Sponsored by:
Creighton University School of Pharmacy and Health Professions

“A fair, balanced, and understandable approach to pharmacy benefit management that aligns with and represents the interests of plan sponsors”
UPM - University Prescription Management

Traditional models of PBM have proven to be expensive, confusing and rarely aligned to a plans' needs. The needs for plans are many and their PBM choices are few. We introduce the ethical, practical and viable solution to this area of healthcare!
UPM - University Prescription Management

VUCA describes the PBM industry,
Volatility, Uncertainty, Confusion and
Ambiguity. We will transform this with
Vision, Understanding, Clarity and
Agility using transparency and world class analytics. We desire to be the change maker of the market.
UPM - University Prescription Management

• Retail pharmacy network
• Mail service pharmacy
 Employer owned pharmacy as preferred vendor
• Plan design
• Customer service help de sk
(7x24x365)
UPM - University Prescription Management

• Clinical Management
(DUR/DUE/DSM/MTM)
• Specialty pharmacy integration
• Formularies
• Manufacturer rebates/discounts
• Data Analytics
UPM - University Prescription Management

*
• In 2014, spending on Rx drugs grew 13.1%, largest increase since 2001
• Specialty drugs are complex molecules derived from living biological sources. These include vaccines, gene therapies, recombinant protein products, antibodies and hormones
• In 2014, Specialty Drugs represented 1% of all prescriptions written
• In 2014, Specialty Drugs accounted for 32% of all prescription drug spending!
* AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015
UPM - University Prescription Management

Medication
Provenge
®
Sovaldi
®
Olysio
®
Rituxan
®
Gleevec
®
Avastin
®
Revlimid
®
*
Indication for use
Metastatic prostrate cancer
Hepatitis C
Hepatitis C
NonHodgkin’s lymphoma
Chronic myeloid leukemia
Metastatic colorectal cancer
Multiple myeloma
Monthly cost for indication
$105,800
$29,900
$23,600
$21,900
$11,900
$11,600
$9,300
* AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015
UPM - University Prescription Management

*
• Integration and Coordination of pharmacy and medical benefits
• Policies to maximize treatment adherence
• Growing role of specialty pharmacies
• Utilization and pharmacy management
• Clinical pathway and bundled payment arrangements
* AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015
UPM - University Prescription Management

UPM - University Prescription Management

UPM - University Prescription Management

• Admin fees per claim
• Admin fees per employee (PEPM)
• Spread Pricing
• Ownership of mail service pharmacy
• Manufacturer Rebates
• Selling claims data
UPM - University Prescription Management

• Admin fees per claim
 Fee for service
 $0.50 - $2.00 per claim paid
• Admin fees per employee (PEPM)
 Capitation arrangement
 $3.00 - $5.00 PEPM
UPM - University Prescription Management

• Spread Pricing
 Brand name (AWP = $100)
 Employer: AWP – 15% (charge = $85)
 Pharmacy: AWP – 17% (paid = $83)
 $2 difference kept by PBM!
UPM - University Prescription Management

• Spread Pricing
 Generic
(MAC based pricing)
 Example: alprazolam 0.25mg #90
 Employer: charge = $17.00
 Pharmacy: paid = $4.00
 $13.00 difference kept by PBM!
UPM - University Prescription Management

• Spread Pricing
 Generic
(MAC based pricing)
 Example: ranitidine 300mg #90
 Employer: charged = $215.00
 Pharmacy: paid = $15.00
 $200.00 difference kept by PBM!
UPM - University Prescription Management

• Spread Pricing
 Brand name
 Example: Xarelto
®
20mg #30
 Employer charged $706
 Pharmacy paid $193
 $513 difference kept by PBM!
UPM - University Prescription Management

• 2004 – Creighton researchers *
 Pilot project:
2 employers; 129 transactions
 Average spread per transaction
 All : $12.29/transaction
 Brand only: $4.65/transaction
 Generic only: $23.45/ transaction
* Garis RI and Clark BE. “The spread: pilot study of an undocumented source of Pharmacy Benefit Manager Revenue,” J Am
Pharm Assoc . 2004;44:15
–21.
UPM - University Prescription Management

• 2008 – Creighton researchers *
 Data source:
2 employers; 20,376 transactions
 Average spread per transaction
 All : $1.82/transaction
 Brand only: $0.07/transaction
 Generic only: $4.20/ transaction
* Siracuse MV, Clark BE, Garis RI. “Undocumented source of Pharmacy Benefit Manger Revenue,” Am J Health-Syst
Pharm 2008; 65:552-7.
UPM - University Prescription Management

• 2013 Creighton experience *
 Average spread per transaction
 All claims: $1.00/transaction
*
Study done to compare a known competitor with their suggested contract values. Spread is in addition to a PEPM fee of $3.50. The goal is a $0.00 spread with a fully disclosed admin fee.
UPM - University Prescription Management

• 2014 – Wharton School U of Penn.
*
•
•
Brand Names : “…For example, the PBM may reimburse pharmacies for drugs at
AW P minus 18% plus a $1 dispensing fee. These payment rates at which PBMs reimburse pharmacies are not generally known to plan sponsors. The PBM contracts for reimbursement from the sponsor at a somewhat smaller discount off AW P, say AW P minus 16% plus a $2 administration fee per script. The difference between the sponsor’s payment rate to the PBM and the PBM’s payment rate to the pharmacy is known as the
‘retail spread’ and is a significant source of PBMs’ net revenue .”
Generics: “… each PBM sets its own MAC reimbursement prices for pharmacies. According to the
2013-2014 PBMI Report, the majority of PBM contracts with plan sponsors (75%) bill for generics based on MAC pricing, and the remainder bill for generics based on a discount off AWP. PBMs can earn a spread on generics dispensed through retail pharmacies, as they do on brand drugs by billing a larger
MAC to the sponsor and paying the pharmacy a smaller MAC.”
* Danzon PM. “2014 ERISA Advisory Council - PBM Compensation and Fee Disclosure,” Report to the United
States Secretary of Labor, November 2014 .
UPM - University Prescription Management

Ownership of mail service pharmacy
• 2009 Creighton researchers *
• Analysis of 484,987 claims from 5 employers
 Copay incentive to use mail service
 Higher mail service utilization
 Higher cost to plan sponsor
 No copay incentive to use mail service
 Lower mail service utilization
 Lower cost to plan sponsor
*
Clark BE, Siracuse MV, Garis RI. “A comparison of mail-service and retail community pharmacy claims in 5 prescription benefit programs,” Research in Social and Administrative Pharmacy 5; 2009: 133-142.
UPM - University Prescription Management

• Manufacturer Rebates
 Flat rebates
 Performance rebates
 What proportion of rebate dollars are passed on to plan sponsors?
UPM - University Prescription Management

• Selling claims data *
 To data warehouse (broker)
 Broker sells to pharmaceutical industry
 Used by pharmaceutical industry to maximize sales and marketing
*
Claims data are de-identified to comply with HIPAA; prescriber information stays with data
UPM - University Prescription Management

“Turing Pharmaceuticals Retreats From Plan To Raise Price Of
Daraprim” from September 24, 2015 from $13 to $750 per tablet!
h t t p : / / p d . n p r . o r g / a n o n . n p r m p 3 / n p r / a t c / 2 0 1 5 / 0 9 / 2 0 1 5 0 9 2 3 _ a t c _ t u r i n g _ p h a r m a c e u t i c a l s _ r e t r e a t s _ f r o m _ p l a n _ t o _ r a i s e _ p r i c e _ o f _ d a r a p r i m . m p 3 ? d l = 1
• Glumetza
®
1000mg ER
 June 1, 2015: AWP = $14.84 per tablet
 July 1, 2015: AWP = $89.09 per tablet
• Compare to metformin 1000mg ER
 AWP = $10.47 per tablet
UPM - University Prescription Management

University Prescription Management
(UPM) – PBM consultants
J. Chris Bradberry, PharmD
Professor and Dean
Mark V. Siracuse, PharmD, PhD
Associate Professor and Vice Chair
Creighton University School of Pharmacy and Health Professions
Center for Health Services Research and Patient Safety
Omaha, NE
Phone: 402-280-3722
Email: msiracuse@creighton.edu
UPM - University Prescription Management

University Prescription Management
(UPM) – PBM consultants
 information file should be in Excel or Access . Required fields:

Date dispensed
 Prescription number
 NDC (National Drug Code)
 Drug name and strength
 Quantity dispensed

Days supply
 NABP # or NCPDP # (Pharmacy Provider ID number)
 Generic Flag (Generic/Brand identifier)
 Ingredient Cost (Amount reimbursed to pharmacy for ingredient)
 Dispensing fee (Amount paid to pharmacy for dispensing)

Co-payment Amount (Co-payment paid by member)

Reversal Flag (Reversal/Credit of transactions = Return to stock)
 Specialty drug flag (if available)
 Need 3 months of prescription claims data
UPM - University Prescription Management

University Prescription Management
(UPM) – PBM consultants
J. Chris Bradberry, PharmD
Professor and Dean
Mark V. Siracuse, PharmD, PhD
Associate Professor and Vice Chair
Creighton University School of Pharmacy and Health Professions
Center for Health Services Research and Patient Safety
Omaha, NE
Phone: 402-280-3722
Email: msiracuse@creighton.edu
UPM - University Prescription Management