Drug Fueled Rage Gripping Plan Sponsors

Price of Drugs Is Too Damn High!

By Bill Rusteberg

High cost specialty drugs can bankrupt a self-funded plan, even if you have stop loss cover. It’s just a matter of time. So do you act now to preserve your plan or do you wait until it’s too late?

Rx plan formularies (Our definition – list of covered drugs) change all the time. Specified drugs are excluded while others are covered. If a plan sponsor relinquishes control of their formulary by assigning that authority to a third party intermediary, self dealing harmful to the plan may occur.

“He who controls the formulary decides which drugs to cover and which to exclude” – Merlin The Magnificent, Sherwood Forest 1243 AD

Riddle:

If Specialty Drug A pays a rebate (commission, kickback) of $50,000 while Specialty Drug B only pays $10,000, which drug do you think a third party intermediary would exclude?

“A plan sponsor should never give up control of their formulary” – Otto Von Bismark, 1878

Amazing Factoid

High cost drugs turbocharge a plan’s risk exposure by 18-22%. Removing specialty drug coverage can save the same amount and more.

But can a plan do that or is there some sort of government mandate prohibiting the strategy?

Quiz

no knock raid | John W. Whitehead, Constitutional AttorneyQUESTION: CAN A PLAN EXCLUDE SPECIALTY DRUGS AND BE REST ASSURED A SWAT TEAM (ALONG WITH CNN) WON’T APPEAR AT THEIR DOOR IN THE WEE MORNING HOURS AND DRAG THEIR ASS OFF TO JAIL?

The answer is (1)_____ Yes  (2)_____ No (3)_____ Maybe (4)_____ Doesn’t Matter, We’re Doing It Anyway & Will Plead Ignorance If Government Agents Come Knocking On Our Door.

In Search of The Truth

Prior to when we started our investigation into whether a plan can eliminate specialty drugs we choose #4. Subsequently every PBM we asked (except one) answered #2 so we continued to cling to #4 with the confidence we had an answer #1 from a regional PBM as a backup. Then we got a few ERISA lawyers involved and………..(drum roll)……….we changed our answer to #1 and the rest is history.

So What is The Definition of a Specialty Drug?

Medicare defines a specialty drug as any drug for which the negotiated price is $670 per month or more.

The Strategy

A plan considering dropping specialty drug coverage (except those who check box #2 above) would be wise to use Medicare’s definition of specialty drugs when reviewing their formulary each year.  A plan sponsor  (except those that check box #2 above) would simply red line drugs costing more than $670 per month, an exercise that is easy enough to do.

Courage Fueled By Common Sense, Reason & Logic

Eliminating specialty drugs is “Für das Größere Wohl” rather than the interests of the few. However this philosophy doesn’t make the decision to act any easier. It’s a tough decision if you act now but it’s an even tougher decision if you act later.

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