“To every broker and consultant who ignored our words, I wonder if you have a conflict of interest? I wonder how many ways you are paid on products, commissions, and overrides by the bad actor in question?”
For anyone without a Bloomberg subscription, the punchline is a vertically integrated (spread pricing) PBM decides to white label generics… but why? To save customers more money? Not likely… Well, what if it was all an elaborate scheme by the PBM to convince brokers and consultants (and the customers they represent) that they had the best “discounts” on generic drugs?
Insert evil genius…
What if the PBM sets up a repackaging group… a business unit that basically took an already manufactured generic drug, buy it in bulk, then put it in a new bottle or package form… and by doing so was now able (FDA approval) to create a “new” NDC-11 (National Drug Code 11-digit identifier, including package size/type) and… wait for it… the PBM can now set a new UNIT PRICE?
I suppose a PBM could effectively target a commonly dispensed generic drug (atorvastatin 40mg) with an average unit cost of $0.38 a pill and set a new NDC-11 at $0.56 a pill. A competing PBM offers a generic discount of 90% and the other PBM (through the magic of repacking) has a generic discount of 96%… but also makes more money. The spreadsheet if fooled, the employer group pays more money ($16.80 per fill), and the PBM with the lowest net cost is completely overlooked ($11.40 per fill). Thank goodness the discount was better!
This flawed process would result in the manipulation of the broker/consultant’s spreadsheet (used for an RFP). If most spreadsheets, especially on generics, contemplate AWP discounts as a form of “guarantee on pricing,” the issue is, a PBM could show a higher discount, but still charge the most amount of money to the employer group.
This is why Capital Rx (Judi Health) has used NADAC pricing and pushed hard for actual pricing lists, to move away from the “illusion” of discounts on categories. We focus on net cost and helping employers see through these opaque practices. I can’t tell you how many times we have tried, and many times been denied by certain broker/consultants the ability to submit a supplemental analysis whenever the incumbent PBM uses a repackaging unit.
To every broker and consultant who ignored our words, I wonder if you have a conflict of interest? I wonder how many ways you are paid on products, commissions, and overrides by the bad actor in question?
To every broker and consultant who heeded our words, and enabled our analysis to be submitted, I appreciate your clarity of purpose and dedication to deliver your clients the truth.
Like I said in an earlier post, the tipping point has begun, and the era of making money on drugs (as an administrator) is coming to an abrupt end.
Cigna Unit Sells Generic Drugs at Higher Prices, Report Says
A little-known Cigna Group subsidiary that sells generic drugs charges prices that skew higher than many competing suppliers, according to a new analysis that raises questions about the company’s role in setting medication prices.
Cigna sells insurance and runs the country’s largest pharmacy benefit manager, which negotiates drug prices between manufacturers, health plans and pharmacies. Drug companies and politicians often blame pharmacy benefit managers for driving up the cost of medicines, but the businesses contend that they actually lower prices and that the drugmakers are the problem.
Continue reading here.
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