Pharmacy Benefits Flashcards
Pharmacy Benefits
Factors that Influence Prescription Drug Costs
- Prescription drug pipeline
- Brand patent protection
- Specialty drugs
- Direct-to-consumer advertising
- Member cost-sharing advertising
- Aging population
- Increase in awareness and testing for diseases that result in drug therapies
- Personalized medicine
Pharmacy Benefits
Employer Group Waiver Plan (EGWP)
Definition, Purpose, Approaches
- Definition: CMS has waived certain Medicare Part C/D requirements
- Purpose: Allow flexibility to offer subsidized retiree coverage via group Medicare plans
- 2 Approaches
- Direct Contract (Through CMS)
- Third-Party Administrator
Pharmacy Benefits
Retiree Drug Subsidy
Definition
- Federally funded incentive
- Encourages ERs not sponsoring Medicare plans to offer post-65 drug coverage at least as rich as standard Part D
Pharmacy Benefits
Pharmacy Drug Framework Entities
- Manufacturers
- Wholesalers
- Pharmacies
- PBMs
- Third Party Payers
- Beneficiaries
- Prescribing Health Care Providers
Pharmacy Benefits
Drug Manufacturers
Role
- Research
- Obtain approval to
- Produce
- Distribute drugs
- Distribute drugs wholesalers and pharmacies
- Negotiate with PBMs to get favorable formulary placement to encourage individuals to purchase their product
Pharmacy Benefits
Drug Manufacturers
340B Drug Pricing Program
Enables health care organization to provide care to underserved population to get drugs at a discount
Pharmacy Benefits
Drug Wholesalers
Role
- Purchase drugs from manufacturers
- Distribute to pharmacies
Pharmacy Benefits
Drug Wholesalers
Strategy to Lower Cost
Utilize large size and purchasing power
Pharmacy Benefits
Pharmacies
Role
- Dispense drugs to beneficiaries in exchange for cost-sharing
- Dispense drugs to providers that administer drugs
Pharmacy Benefits
Pharmacies
Types
- Retail
- Mail order
- Specialty
Pharmacy Benefits
Pharmacy Benefit Managers
Role and Services
Administer drug benefit programs to customers
- Administrative
- Claim adjudication
- Member Services
- Manage call center
- Issue insurance cards
- Other
- Negotiate rebate with manufacturers
- Negotiate discounts with pharmacies
- Manage relationship with third party payers
- UM controls
- Medical benefit integration
Pharmacy Benefits
Pharmacy Benefit Managers
How They Get Paid
Paid an admin fee by third party payers
Pharmacy Benefits
Third-Party Payers
Role
Insurance companies, employers, or government programs that fund drug benefits
Pharmacy Benefits
Beneficiaries
Role
Receive prescription as result of medical encounter
Pharmacy Benefits
Prescribing Health Care Providers
Role
Diagnose, treat medical conditions, and prescribe drugs
Pharmacy Benefits
Types of Prescription Drugs
- Generic
- Brand Name
- Specialty
- Biologic
- Compound
- OTC
Pharmacy Benefits
Prescription Drug Lifecycle (List, Define)
- R&D (15 years) = Drug discovery, FDA approval
- Brand Patent Protection Period (12 years) = Exclusive right to manufacture
- Generic Exclusivity Period (6 months) = 1 brand name manufacturer and 1 other can produce generic
- Generic Drug Lifespan = All manufacturers can produce and sell drug
Pharmacy Benefits
Formulary Design Types (List and Define)
- Closed = only covers drugs on formulary
- Open = doesn’t impact coverage, but does impact cost-sharing
- Tiered = Incentive cost-sharing tiers
Pharmacy Benefits
Formulary Tiers (Define the 6-Tier)
- Generic
- Preferred Brand
- Non-Preferred Brand
- Biosimilars
- Preferred Specialty
- Non-Preferred Specialty
Pharmacy Benefits
Value-Based Insurance Design
Purpose
Offer value-based benefits that reduce cost-sharing and medical treatments identified as being “high-value”
Pharmacy Benefits
How do pharmacy plans limit usage?
- Quantity Limit
- Prior Authorization
- Step Therapy
Pharmacy Benefits
Considerations about Whether to Include Script in Formulary
- Safety
- Efficacy
- Adequate coverage within therapeutic class of drugs
Pharmacy Benefits
Models for PBMs to Contract Third-Party Payers
- Transparent Model = Pass-Through Model
- PBM-negotiated discounts are used to determine claim liability of third-party payer
- Traditional Model = Lock-in Pricing
- Discounts aren’t passed directly to third-party payer (receive contracted rate)
Pharmacy Benefits
Rebates
Payments from manufacturers for preferred status of their drugs on formulary
Pharmacy Benefits
Key Factors to Determine Negotiating Leverage with Manufacturers for Pharmacy Rebates
- # of lives represented
- Ability to move market share to preferred products
- Consistency of plan’s response to manufacturer’s actions
Pharmacy Benefits
PBM Sources of revenues
- Admin fees
- Retention of portion of rebates
- Spread on drug dispensing fees
- Price protection to limit price increases or other sources
