Dallas ISCEBSThe Hidden Issues Behind Increasing Pharmacy Costs

 

April 10, 2014

7401 Metro Blvd, Suite 210, Edina MN 55439952-657-5457 | www.excelsiorsolutions.com

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What If Your PBM Told You...

That your generic dispensing rate exceeded the contractually

guaranteed minimum rate of 72% by 3% at 75%?

That your actual effective generic discount vs. AWP exceeded the

contractually guaranteed minimum generic effective discount of 73%

by 2% at 75%?

…How would you feel about that performance??

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What If Your PBM Went On To Tell You…

That 2015 will produce the fewest number and lowest value of high-profile brand drug patent expirations in recent memory?

That the amount that you spent on specialty pharmacy medications doubled in 2013, even though you only added 10 new patients to your specialty pharmacy pool?

…How would you feel about what 2015 will bring?

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What If Your Boss Then Told You To Reduce Pharmacy Costs By 5% For Next Year’s Budget?

…How well would you sleep tonight?

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The Need for “Common Cents”

This initiative is about finding opportunities to achieve material absolute savings in highly utilized therapeutic classes, even when less specific relative metrics such as generic dispensing rates and aggregate AWP discounts, on the surface, appear to be optimal.

The PBM industry does a very good job of keeping your focus on relative metrics and percentages

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Why the Excitement?

High generic dispensing percentages and deep AWP generic discounts have combined to create the impression that generic performance is "as good as it gets.”

Lesson learned:  "You don't take percentages to the bank."

Not all generics, even those in the same therapeutic category, are priced similarly — there is wide variation in unit prices among them.

Variation in unit price is material (20x or more) among “clinically indifferent” generic alternatives

Are you receiving 20x or more clinical benefit for 20x or more cost??

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“Common Cents” Analysis

Take advantage of the “maturing” generic drug market

What is “Clinical Indifference?”

Volume must be high enough, and delta must be wide enough to

create economically material, clinically reasonable opportunities that

justify effort

Focus in on categories where majority of claims

are already deeply discounted generics

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“Common Cents” Tactics

MD/Patient Communication

MAC pricing modification

Plan design and/or Utilization Management changes

A “Common Cents” Case Study

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“Common Cents” Findings

Analyzed claims data from October 1, 2013 through December 31,

2013 (4Q2013)

Analysis based on “Net Plan Paid” amount, to include impact of

existing “Patient Paid Amount” structure

Terms:

“PPU” = Plan Paid per Unit

“PPC” = Plan Paid per Claim

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Total Net Plan Paid Amount: $ 1.6 million

Target Categories:

TOTAL $168 thousand (10.5%)

4Q13 Descriptive High Level Utilization Statistics:

($ and % of Total Net Plan Paid Amount by Target Category)

• $19 thousand (1.2%)Tetracyclines• $26 thousand (1.6%)Combination OCs• $12 thousand (0.8%) Triphasic OCs• $12 thousand (0.8%) ARBs • $ 7 thousand (0.4%) ARBs + Thiazides• $31 thousand (1.9%) Statins • $10 thousand (0.6%) Nasal Steroids• $39 thousand (2.4%) PPIs• $12 thousand (0.8%) Tropical Steroids

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Combination Oral Contraceptives:

% of claims in class dispensed as generic: 84%

Effective generic discount: 29%

Max Brand PPU: $3.45

Max Generic PPU: $2.26 Min Generic PPU: $0.32

Projected Annual Plan Paid Amt. in category: $104,000

Recommendation: Communicate wide unit price disparity that exists across class to prescriber community with goal of compressing cost to existing mean PPU of $1.24

Tactic: Share information with prescribers illustrating that general clinical indifference that exists among available alternatives across class is not matched by similar economic indifference

Total Potential Annualized Savings: $28,000 (26.9% )

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ARBs:

% of claims in class dispensed as generic: 63%

Effective generic discount: 91%

Max Brand PPU: $4.07

Max Generic PPU: $2.50

Min Generic PPU: $0.00

Projected Annual Plan Paid Amt. in category: $48,000

Recommendation: Displace entrenched Brand ARB utilization with Generic ARBs, where clinically appropriate, by providing incentive to patient to ask physician to consider switch

Tactic: Apply reduced or zero co-pay to all generic ARBs

50% Potential Annualized Savings: $21,000 (43.8% )

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Statins:

% of claims in class dispensed as generic: 86%

Nationwide Market Share for Crestor (all strengths): 10%

Kenosha Market Share for Crestor (all strengths): 13% (HIGH)

PPU for Crestor (all strengths): $4.60

PPC for all generic statins (all drugs & strengths): $0.16

Projected Annual Plan Paid Amt. in category: $124,000

Total Potential Annualized Savings by Eliminating Crestor Market Share Disparity: $21,000 (16.9% )

Tactic: Create MD communication piece highlighting cost differential between Crestor and generics

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Nasal Steroids:

% of claims in class dispensed as generic: 81%

Effective generic discount: 78%

Max Brand PPU: $10.52

Max Generic PPU: $4.11

Min Generic PPU: $0.16

Projected Annual Plan Paid Amt. in category: $40,000

Recommendation: Displace entrenched Brand Nasal Steroid utilization with Generic Nasal Steroids, where clinically appropriate, by providing incentive to patient to ask physician to consider switch

Tactic: Apply reduced or zero co-pay to all generic Nasal Steroids

50% Potential Annualized Savings: $13,000 (32.5% )

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PPIs:

% of claims in class dispensed as generic: 86%

Effective generic discount: 93%

Max Brand PPU: $9.14

Max Generic PPU: $1.15

Min Generic PPU: $0.14

Projected Annual Plan Paid Amt. in category: $156,000

Recommendation 1: Restrict coverage in class to generic omeprazole or pantoprazole only

Tactic: Make omeprazole and pantoprazole only PPIs on formulary, others excluded, except for unique dosage forms to be covered via PA process

Total Potential Annualized Savings: $128,000 (82.1% )

Alternative Tactic: Re-evaluate continued coverage of any PPIs under Rx benefit since now widely available as OTC – be consistent with non-sedating antihistamine coverage strategy

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Grand Total Potential Annualized Savings

GRAND TOTAL $280 thousand

(4.4% Annual Plan Paid Amount)

Tetracyclines • $ 13 thousand

Combination OCs • $ 28 thousand

Triphasic OCs • $ 21 thousand

ARBs • $ 21 thousand

ARBs + Thiazides • $ 11 thousand

Statins • $ 21 thousand

Nasal Steroids • $ 13 thousand

PPIs • $128 thousand

Tropical Steroids • $ 24 thousand

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The Power of Common Cents

A 4.4% reduction in total annual drug spend can be achieved by focusing on only nine highly utilized therapeutic categories where generics already constitute the majority of claims.

Similarly derived incremental savings are achievable across the entire pharmacy benefit by paying close attention to the data, by sharing information with physicians and benefit administrators, and by using Common Cents.

Specialty Pharmacy

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Why the Focus on Specialty Pharmacy?

Fastest growing segment in pharmacy today and will grow at least 4-fold in the United States through 2015.

Over 50% of Specialty spend falls under the Pharmacy benefit with the rest covered under the Medical benefit.

Of the total drug spend, only 15-20% derives from specialty pharmaceuticals.

50% of top 100 drugs and 8 of the top 10 will be specialty pharmaceuticals by 2016.

The specialty market is not a level playing field, as extreme variations are seen in patient care management, service, and outcomes.1. Goldman Sacs Report – Americas: Healthcare Services: Supply Chain, Sept 27, 2012.2. http://www.ajmc.com/payer-perspectives/0213/The-Growing-Cost-of-Specialty-PharmacyIs-it-Sustainable#sthash.3. Specialty Pharmacy Times Industry Guide Oct 2013 – Top 10 Trends in SP.4. Cohen GM, Calla N, Moore TS. Evolution of a community pharmacist to a specialty pharmacist. Specialty Pharmacy Conference; 2013.

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Best-in-class care

Care Collaboration

Patient education + empower

ment

Clinical

Management

Case management coordination

Coordination of benefits

Physician education on guideline updates

Medical billing

Side effect and symptom management

Customized communication

Injection training support

Support group enrollment

Motivational Interviewing Techniques

Drug regimen assessment and collection of medication history

Adherence calls

Proactive PA & Rx renewal support

The most expensive Rx is one shipped to a patient who doesn’t take it . . .

Discussion