|FROM ||Ruben Safir
|SUBJECT ||Re: [Hangout - NYLXS] PBMs and Rebates... lets not just blame Abbott
|From hangout-bounces-at-nylxs.com Sun Jun 11 02:43:23 2017
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From: Ruben Safir
Date: Sun, 11 Jun 2017 02:43:19 -0400
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Subject: Re: [Hangout - NYLXS] PBMs and Rebates... lets not just blame Abbott
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What the PBMs Aren't Telling the Press and Employers about Rebates
DECEMBER 01, 2011
As we expected, PBMs are trying to confuse the employers and the press
about how the Lipitor rebate situation will play out. Rebates are one of
the least transparent transactions that the PBMs control. Employers have
been erroneously trained by their consultants to focus on =E2=80=9Cguarante=
rebate dollars, instead of demanding that the employer get ALL of the
rebate money. By bringing the Lipitor rebate out in the sunlight,
Pharmacists United for Truth and Transparency has begun to expose how
rebates can help increase the PBM=E2=80=99s bottom line at the employer=E2=
To fully understand how the PBMs Lipitor rebate schemes will cost the
employer more than the generic, we will describe in depth how the
current rebate system plays out in the self insured employer market.
Rebate terms are agreed upon at the time the employer/PBM contract
is signed. Contracts are typically 3-year terms.
Rebates are NOT drug specific, they are claim-specific. This helps
the PBM avoid transparency by not having to account for each rebate for
Rebate language generally takes one of two forms (paraphrased):
=E2=80=9CEmployer=E2=80=99s drug plan rebates will consist of $3 per brand =
drug claim=E2=80=9D (all claims) OR =E2=80=9CEmployer=E2=80=99s drug plan r=
ebates will consist
of $17 per brand name drug=E2=80=9D (rebatable claims)
When the PBM obtains rebate dollars in excess of what is
=E2=80=9Cguaranteed=E2=80=9D, the PBM retains all of those dollars.
PBMs will also engage in semantics games with the drug manufacturer
to hide rebate dollars. For example rather than have the drug
manufacturer provide a $50 rebate for a drug, the manufacturer will
reclassify a portion of those dollars, say $35 as a =E2=80=9Cformulary fee=
=E2=80=9Cadministrative=E2=80=9D of =E2=80=9Canything other than a rebate=
=E2=80=9D and $15 as a
=E2=80=9Crebate=E2=80=9D. In this example the employer will then only get a=
the $15 =E2=80=9Crebate=E2=80=9D when they should be getting $50.
In the case of Lipitor, because the generic is expected to be about $35
cheaper than the brand (during the first 180 days), the existing rebate
money contract language will not likely be enough to make up the
difference in cost to the employer between the brand and generic. Unless
there is a specific contract addendum in place to address the Lipitor
rebate, the employer=E2=80=99s PBM contract will only entitle them to the
rebates they agreed to at the beginning of the contract (between $3-$17
per brand name claim on average).
What do we know about the Lipitor situation from the PBM documents?
The rebate from Pfizer to the PBMs is about $47 per Lipitor script
The difference in cost between brand and generic Lipitor is $35
If the employer receives less than $35 plus the copay differential
in additional rebate money from terms of their original rebate contract,
they are losing money on each Lipitor script filled by their employees.
What about the effect of reduced Lipitor copays?
When copays are reduced, the employer=E2=80=99s costs are INCREASED.
Example A. $155 drug with a $40 copay costs the employer $115
$155 (drug cost) - $40 (copay) =3D $115 (employer cost)
Example B. $155 drug with a $10 (generic) copay costs the employer $145
$155 (drug cost) - $10 (copay) =3D $145 (employer cost)
Many employer decision makers (Human Resource Directors/CFOs) are
unaware that reducing copays increases employer=E2=80=99s cost (this also
applies to mail order incentives).
Putting it all together:
Even if the employer is able to get every dollar of rebate provided by
Pfizer to the PBM (based on Catalyst=E2=80=99s number), the employer will s=
be paying MORE for Lipitor than if they had simply obtained the lower
cost generic available.
Self insured employer groups will need to be made aware of that they
must stay on top of the various deals and schemes being put together
between Pfizer, the PBMs, and the Insurance carriers.
The employers need to be on the phone with their benefits consultants
and demanding that the PBM provide the following:
A readily available and easily auditable accounting of all Lipitor
prescriptions filled during the first 180 days of generic Lipitor=E2=80=99s
A written guarantee that the employer=E2=80=99s net cost for brand Lipi=
will be lower than the generics available after reduced copays and
rebates are calculated
Financial penalties, including contract termination without penalty
if the cost of Lipitor is higher than the generic
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