Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Re: Lipitor and the evil PBM’s
Dew,
As this economy is still market driven, what do you think the response has been from the generic company? They lowered the price below the rebate from the brand, nullifying any savings. Lipitor's action, in a wonderful case of unintended consequences, may cause the price to consumers to go down faster than it would have if they did not make all of these deals.
Of course, if your PBM has made a deal with Lipitor, you still will be paying more than you should. But that can't be since PBM's save the system so much....see previous post.
Have a great Christmas if I don't talk to you before,
RPh
Re: PR from ESRX
All you need to know is found on the cover page of the report: This study was supported by funding from Express Scripts and Medco Health Solutions.
It almost sounds like Medco and Express Scripts have something pending?
Shaking of head,
RPh
Re:what value did the PBM add in this transaction?
Dew,
As you know, I think that your assertion that the PBM does nothing but increase costs to health care is beyond argument. The reason that they are still around is that the PBM can claim that my sponsor has saved 5 figures on anti-lipid therapy due to the PBM intervention. Do you think that management really is looking too closely at this savings and what it could be? I can guarantee that the sponsor's benefit coordinator will be more likely to get praise from this deal than get fired.
I can assume that there are some business owners that read this board, so I will be a gentle as possible. Don't be uneducated and/or lazy. The best why to control your medical costs is to personally control as much of the supply costs as possible.
Or just give up and sign up for socialized medicine. Then we all can support your medical costs.
RPh
Re: Wow!
Dew,
I have to admit that I really didn't think that the PBM would answer. I understand that those rebate contracts are, in most circumstances, considered privileged. I was also not surprised that the sponsor took the rebate money. The really surprising part of this agreement is who looses from it. This is where the NY Times, as usual, gets it wrong.
Let's look at who benefits from this deal.
1)The PBM makes more money than they give back to the sponsor.
2)The sponsor gets a rebate for more than the cost savings from the generic, so they feel they win.
3) The patient probably will get a discounted copay for the brand. Most often the copay is the same as for the generic version.
Who looses? The pharmacy supplying the drug must now spend more money on stocking more of the more expensive drug. Since not all insurers will be requiring brand, the pharmacy must also stock more of the generic. Once the 6 month exclusivity is over, the pharmacy will be stuck with some brand inventory that will never be used, causing more loss. It doesn't take many of these types of arrangements for your bottom line to completely erode.
But that is the pharmacy biz. Now you know why I never owned one!
RPh
RE: Corroborating your contention that the PBM industry ranks as one of the largest corporate scams of all time:
Dew,
I am currently dealing with one of these companys now, regarding this very issue. I was asked to review the offer to the sponsor for bypassing the generic for 6 months. The PBM would not disclose how much they were getting from Pfizer and was going to pull their 5 digit rebate to the sponsor. Needless to say, the sponsor elected to take the rebate without the full disclosure requested.
On a side note. It is interesting that many of these close pharmacy/PBM ties have been broken since I last checked in.
Hope all is well,
RPh
OT- Lincoln's first inaugural address
Kinda shows the importance of knowing your history. Thanks for this very appreciated history lesson.
My final OT today,
RPh
RE: OT? It bears on "insulting consumers' intelligence"
Well spoken!
Since we now live in a state of eagerness to assign "accountability" to almost anyone other than the fool who causes an accident, it's natural that most cautionary directions have become bluntly insulting to one's intelligence (and probably ineffective as regards those who have none).
I wish I could turn a phrase like that. In fact, I can now as I plan to steal that line!
You may want to think about a career change as I know some politicians that could use a speach writer.
RPh
Re: insulting consumers’ intelligence
Dew,
One more thought. There are real consequences to the pharmacy for patients not thinking about their orders before they call in refills. Any prescription filled and not picked up is a potential claim of insurance fraud waiting in your bins. It is an auditable offense that triggers more audits. Most insurances allow you 30 days to return orders, but if you are too busy or too disorganized to comply..... I commit a couple of hours per week running through bins and returning items to stock. New computers cut this time but my guess is that CVS has been audited and found multiple issues.
Much of what we do is for the lowest common denominator. This is no exception.
RPh
Re: clip from House
Too funny! Also very realistic.I have had Houses' look on my face before. Kinda "How am I going to say this?"
One story. We were taught a standard set of instructions for suppositories: "Unwrap and insert". As a new, know-it-all pharmacist, I thought this was too descriptive and insulting to the intelligence of my patients. I would write "Insert" only. One day I got a call from a 40ish woman in tears asking when the wrapper on her suppository would come off. I told her before she inserts it. Her silence spoke louder than words. I said, "you did take the wrapper off before you inserted it, didn't you?" More tears.
My error in remembering that people are "stupid" about the things I understand has stuck with me since and has hopefully helped me be a better pharmacist.
I still shake my head though,
RPh
Re: Duh
I actually was taught in school to "never underestimate the stupidity of your clientele!" Ask any pharmacist and they could tell you enough stories of the bizarre and incredibly stupid to fill your day. I do not mean it in a cruel way, just honest.
While this seems to be overkill, CVS must have had many people call in discontinued medications in order for them to go to this extreme.
I should probably use that as my motto as it pertains to so many things, political, social, and personal.
RPh
RE: CVS Caremark: A Match Not Made in Heaven
Dew,
I hope all is well.
This really is no surprise. I think it shows that the FTC is, in general, a less than effective bureaucracy, when it comes to anticipating anti-competitive relationships. As stated, I haven't had faith in them since Merck/Medco originally was approved.
What I find more interesting is the fact that CVS could not make this work. It is very educational for all investors that even though a merger might make sense from a business perspective, the results often fail. I have found that an expert in one area certainly is not an expert almost anywhere else. It is certainly true for me. CVS's mistake seems to be in it's choice of Caremark management.
Finally, with the new Health bill, I really think the need for PBM's will be questioned and may be one of the first insurance casualties of the bill. Why should business keep paying for the employee benefit when there is such an easy way to pawn it off? Then, what happens to the PBM relationship when it is no longer needed? Why should the government need 50 different PBM's? Why not own their own? ...... The cascade will be interesting to watch, even if you and I are paying all of the bills.
Finally, don't be too impressed by the prediction. It really is the only investment opinion I have been right on for a couple of years!!!!
Stay well,
RPh
Re: Tamoxifen and genetic links to Drug Interactions.
Dew,
The science of this interaction goes back to at least 2002, but mostly from 2007. This is not new and my database shows this as an interaction to "avoid concurrent use". This is based on decreased CYP2D6 activity either by "genetic varients and/or drug interaction". The decrease in activity of Tamoxifen is associated with decreased concentrations of the highly active metabolites of Tamoxifen. I could try to find the links to the studies if they are of interest.
The more interesting question is why is Medco studying this. Remember, I believe they are evil so there must be something in it for them. Medco has started offering a genetic test for all Tamoxifen patients paid for by the sponsor. That right, for $250.00 a pop, Medco will check for the genetic marker that is related to Tamoxifen efficacy. If they prove that CYP2D6 effects the efficacy, then more people will want to test their employees for this genetic marker. The sponsor wants the best outcome for the money for it's employees so many would be willing to pay for this service. Especially if there is "science" behind it.
That's my take. You can decide if they are evil!!
RPh
Re:There must be easier ways for a healthcare investor to make money!
A young pharmacist I know is going to be working on the healthcare reform package in Washington. She certainly understands the problems and I have faith that she will represent pharmacy well. It will be interesting to see how all of these healthcare groups work to get a piece of the pie.
As far as your conversion, my work here is done.
RPh
Re: [What a crock!]
Do I hear the sound of a PBM convert?!? You should watch out, as you are starting to sound like me and that won't be good for any of your investments!!
Too funny,
RPh
Re:Wal-Mart is essentially eliminating the middleman
This is really like "on-site pharmacy" lite. While the sponsor does not receive the full benefit of their own pharmacy, catering to their employees needs, buying at deep contract pricing, they do get the full benefit of the negotiated price. It's easily verified and easy to administer. All things that HR departments like.
The PBM response to this is bad because "the pharmacies just want added foot traffic"? Duh! Express scripts needs a refund from their spokesperson's salary.
RPh
re:If today’s WSJ article is any indication, it may be happening sooner rather than later.
I think that this change is a necessity if the US is going to adopt National Healthcare. I've always believed that the main stumbling block to the move is how do you handle all of the private insurers who end up driving up the costs, but have such a hold on the system. If these scenarios gain acceptance and prove their worth, we are one step closer to eliminating the PBM drain on the system, and one more hurdle cleared for nationalization.
I am sure the PBM groups will be coming out with a response to this soon. If their true impact on costs is understood, the end is truly near.
RPh
Re:offering businesses low-priced drugs if they sign up
There are a few reasons why this is a better idea than a PBM. This model is certainly more transparent and will allow sponsors to negotiate with the various providers using a consistent measuring stick. If costs are being consistently negotiated, then the most important variable will be service. When service is stressed as the main tool for customer retention, the patient will really benefit. It is my contention that when pharmacists are allowed to increase their time with patients, the health system saves money and that leads to long-term added sponsor savings.
So sponsors win, patients win by being allowed to see a local pharmacist in person and the profession wins by hopefully being allowed to embrace personal patient care.
Now, if only these companies and pharmacists don't drop the ball.....
RPh
I have lost my clerical staff
I wish you well through this time. I hate the saying "At least we have our jobs" but it has become increasingly true. If your hospital system is anything like were I work, there was some fat that didn't involve direct patient care, that should have been cut long ago. Once this is over we should be more efficient and aware of cost savings. I just hope I don't lose my mind before then!
RPh
My group switched to a HSA account
I agree that HSA's have forced people to watch their health related purchases very carefully. After all, that is the desired outcome of the plans.
I'm curious. Were you given a choice of a traditional plan and an HSA? Was there any company match of your $6000 deductible? As HSA's are the trend for sponsors, it's interesting to see what other areas of the country are offering.
RPh
How long before hospital groups line up at the government trough?
Rising unemployment and other economic problems are causing Americans to visit the doctor less often, resulting in fewer prescriptions being written and filled in the U.S.
Pharmacy, and to a lesser extent, healthcare in general was always thought to be relatively recession-proof. What Walgreens is reporting is being seen in pharmacy's across the country but certainly shows that pharmacy can survive pretty well through an economic downturn.
What is surprising to me is the financial problems that large doctors groups and hospitals have been reporting. In my area all of the hospitals are reporting cash on hand issues and some have stopped building projects in mid-build. The largest hospital chain reports less than 2 months cash on hand and they are in the middle of 2 hospital building projects.
I'm curious if these same issues are being seem throughout the US or is it just a regional thing. One thing is for sure, people seem to be more interested in the costs of their healthcare. They are less likely to get the additional lab test or the elective surgery. They certainly are more informed. This can only be beneficial when the economy turns.
RPh
RE: write-up on MHS amusing
After yesterday, I might just need to invest in Medco!!! That's so sad.
Disillusioned American,
RPh
How much profit is too much
I need your opinions on this encounter I had with a patient yesterday. It shows a new attitude that may explain why our healthcare system WILL be changed in the near future.
A patient called me to find out how much a prescription would be if we filled it at our pharmacy as opposed to their current pharmacy. They had a high deductable insurance so the price would be the same anywhere, as is contracted. He wanted us to discount the copay which is against our contract to do, so I wouldn't do it.
Here's the interesting part. He then asked me, excluding the cost of research, how much I thought the drug cost to make. After explaining that you can't take out the research costs he actually asked if the government controlled how much profit the drug company could make. I almost dropped the phone. I asked him how much profit he thought was fair and he said that he couldn't come up with a number but that it should be fair. I told him that the discussion of government intervention on private companies profit margins is probebly a philosophical issue and ended the conversation.
Have we as a country gone so far down the socialist road that it is just common to think our government should have oversight over everything? Is this a more common attitude than I am aware of. If so, the whole pharmaceutical industry and each investor should keep this in mind before investing.
Still amazed,
RPh
RE: Express scripts
As I've said in the past, it's hard to argue with the premise from an investment standpoint.
I do find this interesting:
But the PBM industry's "Holy Grail" is generic drugs sold via mail order.
Their prices are lower than those charged for brand-name drugs. But generics are more profitable, and eliminating the retail pharmacy from the transaction places all of that profit into the PBM's pocket.
I think it proves my point. If the PBM makes the money, does the sponsor really save?
RPh
Re: rph_in_wi can correct me if this is wrong.
I could never correct you :)
RPh
Re: Why didn't you like working for Walgreens?
No offense to those who enjoy working in chain pharmacy.
I like patient contact. I started in a store that did 100 scripts a day and had 2 to 3 pharmacists on at any one time. We enjoyed a really clinical practice before a the term "clinical" became overused. When that store closed, partly because there were 3 pharmacists and only 100 scripts, I eventually tried chain pharmacy. All of the customer service skills I had learned were useless as every day I was yelled at because of insurance, Walgreens policy, or quality issues. After 2 years my regional manager took me aside and said that the reason he felt I wasn't enjoying my job was that I cared too much. It was the best gift he could have given me. It reminded me why I went into pharmacy and what part of the job I enjoyed most. It was a lesson that has stuck with me today and has allowed me to find happiness in every job I have taken since.
I no longer allow myself to judge my practice by the number of scripts I produce, but by the number of lives I touch.
Corny, but true.
Best of luck to you,
RPh
Re: Is this model just gaining traction, or has it been around for a while?
There have been companies doing this since the late 80's early 90's. Most were put in with a sponsor owned medical clinic. There have been some recent escalation in utilization. A large Indian tribe has put some in their casinos. Drugs and gambling?
A major department store chain located in WI has put one in to service both local and national employees thru mail order. Companies that have the employees in house are starting to listen to alternatives and are more willing to think differently about these cost containment measures.
My longterm vision is to see companies that have their own pharmacies band together to own their own PBM. Local companies could co-op the cost of PBM ownership(actually very minor start-up) and share the benefit of true cost pass-thru transparency. Processing fees that are paid by the pharmacies would further cut costs to the sponsor-owned PBM.
Co-op? Maybe I am a communist. :)
RPh
RE: Is this kind of service explicitly forbidden at some pharmacies?
No pharmacy, chain or independent, would make a rule that you can't leave the filling area to talk to a customer. BUT in many busy chain pharmacies, if you do leave, you are letting down your "team". Because reimbursements are so low, pharmacy has become a volume game. Most stores have been designed to be as efficient as possible. If one member of the team leaves his post, the efficiency is ruined. In essence, my customer service skills have been designed out of the prescription filling process.
I didn't last long at the chains. :(
RPh
Re: the world would be very surprised at what Walgreens has their hands in
I'm not accusing them of anything illegal. Most people think of Walgreens as their local pharmacy. While I didn't like working for them, their upper management has always been very forward thinking. They will have a presence in the writing of prescriptions (nurse practitioner clinics), all forms of medication delivery (IV and Retail), insurance and benefit management (PBM, On-site Pharmacy and Mailorder), and Durable Medical. I'm sure that I missed something.
I'm surprised at the list and I made it!
Rph
Re:the insurance companies
I see common ground!!!!
Good discussion!
Rph
Re: Do these discounts typically apply to injectables
Something like specialty drugs can show the same cost savings. Exclusive specialty drugs I obviously can't get. Where I work now, we make all employees use our pharmacy for Enbrel, Copaxone, Humira, and the like. Even if we can only purchase it at 75% of what the PBM can due to volume, the benefit sees all of that discount. We really can't know how much of the discount we would get from the PBM.
What about “closed” hospital pharmacies that are set up as non-profits?
Are you talking in-patient or out-patient? My current pharmacy is a closed door, out-patient pharmacy owned by the non-profit hospital. It is the perfect example of the success of the model.
RPh
RE: are the three big national PBM’s different
This is truly my opinion so please don't take this as God's Law.
I feel the PBM concept as a whole is flawed. The Big 3 do offer some plans a "pass-thru" or transparent contract. These contracts state that the sponsor will get all discounts and rebates and will pay a transaction fee for service per claim. The problem is that the sponsor has no way to audit for these discounts and rebates. Sponsors have no rights to see exactly what rebates have been paid to the PBM. Until the laws are changed to allow for true transparency, I wouldn't be able to say that the concept would be acceptable.
As you can see, I'm full of opinions and short on universally usable solutions. My question to you is:
Which came first, the high cost of medicine or the insurance companies that insulated all of us from seeing the escalating cost of medicines?"
RPh
Re:why having the pharmacy closed to the general public
Finally an easy question that takes my emotions out of the picture.
There are two different factors that go into the price paid by pharmacies and PBM's. One factor is quantity and the other is trade class. While not equal in discount, the application of each determines the total discount.
The benefit of the closed door on-site pharmacy is that it is owned by the employer. More specifically, the Health Benefit. It can be formed in different ways but commonly it is established as a non-profit. The closed door function is vital as you will be categorized at a better class of trade. If you are only servicing for "own use", the business can purchase through buying groups at a drastically discounted price. Average savings are around the 30% mark and can be as high as 80% of normal costs. The key is that you must ensure that only participating members (employees, retirees, and immediate family dependents) can use the pharmacy. You can't use your discounts to be in competition with the retail world.
PBM's can purchase at great discounts due to large volume. But does this volume save 30% to the sponsor? Remember, the sponsor generally does not pay the exact cost of the drug. With mail order, they may save 10%, which to the lay person sounds great. Not so if you know the PBM pays 30% less for the drug.
The beauty of the on-site pharmacy is that the sponsor owns and controls the pharmacy benefit. All of the savings goes directly back into the benefit.
Hope this makes sense. I don't want this to turn into a sales call for those not interested.
RPh
Re:If PBM’s are really and truly providing no benefits
When I was getting information regarding the start of this business enterprise, I talked to people involved with the PBM industry. One explained to me that the whole PBM model was destined to collapse. This was before Medicare D. She stated that basically, CEO's were "lazy" about looking too deeply into their benefit costs. Easy solutions are easily approved. She felt there was only so long until the health burden would force CEO's to look at what they were getting for the money and would start to ask questions that the PBM would not want to answer. She called it the "black box" where money went in and less money came out. Once the box was opened, by legal action or government oversite, the whole model would collapse. She seemed to think this would happen sooner rather than later. She sited the increased legal action against them as proof of her time-frame.
Now that Medicare D has been started, using PBMs as the cost savings mechanism, this demise has not happened. If I was a conspiracy freak, I would assume the government has propped up the industry so that the program wouldn't crumble with it. As I'm not a freak, I can't ever imagine our government propping up any private industry to preserve jobs, homes, or programs. That would be un-American!
As for shorting the stocks, my investment history would not allow me to ever be qualified to give advice....
RPh
re: The three largest PBM’s
If these companies are as useless to their clients as you suggest, the PBM industry ranks as one the largest corporate scams of all time.
I know I'm going to sound like a nut, but basically, I agree with your conclusion. The PBM is nothing but a middleman, changing money from one group to another, taking a large cut, and providing little to no verifiable benefit. They are experts in hiding what they actually do, and,in general, Benefit Coordinators are not trained to understand the true costs associated with pharmacy benefits. In my meetings, the Coordinators were not aware that PBM's use multiple AWPs when paying pharmacies and billing sponsors. They don't know that the PBM pays the pharmacy a different rate than they are billed. This spread is usually 2-4%. They definitely don't understand that PBM's keep more of the rebates than they give out. Please feel free to google lawsuits and any PBM to see many of the settlements regarding these issues.
Basically, businesses are ill equipped to manage these costs so PBMs fill this need. From an investors perspective, PBMs make money. From a global perspective, just because PBMs make money doesn't mean they are effective at lowering costs.
I really am not a communist. I like profit in business. I beleive there would be more profit in all businesses if there were less middlemen in healthcare.
RPh
I'll respond more later if I can
Re: TRC’s efficiencies of scale
On a recent investor presentation, Medco said the above can’t be done because Medco’s disease-specific TRC’s have efficiencies of scale that even a large hospital group can’t match. I presume you disagree with this claim.
Medco is correct for traditional pharmacies. I'm talking about placing in-house, closed door pharmacies in medium to large employers main employment centers. Because the pharmacies are not open to the general public, they are able to purchase at a better trade of sale, or special contract pricing. While this reduced price may or may not always be at a lower cost than the large PBM, ALL of the savings goes to the sponsor as opposed to being, at best split with the PBM.
I would not expect Medco to admit to this as the above concept is still not widely accepted, and it was their presentation.
RPh
Walgreen to Acquire OPTN
I think the world would be very surprised at what Walgreens has their hands in.
It's not good nor bad. It just is.
Rph
Behind-The-Counter Drug Sales
I hadn't seen this article. Pharmacists have been pushing this since I was in school sooooo long ago! The theory is that mass marketers couldn't offer these specific, highly misused or abused medications. Honestly, any pharmacist who is allowed to escape the filling counter to help a patient in the proper OTC product selection probably doesn't need the BTC to protect his business.
An example is pseudoephedrine. Currently, you must sign a log to purchase it at the pharmacists counter. How many times has the pharmacist asked you about high blood pressure, diabetes, or thyroid conditions before he sold it to you? Just because we have the exclusive rights to sell it doesn't mean we actually do anything to earn the right.
RPh
"The new price was chosen by looking at the prices of other specialty drugs and estimating how much insurers and employers would be willing to bear."
The honesty in this statement staggers me. The willingness and ignorance of the insurance plan sponsors (employers), who are usually self-insured, to pay whatever bill is presented to them is even more staggaring. From my most recent experience consulting with a major hospital group, the benefit coordinators have very little understanding of the way these PBM's work.
Our PBM quotes all the statistics of how specialty pharmaceutical costs are growing at outrageous rates, not ever hinting that they control some of that increase. We control those costs by bringing the pharmacy "in-house" and bypassing their specialty units. We can buy those products cheaper and pass the savings directly to the plan benefit. This concept really ticks off the PBM.
FYI. Medco is hiring at least 80 pharmacists to perform Medication Therapy Management (MTM), disease state specific intervention and medication review, by phone. If I were performing the MTM, my interventions would revolve around what is best for the patient. Think about the cost of 80 pharmacists. What criteria will their interventions be based on?
RPh
This one I do. No other messages are there.
RPh
iHub mailbox
My mailbox shows that mail should be in there, but nothing is there when I look. Any thoughts?
RPh