Drug Deals. Understanding the Intricacies of PBM Contracts, Language, & Opportunities. *Every example in this webcast is taken from real-world data

Transcription

1 Drug Deals Understanding the Intricacies of PBM Contracts, Language, & Opportunities *Every example in this webcast is taken from real-world data

2 About the Webinar Lines Are Muted Use Arrow To Minimize Menu View Slides in Full Screen Mode Enter Questions for Q&A Session

3 HRCI* & SHRM** Pre-Approved In order to receive the HRCI & SHRM Credits: Must have signed in with your unique registration link Must attend the entirety of the webinar Must answer the applicable polls for HRCI credits An HRCI certificate with ID# will be sent to you upon completion of all of the above *The use of this seal confirms that this activity has met HR Certification Institute s (HRCI) criteria for recertification credit pre-approval. This activity has been approved for 1 HR (General) recertification credit hours toward aphr, PHR, PHRca, SPHR, GPHR, PHRi, and SPHRi recertification through HRCI. **Crawford Advisors is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP or SHRM- SCP. This program is valid for 1 PDC for the SHRM-CP or SHRM-SCP. For more information about certification or recertification, please visit shrmcertification.org.

4 About Our Speaker Scott Mayer, Director of Data Analytics Scott focuses on helping employer groups use the vast amount of healthcare data at their disposal to identify and stratify the risk within their employee population, and develop programs and strategies aimed at controlling and containing said risk. Scott is very active in the healthcare community, having served on numerous boards and committees such as: Executive board of the Baltimore Association of Health Underwriters The Navigator Advisory Committee for the Maryland Health Connection, The NAIFA-MAHU Joint Legislative Committee. His legislative efforts have garnered awards and recognition at both the state and national level. Scott holds a degree in math and physics from Cornell University, and loves the challenges of working with big data sets to develop meaningful analytics, predictive outcomes, and statistical projections for his clients.

5 Quiz Question #1 What is the definition of a Generic Drug? a. A drug whose patent has expired b. A drug manufactured by more than one company c. A drug with one active ingredient d. A single source drug e. Depends who you ask

6 Check Your Contract Definitions Ideal definitions reference a third party, independent database such as First DataBank or Medi-Span.

7 Quiz Question #2 So What is a Single Source Generic Drug? a. Any Generic Drug b. A Generic Manufactured by One Company c. A Generic Manufactured by Two Company d. Determined by Medi-Span or First DataBank e. Depends who you ask

8 Check Your Contract Definitions Ideally, generics are generics (per an independent agency ie. Medi- Span or First DataBank) and brands are brands. References to Single Source and Multi-Source products are outdated and can SEVERELY impact your pharmacy spend.

9 Why Does it Matter? Both PBMs in this example use the Medi-Span definition of Generics (good). However, PBM B considers Single Source Generics to be any generic manufactured by up to two manufacturers, and treats them as Brand name drugs when it comes to discounts. Drug Z is a Medi-Span Generic and is also manufactured by two other Pharma companies. The AWP of Drug Z is $500. PBM A will guarantee a 79% Discount, so Drug Z will cost that plan $105. PBM B will only guarantee a 17% Discount, so Drug Z will cost the plan $415

10 Quiz Question #3 What is a Pharmacy Rebate? a. A rebate given from a Pharmacy to a Plan Participant b. A rebate given by the Manufacturer to the Plan Participant c. A rebate given by the Manufacturer to the PBM d. A rebate given by the Pharmacy to the PBM e. A rebate given by the PBM to the Plan Sponsor

11 Rebates vs. Fixed Credits Many Carriers will offer Fixed PEPM Credits when the Pharmacy is Embedded In Exchange, Carriers Keep the Rebates Typical Credits Range from $12 PEPM as high as $30 PEPM *Even in the best contracts, PBMs will typically keep up to 15-20% of the rebates.

12 Quiz Question #4 Who Can Typically Receive Payments from a PBM? a. Pharmacies b. Brokers/Consultants c. Doctors d. Pharma Companies e. A and B

13 Hidden Fees Some Brokers/Consultants use PBM fees to offset consulting fees and commissions Some Include fees on top of commissions (PBM consulting fees do not typically appear on a 5500) Many coalition and consortium programs include fees to compensate the consortium Some brokerages have their own coalitions Possible conflict of interest?

14 Quiz Question #5 What happens if a PBM doesn t meet their discounts? a. They pay the plan sponsor a fixed fee b. They refund the sponsor the difference in value c. The PBM feels sorry d. Nothing e. Depends who you ask

15 I Guarantee You are Confused Ideal reconciliation methods will evaluate each tier individually, and refund the plan the true dollar equivalent of the difference between the plan s performance and the guarantee number.

16 I Guarantee You are Confused This example shows the carrier failing to meeting the guarantees of 77% and 79% for Retail/Mail. There was no language in place as to how to reconcile this discrepancy, costing the plan millions of dollars. Ideal reconciliation methods will evaluate each tier individually, and refund the plan the true dollar equivalent of the difference between the plan s performance and the guarantee number.

17 Remember those Definitions?

18 What to Compare: Discounts Rebates Dispensing Fees Administrative Fees Definitions of Generics/Brands and Single/Multi-Source Guarantee Definitions and Methodologies Other items to note: Clinical Protocols (eg: Hepatitis C) Specialty Drug Definitions and Rebates Experimental Therapies Definition of Rebates Formulary Disruption

19 Q u e s t i o n s If you have any further questions about the information discussed in this webinar please feel free to contact us at: Crawford Advisors, LLC HQ: 200 International Circle Suite 4500 Hunt Valley, MD Sweetbay Drive Suite 10 Salisbury, MD M.F. Irvine 21 East 5 th Avenue Conshohocken, PA Stoudt Advisors 280 Granite Run Drive Suite 250 Lancaster, PA W. Executive Parkway Lehi, UT (800) Data Analytics (443) Download Slides Questions & Requests info@crawfordadvisors.com