the updates to that category, Inflectra and Renflexis are no longer preferred agents for 2020.

Each of the major PBMs has taken a different approach to managing drug spend in 2020 and formulary exclusions continue to play a major role.  PBMs exclude products because of clinical, financial, and humanistic reasons.  They are making value judgments and have decided covering these products is no longer warranted.  This article represents PHSI’s analysis of publicly available information regarding the three PBMs’ formulary exclusion lists for 2020.  Readers are encouraged to assess the lists for themselves.  Links to the exclusion list source information are provided below.

 

Posted November 2019

2019 Fall Newsletter:

Last Call for USP Chapter <800>

The Importance of PBM Contract Review Post Implementation

One of the biggest responsibilities of health plans and self-insured employer groups is selecting a PBM partner.  When that selection is being made, health plans and large self-insured employers frequently undertake an RFP (request for proposal) process, narrow down the candidates, and then perform a diligent review of the finalists.  Once a PBM is chosen, the health plan or employer group reviews and negotiates contract terms to finalize an agreement.

Health plans or employer groups enter into PBM contracts that make several guarantees, specifically as it relates to rebates, PBM operational performance (guarantees), and reimbursement rates.  Although a diligent review should be performed before the agreement is signed, what steps are health plans and employer groups taking after the agreement is in place to ensure that the contract terms are being met?  When dealing with PBM contracts, it is imperative that guarantee language is clearly defined.  A regularly scheduled review of the data is critical to ensuring contract obligations and guarantees are being met or exceeded.

When rebates are being calculated, the contract should clearly specify which claims are eligible for rebates.  Will rebates be paid on specialty drugs, and if so, how is a specialty drug defined?  Does the site of dispensing (retail vs. mail) impact the rebate?  How does the contract define a brand vs. generic drug?  Are there different rebate guarantees for 30-day vs. 90-day retail prescriptions? These are only some of the questions that should be answered in the contract language, but having well-defined terms is half the battle.  Once the contract is in place, an ongoing assessment is critical to ensure the plan performance meets the expectations.  For one of our employer group clients, this means a quarterly review of claims data and a comparison of the data against the rebate guarantee information provided by the PBM.  By monitoring the data, we proactively identify any discrepancies, estimate rebate dollars based on historical trends, and better negotiate future PBM contract extensions.  Whether the assessment is performed in-house or outsourced to consultants may depend on the individual health plan or employer group.

When evaluating reimbursement rates and effective rate guarantees, health plans and employer groups need to ensure that brand and generic drug definitions are clear.  The contract language should also include verbiage around different reimbursement scenarios.  Contracts should list what reimbursement rates will apply to single-source generics and prescriptions dispensed with different DAW (dispense as written) codes, such as DAW 5, brand dispensed as a generic.  Using the defined definitions, claims data is used to audit and ensure that the claims are being reimbursed appropriately and rate guarantees are being met or exceeded.  A review of the data can also identify scenarios that are negatively affecting the health plan or employer group, including identifying specific drugs that are having a negative financial effect.  Although some situations may be allowed under the current contract, a review can pinpoint problematic areas for future contract renegotiation discussions.

Negotiating PBM contracts with well-defined terms is crucial.  Concise contract language makes it easier to conduct post-contract audits and ensure that the PBM is meeting or exceeding the contractual terms.  Health plans and employer groups should have programs to monitor rebate guarantees, proactively identify discrepancies, and bring them to their PBM’s attention for resolution.  These reviews also assess other factors and provide insight into the PBM operations, enabling the health plan or employer group to negotiate better terms in future agreements.  PHSI has extensive experience helping health plans and employer groups evaluate PBM contracts and analyze data.  Let us know if we can help!

Posted May 2019

 

2019 Spring Newsletter:

Biologic Naming Update