Pharm Econ 1

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3 types of formularies

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Open Formulary

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open formulary

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a formulary with few

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closed formulary

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a formulary that restricts access to non-formulary drugs.

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Partially open or incentive-based formulary

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a formulary that allows access to non-formulary drugs

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Decisions about what drugs should be on a formulary often are made by

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a pharmacy and therapeutics (P & T) committee (role of this committee varies across orgs)

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P&T committee composed of...(4)

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composed of physicians

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patient cost sharing requirements

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Under most prescription drug insurance plans

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3 purposes of cost sharing

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To directly reduce insurer costs by shifting costs to patients.

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3types of pt cost sharing

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deductible

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deductible

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the amount (e.g. $500) that patients have to pay toward their medical expenses before the insurance coverage begins

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3 properties of deductibles

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Typically covers some period of time (e.g. one year).

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coinsurance vs copayment

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Coinsurance: patients pay a set percentage of the cost of prescriptions (e.g. 20 percent).

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multi tier copayments- two vs three tier copays

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Two-tier copayment: two levels of copayments.

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e.g. $10 for generic drugs

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$20 for brand name drugs

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e.g. $10 for generic drugs

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$20 for preferred brand name drugs and $45 for non-preferred drugs.

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now

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how many tiers are commonly seen for copays

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specialty drugs

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biotech drugs and drugs for some serious diseases (e.g. cancer

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give example

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specialty drugs

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Recent example is Provenge to treat advanced prostate cancer with a $93

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000 price per course of treatment. (cost per month often thousands of dollars)

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PBMs - how are they managing specialty drugs? (3)

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tighter management of specialty drugs

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how PBMs have dealt with specialty drugs (3)

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tighter mgmt

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2010 health care reform and biologic drugs (biotech)

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The 2010 health care reform law included a pathway for approval of generic biologics

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value based benefit design

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Copayments and other cost-sharing amounts are based on the value of the drug

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Incentives for Generic Substitution (4)

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pt financial incentives: Differential copayments

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Other Benefit Restrictions (2)

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Days supply or other quantity limitation.

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Many prescription drug plans limit the quantity dispensed

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often to a 30 days supply though may be longer for chronic meds (90 days)

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cap on # of rx per month was instigated by/used by whom

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medicaid

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prior auth

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a process or protocol whereby the third party payer limits coverage of selected medication to patients meeting predetermined specifications

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who can initiate PA process

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Depending on the plan

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prior auth involves the insurer

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how?

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used for what?

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Programs that review

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Can occur before

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during or after dispensing.

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what is DSM? (disease state management)

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comprehensive

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DSM programs usually target (2)

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chronic

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DSM programs focus on what for the pt (4)

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education

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case management vs. disease state management (main difference)

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many of the same components as DSM programs

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Patients typically are selected for case management based on what? (2)

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high utilization and/or high expenditures

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which state program has a pharmaceutical case mgmt program?

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Iowa Medicaid has a pharmaceutical case management program

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Clinical Practice Guidelines

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Systematically developed statements that assist practitioners in the proper management of a given disease.

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Step Protocols

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Access to an expensive drug is based on failing less expensive therapy.

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3 other tools for controlling drug costs

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clinical practice guidelines

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PBM-Pharmacy Contract Battles- example

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walgreens and express scripts

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big blow to walgreens

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Rationale was low reimbursement under Express Scripts.

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what gives PBMs the right to audit pharmacies

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Under pharmacy contracts with PBMs

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desk audits

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“Desk audits” where the pharmacy must submit information on selected prescriptions to the PBMs

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on-site audits

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where a PBM auditor comes to the pharmacy to check records.

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common outcome of audits

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Audits often result in pharmacies having to pay back money to the PBMs

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evidence of quality of PBM audits changing

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Anecdotal evidence that both the frequency and intensity of PBM audits are increasing

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describe what a restrictive network is

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a pharmacy chain or other small group of pharmacies that have agreed to accept lower reimbursement rates.

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how patients are coerced into using restrictive networks (2)

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Patients may be required to use the network pharmacies (e.g. required to mail order)

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trends in restrictive pharmacy networks and PBMs

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Seeing a trend toward some very restrictive pharmacy networks being offered as an option to PBM customers.

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mail order pharmacies: how are they coercing pt to do this (2)

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Either mandatory or incentives to use.

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Mail order is often chosen by employers who are hoping to do what

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to reduce prescription drug costs

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laws regarding mail order pharmacies. why?

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NY law that bans mail order incentives (see reading).

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do mail order pharmacies save money?

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Controversy over how much mail order pharmacies save.

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pharmacy direct contracting- give example of what this is (and store)

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Wal-Mart has a program where companies can direct contract with Wal-mart for prescriptions filled by their employees at Wal-mart.

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explain how walmart direct contracting works (how does company pay wal-mart

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incentives to use)

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testing of walmart direct contract program

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Caterpillar pilot tested this program. (wtf)

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What are advantages and disadvantages of this model for pharmacies? (pharmacy direct contract program)

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