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Assuring Optimal Prescription Benefit Management

Assuring Optimal Prescription Benefit Management. Terrance Killilea, Pharm.D. Wells Fargo Insurance Services. Demography ― Aging.

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Assuring Optimal Prescription Benefit Management

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  1. Assuring Optimal Prescription Benefit Management Terrance Killilea, Pharm.D.Wells Fargo Insurance Services

  2. Demography ― Aging Source: National Center for Health Statistics, 1993. Hyattsville, MD: Public Health Service, 1994. US Bureau of the Census, Historical Statistics of the US , Colonial Times to 1970, Washington DC, 1975.

  3. Health Insurance Costs Are Rising? Kaiser Family Foundation, 2008

  4. And Rx Cost Continue To Rise Double every 12 years Kaiser Family Foundation, 2007

  5. Recent Factors In PBM/Rx Cost Trends • Increased generic use (up to 70%) • Stabilization of cost growth trend • Stabilization of Rx as a % of total cost • Biotechnology as a significant cost driver • “Transparency” debate • Increased importance as self-funding/ reinsurance gains focus

  6. What A Client Looks For In A PBM • Accurate eligibility management • Accurate claims/benefit adjudication • Low commodity (unit) pricing • Quality of care management • Effective strategies to manage cost

  7. Generic Drug Factors Affecting Plan Sponsor Costs • Generic unit pricing • Formulary impacts generic utilization • Examples of comparisons

  8. Biotechnology Drugs • Also termed “specialty drugs” • Rarely less than $1000 per dose • Few large studies verifying value • Often due not cure disease, lessen symptoms • Very profitable for “specialty pharmacies”

  9. GENE GUNS AS VECTOR • Isolate normal DNA fragment. • Make very small spheres of a heavy metal like gold. • Coat gold with DNA. • Fire particles at cells at high speed so particles enter cells. • Good success to date. • May be used directly on tissues or organs in situ.

  10. Cost Challenges With Biotech • Consistent increases in wholesale price(8% increase = $160 per month!) • Low likelihood of becoming generic • Many are chronic/long term therapy Enbrel/ Humira/ Avonex/ Copaxone/ Rebif • Wastage costs $1000s per dose Thus assuring every new start is “appropriate” is essential….evidence-based criteria for use

  11. Cost Reduction From Specialty Pharmacy Management Projection From Unmanaged Utilization Pricing and Distribution Benefit Design Clinical Management Formulary Rebates Waste Minimization 2-5% 5-25% 2-5% 2-5% 3-6% with dosage control virtually open ended

  12. Biotechnology ManagementAn Improved Model Current Vendors Improved Model Clinically Appropriate (Y/N)? Clinically Appropriate (Y/N)? If Yes If Yes Distribute (at significant margin) Distribute (at negotiated rate) With oversight of vendor to assure pricing is adhered to • Eliminates profit motive from clinical assessment • Allows close scrutiny of pricing • Assures each treatment has been assessed and assured of value to patient/client • Avoids evolution of misaligned priorities • Control of manufacturer relations/rebate contracting

  13. Transparency: What To Watch For • Spread pricing • Relations between PBM/mail/specialty • Rebate administration • Network administration fees • Selling data to manufacturers

  14. The Fiduciary Debate • Increased focus as member cost sharing rises • Recent legislative and court decisions • Practical elements of fiduciary responsibility • Adding fiduciary language to your contract

  15. Optimal PBM RelationsIt All Starts With The Contract • Assessing your current contract • Working within contractual restraints • The value of going to bid • How to derive terms beneficial to the plan

  16. Measurable Value to ClientA: Improved Pricing Cost of Prescriptions ($ pmpm) $x pmpm Time

  17. Measurable Value to Client B: Decreased Cost Trend Quarterly Cost Trend (% vs. previous year) x% lower trend Time

  18. Measurable Value to Client C: Effective Specialty/Biotech Strategy Using an evidence based prior authorization program, inappropriate use or use where there is no demonstrated value will be dramatically reduced. In addition, determination of appropriateness will not be performed by the entity distributing (making margin) the drug

  19. Value For Self Funded Accounts • Assure PBM pricing is lowest possible • Monitor and audit TPA billing • Assure PBM clinical cost management programs in place • Audit/manage rebate collection and reconciliation • Biotechnology strategies (pricing and Prior Auth) • Assess disease management fees and claims • Data analysis-identification of arising problems • Report interpretation Terrance Killilea, Pharm.D. terry_killilea@wellsfargois.com

  20. Value For Insured Accounts • Assure pharmacy trend underwriting matches experience • Assess PBM clinical cost management programs (impact) • Assess rebate collection, is it being applied to experience? • Biotechnology strategies (pricing and Prior Auth) • Assess disease management fees impact on experience • Report interpretation, tracking of insurer commitments Terrance Killilea, Pharm.D. terry_killilea@wellsfargois.com

  21. Success Requires That Many Parties Work Hard and Pull Together in the Same Direction

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