What the PBMs Aren't Telling the Press and Employers about Rebates
Published Online: Friday, December 2nd, 2011
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As we expected, PBMs are trying to confuse the employers and the press about how the Lipitor rebate situation will play out. Rebates are one of the least transparent transactions that the PBMs control. Employers have been erroneously trained by their consultants to focus on “guaranteed” rebate dollars, instead of demanding that the employer get ALL of the rebate money. By bringing the Lipitor rebate out in the sunlight, Pharmacists United for Truth and Transparency has begun to expose how rebates can help increase the PBM’s bottom line at the employer’s expense.
To fully understand how the PBMs Lipitor rebate schemes will cost the employer more than the generic, we will describe in depth how the current rebate system plays out in the self insured employer market.
What do we know about the Lipitor situation from the PBM documents?
When copays are reduced, the employer’s costs are INCREASED.
Example A. $155 drug with a $40 copay costs the employer $115
$155 (drug cost) - $40 (copay) = $115 (employer cost)
To fully understand how the PBMs Lipitor rebate schemes will cost the employer more than the generic, we will describe in depth how the current rebate system plays out in the self insured employer market.
- Rebate terms are agreed upon at the time the employer/PBM contract is signed. Contracts are typically 3-year terms.
- Rebates are NOT drug specific, they are claim-specific. This helps the PBM avoid transparency by not having to account for each rebate for each drug.
- Rebate language generally takes one of two forms (paraphrased): “Employer’s drug plan rebates will consist of $3 per brand and generic drug claim” (all claims) OR “Employer’s drug plan rebates will consist of $17 per brand name drug” (rebatable claims)
- When the PBM obtains rebate dollars in excess of what is “guaranteed”, the PBM retains all of those dollars.
- PBMs will also engage in semantics games with the drug manufacturer to hide rebate dollars. For example rather than have the drug manufacturer provide a $50 rebate for a drug, the manufacturer will reclassify a portion of those dollars, say $35 as a “formulary fee” or “administrative” of “anything other than a rebate” and $15 as a “rebate”. In this example the employer will then only get a portion of the $15 “rebate” when they should be getting $50.
What do we know about the Lipitor situation from the PBM documents?
- The rebate from Pfizer to the PBMs is about $47 per Lipitor script filled.
- The difference in cost between brand and generic Lipitor is $35
- If the employer receives less than $35 plus the copay differential in additional rebate money from terms of their original rebate contract, they are losing money on each Lipitor script filled by their employees.
When copays are reduced, the employer’s costs are INCREASED.
Example A. $155 drug with a $40 copay costs the employer $115
$155 (drug cost) - $40 (copay) = $115 (employer cost)
Example B. $155 drug with a $10 (generic) copay costs the employer $145 ($30 MORE)
$155 (drug cost) - $10 (copay) = $145 (employer cost)
Many employer decision makers (Human Resource Directors/CFOs) are unaware that reducing copays increases employer’s cost (this also applies to mail order incentives).
Putting it all together:
Even if the employer is able to get every dollar of rebate provided by Pfizer to the PBM (based on Catalyst’s number), the employer will still be paying MORE for Lipitor than if they had simply obtained the lower cost generic available.
Self insured employer groups will need to be made aware of that they must stay on top of the various deals and schemes being put together between Pfizer, the PBMs, and the Insurance carriers.
The employers need to be on the phone with their benefits consultants and demanding that the PBM provide the following:
- A readily available and easily auditable accounting of all Lipitor prescriptions filled during the first 180 days of generic Lipitor’s availability
- A written guarantee that the employer’s net cost for brand Lipitor will be lower than the generics available after reduced copays and rebates are calculated
- Financial penalties, including contract termination without penalty if the cost of Lipitor is higher than the generic
Disclaimer
The opinions stated in this blog are the sole and present opinions of Pharmacists United for Truth and Transparency and do not necessarily represent the views of Pharmacy Times and/or its editorial staff. The information stated in this blog is for informative purposes only and should not be constituted as legal or medical advice. Pharmacy Times makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses or damages arising from its display or use.
David Goldberg RPH December 17th, 2011 11:12:1611:16:18 AM
....and what about this???
The latest PMB/Audit Company Pharmacy Scams….
I am sure most of you independent pharmacy owners have been through the latest never-ending PBM/ “audit company” audits and really want to know why and how they may operate. Well, I was recently subjected to another one of these onsite audits by the so-called tag-team-duo: WellCare/ACS (PBM/Audit company) and they provided me some info that I find priceless. It all started when I got a fax from the tag-team stating that in one month time they will visit my pharmacy in order to conduct an audit of approximately 150 medications that were dispensed within the last year in the pharmacy. Upon looking at the least of medications, I noticed a trend. All of the drugs audited are between $300-1000 each prescription and what is more interesting is that they only targeted expensive medications. So they did not just target brand medications, as most of us would think, they targeted all expensive medications (brand and generics). On the day of the audit a lady came out with a scanner and a computer from ACS and scanned all the prescriptions that were the target of the audit. I was polite to her and provided all that she asked for. Upon the completion of the audit, I asked her about the whole audit process and this is the gist of what info I got from her. She said that these days most, if not all, of these audits are there to make money for PBM’s and audit companies. Basically, any auditing company can approach any PBM and offer “Bids” to purchase the prescription information. Thus, for example, PBM-X has paid for 500 prescriptions to ABC Pharmacy in one year. Any audit company can place bids to purchase the “rights” to these 500 prescriptions from PBM-X and start the audit process to make a buck. So let’s say that these 500 prescriptions amount to $20,000 that PBM-X paid ABC Pharmacy in the past year to fill the prescriptions. The audit company basically offers maybe $2000 to PBM-X to purchase all the rights to audit and recovery of the aforementioned 500 prescriptions. This means that the audit company has basically purchased HIPPA protected patient information, just for pennies-on-the-dollar. Next, the audit company turns around and starts there audit of the 500 prescriptions of ABC-Pharmacy. Upon the audit, the audit company will willfully and egregiously look for ways to recover any amount of the $20,000 from ABC Pharmacy. To further our example, they may recover $10,000 from the pharmacy, at which point, they will be very happy because they have made an $8000 profit for their audit company in just 2-3 hours of grilling the small community pharmacy( $10,000 recovered - $2000 paid for “info”= $8000 profit ). Granted, you might think that all is well and the taxpayers got reimbursed $8000. This is where you are dead wrong. The only people who got rich here were the PBM and the audit company. None of the amounts recovered were paid back in any way to the government program that originally paid for the 500 prescriptions mentioned. Medicare did not get back even a penny of the $10,000 recovered from ABC Pharmacy. I hope I have shed some light on the latest corruption scheme between these new-age mobs. Should any one of you reading this think any of what I mentioned above seems kind of fishy, and outright illegal, please do not refrain to contact someone who may have some power to stop them. As for me, my aim here is to inform you, so that one day we may all get outraged enough to start up our own “mob” against this kind of tyranny.
The latest PMB/Audit Company Pharmacy Scams….
I am sure most of you independent pharmacy owners have been through the latest never-ending PBM/ “audit company” audits and really want to know why and how they may operate. Well, I was recently subjected to another one of these onsite audits by the so-called tag-team-duo: WellCare/ACS (PBM/Audit company) and they provided me some info that I find priceless. It all started when I got a fax from the tag-team stating that in one month time they will visit my pharmacy in order to conduct an audit of approximately 150 medications that were dispensed within the last year in the pharmacy. Upon looking at the least of medications, I noticed a trend. All of the drugs audited are between $300-1000 each prescription and what is more interesting is that they only targeted expensive medications. So they did not just target brand medications, as most of us would think, they targeted all expensive medications (brand and generics). On the day of the audit a lady came out with a scanner and a computer from ACS and scanned all the prescriptions that were the target of the audit. I was polite to her and provided all that she asked for. Upon the completion of the audit, I asked her about the whole audit process and this is the gist of what info I got from her. She said that these days most, if not all, of these audits are there to make money for PBM’s and audit companies. Basically, any auditing company can approach any PBM and offer “Bids” to purchase the prescription information. Thus, for example, PBM-X has paid for 500 prescriptions to ABC Pharmacy in one year. Any audit company can place bids to purchase the “rights” to these 500 prescriptions from PBM-X and start the audit process to make a buck. So let’s say that these 500 prescriptions amount to $20,000 that PBM-X paid ABC Pharmacy in the past year to fill the prescriptions. The audit company basically offers maybe $2000 to PBM-X to purchase all the rights to audit and recovery of the aforementioned 500 prescriptions. This means that the audit company has basically purchased HIPPA protected patient information, just for pennies-on-the-dollar. Next, the audit company turns around and starts there audit of the 500 prescriptions of ABC-Pharmacy. Upon the audit, the audit company will willfully and egregiously look for ways to recover any amount of the $20,000 from ABC Pharmacy. To further our example, they may recover $10,000 from the pharmacy, at which point, they will be very happy because they have made an $8000 profit for their audit company in just 2-3 hours of grilling the small community pharmacy( $10,000 recovered - $2000 paid for “info”= $8000 profit ). Granted, you might think that all is well and the taxpayers got reimbursed $8000. This is where you are dead wrong. The only people who got rich here were the PBM and the audit company. None of the amounts recovered were paid back in any way to the government program that originally paid for the 500 prescriptions mentioned. Medicare did not get back even a penny of the $10,000 recovered from ABC Pharmacy. I hope I have shed some light on the latest corruption scheme between these new-age mobs. Should any one of you reading this think any of what I mentioned above seems kind of fishy, and outright illegal, please do not refrain to contact someone who may have some power to stop them. As for me, my aim here is to inform you, so that one day we may all get outraged enough to start up our own “mob” against this kind of tyranny.
Your comments are valuable to us. Thank you.
Blog Info
This blog is designed to keep pharmacists educated about the truth behind drug costs and keep them informed on the misinformation spread by PBMs.
Author Bio
Pharmacists United for Truth and Transparency is a growing coalition of independent pharmacists and pharmacy owners dedicated to exposing widespread abuse and manipulation by pharmacy benefit managers (PBMs). Pharmacists United for Truth and Transparency is a resource for employers, policy makers and members of the media. We are here to educate pharmacists about the intricate PBM business model and help counter the misinformation spread by PBMs. We are a not-for-profit organization funded by individual members, not corporations or other special interest groups.
For more information, visit our Web site at TruthRx.org (http://www.truthrx.org/).
Disclaimer
The opinions stated in this blog are the sole and present opinions of Pharmacists United for Truth and Transparency and do not necessarily represent the views of Pharmacy Times and/or its editorial staff. The information stated in this blog is for informative purposes only and should not be constituted as legal or medical advice. Pharmacy Times makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses or damages arising from its display or use.
Disclaimer
The opinions stated in this blog are the sole and present opinions of Pharmacists United for Truth and Transparency and do not necessarily represent the views of Pharmacy Times and/or its editorial staff. The information stated in this blog is for informative purposes only and should not be constituted as legal or medical advice. Pharmacy Times makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses or damages arising from its display or use.
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666 Plainsboro Road
Building 300
Plainsboro, NJ 08536
P: 609-716-7777
F: 609-716-4747
Copyright HCPLive 2006-2011
Intellisphere, LLC. All Rights Reserved.