Drug Topics - November 19, 2007 - (Page 20)

20 DRUG TOPICS NOVEMBER 19, 2007 www.drugtopics.com Managed Care More PBMs agreeing to pricing transparency Martin Sipkoff otwithstanding early opposition from the nation’s pharmacy benefit managers, the HR Policy Association’s (HRPA) Pharmaceutical Purchasing Coalition (PPC) now has 13 PBMs agreeing to certification criteria that create pricing transparency. The PPC includes about 55 employers, with more than five million covered lives. The certification process—named Transparency in Pharmaceutical Purchasing Solutions (TIPPS)—requires PBMs to disclose to their clients the actual acquisition costs for retail and mail-order drugs. The PBMs are required to pass drug company rebates directly to their clients. The PBMs also agree to be audited by the employers. “That, we believe, is the most important criterion,” said Marisa Milton, PPC executive director. “This is a complicated business,” said Kristin Todd Bisping isn’t Begley, Pharm.D., pharmacy practice leader for worried about Hewitt Associates, which wrote the TIPPS stanPBMs meeting dards for the PPC. “PBMs have traditionally had the standards. two customers: employers and the [drug] manufacturers. The goal was to align PBM incentives to provide the service they are hired by plans and Thirteen PBMs agree to employers to provide: TIPPS certification lower drug costs.” he 13 PBMs that have agreed to HR The result is that all Policy Association’s Pharmaceutical TIPPS-credentialed Purchasing Coalition’s Transparency in PBMs would charge Pharmaceutical Purchasing Solutions employers a straight certification are: administrative fee instead of making their Aetna Pharmacy Management profits through deals BlueCross and Blue Shield of Alabama with the drug industry. CVS Caremark The certification fee is Catalyst Rx, a HealthExtras company $50,000. RecertificaCIGNA Pharmacy Management tion costs $30,000. Express Scripts “The PBMs pay the Humana Pharmacy fees only if they meet Medco Health Solutions our certification stanPrime Therapeutics LLC dard,” said Milton. RESTAT LLC “When we originalSXC Health Solutions ly reached out to the PBMs three years ago, Walgreens Health Initiatives only three agreed to be WellPoint NextRx certified,” said Todd N T Bisping, manager of pharmacy plan design and administration at Caterpillar Inc., a leading PPC member. “We believe that what’s changed is that PBMs talked to their clients as contracts came up for renewal and got some pushback about their pricing policies.” A Medco spokesperson said, “In the first year of TIPPS [2006], Medco felt the requirements were not reflective of the true PBM market and capabilities. In the second year [2007)], HRPA modified and expanded the requirements to reflect marketplace realities.” Aetna Pharmacy Management was one of the three initial PBMs to agree to TIPPS, along with MedImpact Healthcare Systems and Walgreens Health Initiatives. “We were one of the first and we’ve maintained TIPPS standards ever since,” said Ed Pezalla, M.D., the company’s national medical director. “We believe it is good business to make it clear how much drugs cost and what our clients are getting for their money, and from the beginning we’ve demonstrated strong leadership on this issue.” PBMs make much of their profit—to an excessive degree, say PPC members—on rebates from manufacturers and by what is called “the spread,” i.e., the difference between the drug ingredient cost billed to the employer by the PBM and what is paid to dispensing pharmacies. Rebates and spreads vary, depending on the drug, the manufacturer, and PBM contracts with payers. The profitability transparency inherent in TIPPS represents an industry trend, said Perry Cohen, president, The Pharmacy Group LLC, in Glastonbury, Conn. “After employers began examining the way PBMs made their money and found out about the spread, they felt lied to, so the PBMs lost credibility,” he said. “No employer by itself could make change happen. But when employers got together, checkmate.” Perhaps so, said John Rector, general counsel and senior VP of the National Community Pharmacists Association. But he believes TIPPS does not achieve public PBM pricing transparency. “The question is, Who exactly gets access to [pricing] information? We prefer the Maine law, which requires complete public access to pricing information. TIPPS does not provide public access, but the more daylight there is, the better it is for plans and providers. We can’t complain about efforts toward more transparency.” THE AUTHOR is a writer based in Gettysburg, Pa. http://www.drugtopics.com

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Drug Topics - November 19, 2007 Contents Latebreakers Letters Leukemia Patients Now Have More Options First-in-Class HIV Drug Boon to Patients at End of Tether 150 Years of American Pharmacy Pharmacy Schools Confront New Pressures From Pariah to Patient ACCP Releases Position Paper on Ethical Interactions New Injectable Antibiotic Welcomed with Open Arms NCCN Updates Head and Neck Cancer Guide Improved Phosphate Binder Approved for Dialysis Patients Considering Combination Concern Ensuring Seamless Care Bill Would Create Center for Comparative Effectiveness Hospital Improves Patient Safety with Automatic Drug Distribution System Infection Rates, Patient Stays Drop with New Drug Device How R.Ph.s Helped Three Hospitals Win Quality and Safety Awards A Pharmacist and Dog in Tow are Alzheimer’s Patients’ Best Friends More PBMs Agreeing to Pricing Transparency New Insulins in the Management of Diabetes New Products Advertisers Index Classified VIEWPOINT: Reflections on Pharmacy School After 30 Years

Drug Topics - November 19, 2007

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