PBM Overview

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• PBM Overview
• What is in this black box?
• Greg Rucinski RPh

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PBM FUNCTIONS

• Process Claims
• Provide Pharmacy Network Discounts
• Provide Mail Order
• Provide High Cost Therapy Programs
• Provide Customer Service
• Provide Rebates
• Provide Information

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Misaligned Incentives

• These Program Participants Are Paid By
• The Prescription
• Manufacturers
• PBMs
• Pharmacy
• All are paid additional funds outside of your
  control

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PBM Scrutiny

• TRENDS-Litigation
• Articles-almost every week
• Firms Paid to Trim Drug Costs Also Toil For Drug
  Makers (Wall Street Journal)
• When Is a Rebate a Kickback? (U.S. News World
  Report)

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Quality Assurance Strategy

• QA Plan Design Effectiveness
• QA PBM and Claims Processing
• QA Manufacturer Revenue
• Assist Underwriting and Actuary

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Where Are The Dollars?
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UN-LEVERAGING PHARMACY TREND
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• Where to MANAGE?
• Contractual Holes- Missing Opportunities
• DUR,Plan Design Eligibility Disconnects
• Ongoing Savings Opportunities

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Contract Discount Issues
14.22
35.45
Validation of Discounts
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What MAC Program?
Same Medication
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Brands need MACs Too!For Example Prozac 20mg

• Dista(Lilly) Package of 100 AWP3.11
• RePackager A AWP3.54
• RePackager B AWP3.56
• RePackager C AWP4.27
• 12 off any one of these drugs will not violate a
  contract with the PBM!!

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MAC Alternates
0.10
0.41
2002 Data No MAC
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MAC REPRICE
Implied MAC Paid
Opportunities
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New Generic Entities
More Paid For Generic vs. Brand based on Co-Pay
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PBM Pricing Model

• Contracts No Longer Refer to U C
• -Typical Withhold 1.25/claim
• AWP based on 100 unit costs
• -Typical Withhold 0.50/claim

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Cost/Amount Billed Per Unit and Day

• Mail Order vs Retail
• Define the Discount
• Example SSRIs (Anti Depresents)
• Mail AWP 20 1.00
• Retail AWP 12 2.50

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Mail Order Analysis
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Rebate Issues

• Complex Contract Types
• Not easy to understand, payment based on AWP,
  MAC, or unique criteria-Days of therapy
• Market Share Based
• Based on Carrier, PBM, compared to National
  Benchmarks.

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Rebate Overview

• PBMs revenue may be maximized through a greater
  rebate
• Administrators of these programs may be aligned
  on the wrong incentive
• High cost drugs with high rebates-who wins?
• Increasing Rebate Revenue does not always equal a
  lower PMPM

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Best Price Issues
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Manufacturer Revenue Report
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Process Improvement

• Invalid NDCs
• Re Packs
• Phony DEAs
• Compound Rxs
• DAW Discount Grid
• QLL/QPC

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SOLUTION

• Be Informed
• Always QA the Program
• Beware of Mail Programs
• Read The Reports from PBM
• Ask Unit Cost Questions
• Communicate

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Products

• Basic Audit (Claim only)
• Full Audit (Claim Elig)
• Process Improvement Audit
• Day One Management Program
• Full PBM Replacement (TriScripts)

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Pricing