PHSI Newsletters

2016 Summer Newsletter- A Flooding of Pharmacists

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?

ADI Chart

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.

2016 Spring Newsletter- CMS’s Proposed New Part B Payment Model

Spring 2016 Newsletter
CMS’s Proposed New Part B Payment Model

Medicare Part B drug reimbursement to physicians and hospital outpatient centers has been in the spotlight for the past few years. Average Sale Price (ASP) pricing reimbursement methodology and the increased approval of more office-administered drugs has dramatically increased spending on Part B drugs. Currently, Medicare Part B reimburses medications at a rate of ASP + 6%. It is CMS’s position that this payment structure may not always promote the most cost-effective prescribing and could be interpreted as encouraging physicians to prescribe and administer more costly agents to increase their revenue under the buy and build model. The total CMS cost for Part B drugs exceeded $20 billion in 2015.

In response to this concern and in an effort to move to a more value-based reimbursement, CMS has proposed a new reimbursement methodology with multiple components. Instead of the ASP plus 6% reimbursement, the new strategy proposes reimbursing at a smaller percentage of ASP with an additional flat-dollar fee. The percentage-based portion still provides for a variable amount for handling and dealing with overhead costs of purchasing and storing expensive specialty medications. Meanwhile, the flat-dollar amount provides more compensation for offices primarily dealing in lower-cost agents, such as primary care doctors and orthopedic specialties.

While CMS may have considered implementing a methodology that only provided a flat fee, this strategy would have likely created insufficient reimbursement for physicians dealing with high-cost specialty medications and would likely increase profits on inexpensive product. Physicians and outpatient centers dealing with the high-cost products should be reimbursed on the increased financial risks associated with handling and storing these products.

Based on all of these considerations, the newly proposed methodology would reimburse office-administered agents at a rate of ASP + 2.5% plus a flat-dollar fee of $16.80 per drug. CMS stated that they would update the flat dollar fee annually. For a drug with an ASP of $1,000, this new methodology would lead to a difference in reimbursement of $18.20, as shown in the chart below.

Part B Payment Model

Based on the proposed reimbursement methodology, this creates a breakeven point of $480. At an ASP of $480, both methodologies equate to a reimbursement of $28.80. Therefore, for drugs with an ASP of less than $480, the new methodology will provide increased profitability for physicians. However, for drugs with an ASP greater than $480, Medicare Part B reimbursement under the newly proposed methodology will be decreased.

When looking at the above figures, it is clear that the goal of the new reimbursement strategy is to achieve cost savings, as the changes will not be budget neutral. The test to evaluate this new ASP change is scheduled to start in late 2016. CMS also continues to investigate other reimbursement methodologies that move away from fee-for-service reimbursement. Other reimbursement methodologies discussed include reference pricing, indication-based pricing, and outcomes-based risk-sharing strategies. CMS accepted comments on the proposed rule until May 9. PHSI will keep you abreast of any future reimbursement changes for Medicare Part B, and we welcome your feedback on the topic.

2016 Spring Newsletter- OTCs vs. Supplements

Spring 2016 PHSI Newsletter
OTCs vs. Supplements

When patients visit the front-end of the pharmacy, most assume that the FDA approves all products on the shelf for safety and efficacy. Patients do not distinguish between over-the-counter (OTC) drugs, vitamins, and dietary supplements. Supplements such as fish oil and ginseng, OTC drugs like acetaminophen, and vitamins B6 and D are often viewed with the same level of scrutiny. Lack of public knowledge and proposed regulatory changes the last few years necessitate a refresher on the differences between OTC drugs and dietary supplements.

OTC drugs are developed either through a New Drug Application (NDA) process or under the OTC Monograph Process. The NDA process is primarily only used to gain approval to market an OTC product that was previously a prescription drug. Meanwhile, the OTC Monograph Process allows for the marketing of OTC drug products with active ingredients that are already recognized as generally safe and effective. Active ingredient safety and efficacy, labeling, indications, dosing instructions, and side effect warnings are all reviewed, and once approved, monographs are approved which establish the conditions under which an active ingredient is generally recognized as safe and effective. These monographs set the standards for the OTC therapeutic drug class. As long as a new OTC product meets the conditions already set forth in a monograph, companies can develop OTCs containing those ingredients without pre-approval from the FDA. If a drug does not comply with the monograph, an NDA is necessary before the manufacturer can market the OTC. Although this is a simplified explanation, there is a government review for OTC drugs to ensure safety and efficacy.

Dietary supplements fall under the FDA’s “foods” category and are not subjected to the same approval process as OTCs. According to the FDA, supplements are products taken by mouth that are intended to supplement the diet and contain one or more “dietary ingredients”. They may include vitamins, minerals, herbs, botanicals, amino acids, or enzymes. Supplements must only guarantee that the products are safe and ensure that claims made are not false or misleading. Product efficacy is not required, although many of these products can produce efficacious results in patients. Common product supplements that are often confused for drugs include iron, fish oil, niacin (vitamin B3), calcium, vitamin B12, and probiotics.

FDA plans to monitor dietary supplements more closely and has published draft guidance for the industry on dietary supplement ingredients. However, the FDA published this draft guidance in July 2011, and a final version has yet to be published. This guidance would require companies to submit their new dietary ingredients (NDIs) at least 75 days prior to marketing. The NDI would require that manufacturers provide a description of the dietary supplement, prior history of use, and evidence of safety under its labeled conditions of use. The proposed guidance could create a barrier to market entry for supplement manufacturers. It appears that the FDA is trying to manage supplement use and prevent unsafe products from entering the market. In the meantime, consumers and pharmacists should continue to rely on the USP Verified Mark when choosing supplement products. The United States Pharmacopeia (USP) has developed voluntary standards for developing and testing dietary supplements. Products with the USP Verified Mark have met the most stringent criteria of the program. The date of publication for the final guidance on supplement marketing is unknown, but PHSI will keep you abreast of any changes.

PHSI Winter Newsletter 2016

The 2016 Winter Edition of the PHSI Newsletter is now available to read here. This issue of the PHSI newsletter discusses pharmacists’ authority to prescribe oral and transdermal contraceptives in Oregon and California. Additionally, the issue covers the factors leading to expanded use of formulary exclusion lists by PBMs in 2016. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Fall Newsletter 2015

The 2015 Fall Edition of the PHSI Newsletter is now available to read here. This issue of the newsletter reviews 2015 new drug approvals and discusses proposed 340B Program guidance. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Summer Newsletter 2015

The 2015 Summer Edition of the PHSI Newsletter is now available to read here. This issue of the newsletter focuses on the growing trend of telehealth and the effects on telepharmacy. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Newsletter Spring 2015

The 2015 Spring Edition of the PHSI Newsletter is now available to read here. This issue of the newsletter focuses on the newly approved biosimilar drug Zarxio® and discusses the uncertain future of biosimilars, including medical benefit coverage. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Newsletter Winter 2015

The 2015 Winter Edition of the PHSI Newsletter is now available to read here. This issue of the newsletter highlights changes in the number of products found on retail pharmacy discount generic lists. It also discusses rebate contracting of specialty drugs, with a focus on newer HCV therapies. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Newsletter Fall 2014

The 2014 Fall Edition of the PHSI Newsletter is now available to read here. This issue of the newsletter discusses the challenges faced by the FDA when naming biosimilars and also takes a look at the implications of increasing prescription compounds. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!

PHSI Newsletter Spring 2014

The 2014 Spring Edition of the PHSI Newsletter is now available here. This issue of the newsletter takes a look at prescription claims from exchange plans and also discusses NCPDP’s effort to standardize dosing designations for oral liquids. If you would like to receive the newsletter electronically, click here to sign up for our e-Newsletter Mailing List!