Any Plan that wants to control its prescription coverage costs needs to control the “days supply” of Specialty Drugs that will be dispensed by its PBM. Your Plan can’t afford to squander precious money on Specialty Drugs that your Plan beneficiaries may never use and may instead flush down the toilet.
Therefore, if you haven’t reviewed your Plan’s claims data to analyze the quantities of Specialty Drugs dispensed by your PBM, you should. That’s particularly true, because you’ll likely discover your PBM is dispensing many Specialty Drugs with 90 day supplies. Then you need to take action to control the days supply of all Specialty Drugs.
Below we describe several categories of Specialty Drugs and appropriate quantity limits for each. We also discuss why your PBM may not allow your Plan to impose quantity limits on Specialty Drugs, and describe what your Plan needs to do to change the situation.
Oncology Drugs: Obvious Candidates for Strict Quantity Limits
Anyone who has ever had cancer – or knows someone who has – which means virtually everyone – knows that many people begin cancer treatments and quickly end or change them for at least three reasons. First, most cancer treatments are toxic, and many patients cannot tolerate them. Second, most cancer treatments fail to cure cancer or lead to remission, or do the latter for very limited periods of time. Third, these drugs often have adverse events and affect other cells in the body like red and white blood cells. As a result, patients may have to reduce their dose or stop taking the drug.
Accordingly, it makes no sense to dispense initial cancer treatments with 90 day supplies, or even 30 day supplies. Instead, Plans should limit initial treatments to 14 or 15 day supplies, and ensure the relevant copayment is half what it would have been for a 28 or 30 day treatment.
Plans should also require the days supply of the next several treatments to be similarly limited. For most oncology drugs, creating a 14 or 15 day supply limit for the first 3 months of treatment makes sense.
If plan beneficiaries continue to use a cancer treatment beyond an initial three month period, for most cancer treatments Plans should limit the quantity dispensed to 30 day supplies. Exceptions for a few oncology drugs might be created, like Gleevec/imatinib. But such exceptions should be rare.
Although it’s obvious that almost all cancer treatments should be dispensed with limited supplies, many PBMs allow initial treatments – and subsequent treatments – to be dispensed with 90 day supplies. Exemplifying this problem, when we recently examined a new client’s claims data we found one of the Big Three PBMs was dispensing 90 day supplies of several cancer drugs, including the following:
Inlyta – used to treat advanced kidney cancer when a different treatment has not worked (approximately $13,800 per 30 day treatment)
Xeloda/capecitabine – used to treat breast cancer or colon or rectal cancer that’s metastasized (approximately $3,000 per 30 day treatment)
Sutent – used to treat kidney cancer, or a type of pancreatic cancer, or a rare cancer of the stomach, bowel or esophagus called gastrointestinal stromal tumor (GIST) (approximately $10,500 per 30 day treatment)
Temozolomide – used to treat brain cancer (approximately $3,100 per 30 day treatment)
Tasigna – used to treat chronic myeloid leukemia (approximately $13,100 per 30 day treatment)
As you can see, all these drugs treat very serious cancers with poor prognoses. All, also, are very toxic. Multiply the approximate 30 day cost of each drug by three to learn the approximate cost of a 90 day treatment, and you’ll understand why dispensing 90 day treatments will likely cause excessive costs for every Plan – including yours – if you allow your PBM to dispense 90 day treatments.
Specialty Drugs That Are Almost Always In The Top 20 Most Expensive Drugs: Multiple Sclerosis, Growth Hormone & Auto-Immune Treatments
Examine a list of your Plan’s Top 20 Most Costly Drugs, and it’s virtually certain it will include drugs in three therapeutic categories, namely (i) multiple sclerosis drugs (like Copaxone and Tecfidera), (ii) growth hormone treatments (like Norditropin and Humatropin), and (iii) auto-immune drugs that treat rheumatoid arthritis, plaque psoriasis, psoriatic arthritis, Crohn’s disease and other similar health problems (like Enbrel, Humira and Xeljanz).
Many multiple sclerosis patients start on a MS drug, stay on it until they experience a relapse, and then quickly change drugs. To dispense 90 day supplies of these drugs, which typically cost approximately $18,000+ per 90 day treatment, is to invite waste and excess cost. Limiting all MS treatments to 30 day supplies is an obvious way to reduce waste and decrease your Plan’s costs.
Growth hormone treatments often require refrigeration, meaning dispensing 90 day treatments could result in spoilage if appropriate refrigeration isn’t provided. Often, because of the injection device the packaging may be bulky, making it difficult to fit a 90 day supply into the refrigerator. Individuals also don’t stay on growth hormone treatments for lengthy periods of time. Therefore, limiting these drugs to 30 day supplies makes sense.
Users of auto-immune drugs may remain on these drugs for longer periods of time, but as many as 30% or more may not. Therefore, your Plan should consider whether to allow 90 day supplies of auto-immune drugs, which typically cost at least $12,000+ per 90 day treatments.
In all these instances, your Plan should consider whether it’s (i) more important to avoid imposing an extra burden on your plan beneficiaries to obtain 12 scripts (rather than 4 scripts) a year, or (ii) worthwhile to avoid the extra costs and waste that will likely result from dispensing 90 day supplies.
Hepatitis C Drugs: Another Therapeutic Category Where Quantities Should Be Limited
As almost everyone knows, remarkably effective new hepatitis C treatments are now available (like Harvoni, Viekira Pak, Epclusa and Mavyret). However, these treatments are immensely expensive. One person receiving a complete treatment (of 8 or 12 weeks) may cost a Plan $80,000 or more based on the costs invoiced to the Plan. And almost no Plans can obtain any information from their PBMs reflecting whether, and to what extent, rebates are reducing those costs.
While most individuals can – and do – take the full 8 or 12 week course of treatment successfully, some do not, either because the drug is ineffective or the individuals are non-compliant.
Given the exorbitant costs of hep C drugs, every Plan should limit dispensing to 4 or 6 weeks initially, and require a lab test to be transmitted and reviewed by the PBM before the end of the relevant period, to ensure the drug is being taken appropriately and working. To allow a complete hepatitis treatment to be dispensed to any user invites likely waste and excess costs.
Other Specialty Drugs
Most other Specialty Drugs should also be limited to 30 day supplies.
Notably, however, when our firm reviews the claims data of new clients, we almost always discover a PBM dispensing large supplies of many high-cost Specialty Drugs. Here are a few examples from a recent review of a new client’s data:
Repatha – a new PCSK9 treatment for high cholesterol (about $1200+ per month)
Benlysta – used to treat lupus (depending on dosage level, about $1600+ to $3800+ per 30 day treatment)
Botox injection – multiple uses (about $600+ per 30 day treatment)
Sensipar – (depending on dosage level, about $950+ to $2500+ per 30 day treatment)
H.P. Acthar – used to treat infantile spasms (about $35,000+ per 30 day treatment)
Given the high-costs of drugs like these, and the possibility that an extended day supply of many of these drugs may not be used in its entirety, your Plan should limit all these drugs – and many other Specialty Drugs – to no more than a 30 day supply.
But Will Your PBM Allow Your Plan To Implement Specialty Drug Quantity Limits?
Our caption raises what may be the million dollar question – quite literally – for your Plan.
Unfortunately, the answer to this question is likely “No”. Your PBM may refuse to allow your Plan to have any control over the days supply of Specialty Drugs.
Why would PBMs prevent Plans from reducing waste and excess costs? Because most PBMs own their own Specialty Drug Pharmacies, meaning the more Specialty Drugs the PBMs dispense with profit “spreads”, the more money the PBMs make.
As a result, for many years most PBM-client contracts have explicitly or implicitly ceded all control over quantity limits to PBMs. Thus, on those rare occasions when Plans ask to customize quantity limits, PBMs typically take the position that the Plans cannot do so. Alternatively, PBMs say they’ll allow customization, but they make clear that any such customization will result in forfeiture of most – or all – rebates.
Making matters worse, certain PBMs have recently begun adding new provisions to their client contracts that explicitly allow the PBMs to dispense 90 day supplies for numerous drugs. And those contract provisions often even explicitly include oncology drugs! Therefore, if your Plan has recently entered into a new PBM contract, it’s possible that your Plan has accepted specific language allowing the dispensing of 90 day supplies of Specialty Drugs.
What You Should Do
Regardless of your Plan’s contract’s terms, as a Plan administrator or trustee you should take the steps to analyze your Plan’s claims data to understand the extent to which your PBM may be dispensing 90 day quantities of Specialty Drugs. Then you should make clear to your PBM that you want it to cease doing so for most (if not all) Specialty Drugs. There is simply too much money at stake to ignore this matter.
If your PBM responds as we have predicted, you should not allow your PBM to end the discussion there. Consider reporting what’s happened to our firm, and we’ll write another article identifying specific PBMs that are engaged in this practice (without citing our sources).
Or consider contacting a reporter, and describing what’s happened (“on” or “off” the record, depending on your preference for anonymity). PBMs’ conflicts of interest and misconduct are now the focus of much attention, and many reporters are interested in identifying problems in the industry. If you want assistance contacting a reporter, let us know. We know several who will likely be interested in this subject.
But you need to do more than call attention to the problem if you want to decrease and control your Plan’s costs.
Change Your PBM Contract ASAP
Your PBM contract should explicitly allow your Plan to customize all Specialty Drug quantity limits (as well as all other Programs and your Formulary). However, as mentioned, it’s virtually certain your PBM contract explicitly or implicitly cedes all quantity limit decisions to your PBM.
Therefore, there’s good reason for you to change your Plan’s PBM contract as soon as you can, particularly because your contract is likely stuffed with other loopholes as well.
Review your contract and find the termination provision. If it contains a “with or without cause” termination right, take advantage of it: Put your PBM on notice that you intend to terminate the contract within the stated period. Then generate an entirely different form of contract, which includes a new provision granting your Plan the exclusive right to determine the days supply of every Specialty Drug. Make sure to eliminate the typical ambiguous definition of “Specialty Drugs” and carefully define the term “Specialty Drug” via a list of all such drugs. Then contractually identify the days supply of every drug listed.
If your contract only allows termination with cause, review the termination provision and make sure you know when your contract ends. Also, note when your Plan needs to give “notice” of termination to prevent the contract from automatically renewing for an additional year. Approximately one-third of all PBM-client contracts end as of December 31, 2018, but most contain “automatic one year renewal” provisions unless notice is given 90 or 120 or 180 days before that date. Therefore, many Plans still have time to give “notice” and improve their positions for 2019.
If your Plan is relatively small (providing coverage to, say, 1,000 covered lives) your Plan may be squandering tens or hundreds of thousands of dollars because your PBM is dispensing excessive supplies of Specialty Drugs. If your Plan is larger (providing coverage to, say, 10,000 covered lives), your Plan may be wasting as much as a million dollars (or more).
Take action on this matter. There’s too much to be saved to ignore it. And it makes no sense for your Plan to spend immense sums for drugs to be flushed down the toilet.
To read other Rx Drug Alerts, go to our Menu Bar at the top of this page, and click on RxAlerts.
Create Rational Quantity Limits For Specialty Drugs
Therefore, if you haven’t reviewed your Plan’s claims data to analyze the quantities of Specialty Drugs dispensed by your PBM, you should. That’s particularly true, because you’ll likely discover your PBM is dispensing many Specialty Drugs with 90 day supplies. Then you need to take action to control the days supply of all Specialty Drugs.
Below we describe several categories of Specialty Drugs and appropriate quantity limits for each. We also discuss why your PBM may not allow your Plan to impose quantity limits on Specialty Drugs, and describe what your Plan needs to do to change the situation.
Oncology Drugs: Obvious Candidates for Strict Quantity Limits
Anyone who has ever had cancer – or knows someone who has – which means virtually everyone – knows that many people begin cancer treatments and quickly end or change them for at least three reasons. First, most cancer treatments are toxic, and many patients cannot tolerate them. Second, most cancer treatments fail to cure cancer or lead to remission, or do the latter for very limited periods of time. Third, these drugs often have adverse events and affect other cells in the body like red and white blood cells. As a result, patients may have to reduce their dose or stop taking the drug.
Accordingly, it makes no sense to dispense initial cancer treatments with 90 day supplies, or even 30 day supplies. Instead, Plans should limit initial treatments to 14 or 15 day supplies, and ensure the relevant copayment is half what it would have been for a 28 or 30 day treatment.
Plans should also require the days supply of the next several treatments to be similarly limited. For most oncology drugs, creating a 14 or 15 day supply limit for the first 3 months of treatment makes sense.
If plan beneficiaries continue to use a cancer treatment beyond an initial three month period, for most cancer treatments Plans should limit the quantity dispensed to 30 day supplies. Exceptions for a few oncology drugs might be created, like Gleevec/imatinib. But such exceptions should be rare.
Although it’s obvious that almost all cancer treatments should be dispensed with limited supplies, many PBMs allow initial treatments – and subsequent treatments – to be dispensed with 90 day supplies. Exemplifying this problem, when we recently examined a new client’s claims data we found one of the Big Three PBMs was dispensing 90 day supplies of several cancer drugs, including the following:
As you can see, all these drugs treat very serious cancers with poor prognoses. All, also, are very toxic. Multiply the approximate 30 day cost of each drug by three to learn the approximate cost of a 90 day treatment, and you’ll understand why dispensing 90 day treatments will likely cause excessive costs for every Plan – including yours – if you allow your PBM to dispense 90 day treatments.
Specialty Drugs That Are Almost Always In The Top 20 Most Expensive Drugs: Multiple Sclerosis, Growth Hormone & Auto-Immune Treatments
Examine a list of your Plan’s Top 20 Most Costly Drugs, and it’s virtually certain it will include drugs in three therapeutic categories, namely (i) multiple sclerosis drugs (like Copaxone and Tecfidera), (ii) growth hormone treatments (like Norditropin and Humatropin), and (iii) auto-immune drugs that treat rheumatoid arthritis, plaque psoriasis, psoriatic arthritis, Crohn’s disease and other similar health problems (like Enbrel, Humira and Xeljanz).
Many multiple sclerosis patients start on a MS drug, stay on it until they experience a relapse, and then quickly change drugs. To dispense 90 day supplies of these drugs, which typically cost approximately $18,000+ per 90 day treatment, is to invite waste and excess cost. Limiting all MS treatments to 30 day supplies is an obvious way to reduce waste and decrease your Plan’s costs.
Growth hormone treatments often require refrigeration, meaning dispensing 90 day treatments could result in spoilage if appropriate refrigeration isn’t provided. Often, because of the injection device the packaging may be bulky, making it difficult to fit a 90 day supply into the refrigerator. Individuals also don’t stay on growth hormone treatments for lengthy periods of time. Therefore, limiting these drugs to 30 day supplies makes sense.
Users of auto-immune drugs may remain on these drugs for longer periods of time, but as many as 30% or more may not. Therefore, your Plan should consider whether to allow 90 day supplies of auto-immune drugs, which typically cost at least $12,000+ per 90 day treatments.
In all these instances, your Plan should consider whether it’s (i) more important to avoid imposing an extra burden on your plan beneficiaries to obtain 12 scripts (rather than 4 scripts) a year, or (ii) worthwhile to avoid the extra costs and waste that will likely result from dispensing 90 day supplies.
Hepatitis C Drugs: Another Therapeutic Category Where Quantities Should Be Limited
As almost everyone knows, remarkably effective new hepatitis C treatments are now available (like Harvoni, Viekira Pak, Epclusa and Mavyret). However, these treatments are immensely expensive. One person receiving a complete treatment (of 8 or 12 weeks) may cost a Plan $80,000 or more based on the costs invoiced to the Plan. And almost no Plans can obtain any information from their PBMs reflecting whether, and to what extent, rebates are reducing those costs.
While most individuals can – and do – take the full 8 or 12 week course of treatment successfully, some do not, either because the drug is ineffective or the individuals are non-compliant.
Given the exorbitant costs of hep C drugs, every Plan should limit dispensing to 4 or 6 weeks initially, and require a lab test to be transmitted and reviewed by the PBM before the end of the relevant period, to ensure the drug is being taken appropriately and working. To allow a complete hepatitis treatment to be dispensed to any user invites likely waste and excess costs.
Other Specialty Drugs
Most other Specialty Drugs should also be limited to 30 day supplies.
Notably, however, when our firm reviews the claims data of new clients, we almost always discover a PBM dispensing large supplies of many high-cost Specialty Drugs. Here are a few examples from a recent review of a new client’s data:
Given the high-costs of drugs like these, and the possibility that an extended day supply of many of these drugs may not be used in its entirety, your Plan should limit all these drugs – and many other Specialty Drugs – to no more than a 30 day supply.
But Will Your PBM Allow Your Plan To Implement Specialty Drug Quantity Limits?
Our caption raises what may be the million dollar question – quite literally – for your Plan.
Unfortunately, the answer to this question is likely “No”. Your PBM may refuse to allow your Plan to have any control over the days supply of Specialty Drugs.
Why would PBMs prevent Plans from reducing waste and excess costs? Because most PBMs own their own Specialty Drug Pharmacies, meaning the more Specialty Drugs the PBMs dispense with profit “spreads”, the more money the PBMs make.
As a result, for many years most PBM-client contracts have explicitly or implicitly ceded all control over quantity limits to PBMs. Thus, on those rare occasions when Plans ask to customize quantity limits, PBMs typically take the position that the Plans cannot do so. Alternatively, PBMs say they’ll allow customization, but they make clear that any such customization will result in forfeiture of most – or all – rebates.
Making matters worse, certain PBMs have recently begun adding new provisions to their client contracts that explicitly allow the PBMs to dispense 90 day supplies for numerous drugs. And those contract provisions often even explicitly include oncology drugs! Therefore, if your Plan has recently entered into a new PBM contract, it’s possible that your Plan has accepted specific language allowing the dispensing of 90 day supplies of Specialty Drugs.
What You Should Do
Regardless of your Plan’s contract’s terms, as a Plan administrator or trustee you should take the steps to analyze your Plan’s claims data to understand the extent to which your PBM may be dispensing 90 day quantities of Specialty Drugs. Then you should make clear to your PBM that you want it to cease doing so for most (if not all) Specialty Drugs. There is simply too much money at stake to ignore this matter.
If your PBM responds as we have predicted, you should not allow your PBM to end the discussion there. Consider reporting what’s happened to our firm, and we’ll write another article identifying specific PBMs that are engaged in this practice (without citing our sources).
Or consider contacting a reporter, and describing what’s happened (“on” or “off” the record, depending on your preference for anonymity). PBMs’ conflicts of interest and misconduct are now the focus of much attention, and many reporters are interested in identifying problems in the industry. If you want assistance contacting a reporter, let us know. We know several who will likely be interested in this subject.
But you need to do more than call attention to the problem if you want to decrease and control your Plan’s costs.
Change Your PBM Contract ASAP
Your PBM contract should explicitly allow your Plan to customize all Specialty Drug quantity limits (as well as all other Programs and your Formulary). However, as mentioned, it’s virtually certain your PBM contract explicitly or implicitly cedes all quantity limit decisions to your PBM.
Therefore, there’s good reason for you to change your Plan’s PBM contract as soon as you can, particularly because your contract is likely stuffed with other loopholes as well.
Review your contract and find the termination provision. If it contains a “with or without cause” termination right, take advantage of it: Put your PBM on notice that you intend to terminate the contract within the stated period. Then generate an entirely different form of contract, which includes a new provision granting your Plan the exclusive right to determine the days supply of every Specialty Drug. Make sure to eliminate the typical ambiguous definition of “Specialty Drugs” and carefully define the term “Specialty Drug” via a list of all such drugs. Then contractually identify the days supply of every drug listed.
If your contract only allows termination with cause, review the termination provision and make sure you know when your contract ends. Also, note when your Plan needs to give “notice” of termination to prevent the contract from automatically renewing for an additional year. Approximately one-third of all PBM-client contracts end as of December 31, 2018, but most contain “automatic one year renewal” provisions unless notice is given 90 or 120 or 180 days before that date. Therefore, many Plans still have time to give “notice” and improve their positions for 2019.
If your Plan is relatively small (providing coverage to, say, 1,000 covered lives) your Plan may be squandering tens or hundreds of thousands of dollars because your PBM is dispensing excessive supplies of Specialty Drugs. If your Plan is larger (providing coverage to, say, 10,000 covered lives), your Plan may be wasting as much as a million dollars (or more).
Take action on this matter. There’s too much to be saved to ignore it. And it makes no sense for your Plan to spend immense sums for drugs to be flushed down the toilet.
To read other Rx Drug Alerts, go to our Menu Bar at the top of this page, and click on RxAlerts.
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