It seems to be getting more difficult to treat psoriasis in the past few years, even though more medication choices are available than ever before to prescribe. Managed care is in the way, a roadblock between us prescribing and our patients receiving their needed medication. Managed care seems to have not only narrowed our choices, but it also seems to have created more paperwork for us to work through to have our patients start or even continue the narrowed choice of therapy the insurance companies will let us select from.
In the 20th century, we could prescribe and our patients quickly received almost any medication prescribed. A prescription was written, the patient took the prescription to the pharmacy, and the pharmacy filled the medication. If the pharmacy did not have the medication in stock, the pharmacist ordered the medication from their wholesaler, who would get the medication in stock in a matter of days at the most. The pharmacy billed the patient’s insurance for the cost of the medication (that they paid for from the wholesaler) adding on a fee for their profit margin. The wholesaler was the middleman, who purchased the medication directly from the manufacturer and then sold it to the pharmacy for a profit.
The Rise of Rebates
About 20 years ago, some pharmaceutical manufacturers began offering coupons/rebates to patients when their doctor would give them a prescription for their product (and the corresponding coupon). The manufacturer would take up to a certain dollar amount or percentage amount off the patient’s insurance copay or payment directly when they received their medication from their pharmacy. The pharmacy then submitted this manufacturer’s coupon to the pharmaceutical manufacturer to get reimbursed for the discount. This step does take extra work on the pharmacy’s behalf, but it is very much like what they do on a daily basis with coupons for retail products.
Adding coupons/discounts, however, sometimes clouded the picture as to what the pharmaceutical company was actually paying the insurance company for a patient’s prescription. The insurer sometimes received a negotiated discount from the pharmaceutical manufacturer when a pharmacy accepted a coupon/rebate (in addition to capping the patient outlay for the product). While the patient’s copay outlay and the before discount retail cost for the prescription was known, the exact amount the insurer paid for the remainder of the prescription’s cost was unknown.
With the rising popularity of costly biologic medications in the 21st century, the tried-and-true formula of pharmaceutical manufacturer to wholesaler to pharmacy to patient became more expensive for stakeholders. Insurers were asked to pay much more for medications then they were used to and local pharmacies would have to spend a lot of money to purchase and store biologics in their pharmacies. Everyone began looking for ways to reign in the high costs for paying for these new very expensive medications. Thus, the specialty pharmacy was born.
Utilization Management
Specialty pharmacies became the new middleman that replaced both the wholesaler and the pharmacy in the original pharmaceutical manufacturer to wholesaler to pharmacy to medication to patient format. Insurers, who preferred not to waste their resources by spending time negotiating rebates and discounts for these expensive medications outsourced to these new pharmacy benefit managers (PBMs) to negotiate rebates on their behalf. Or sometimes insurers created their own PBMs to try and negotiate prices for these expensive medications. PBMs created “utilization management” to help try and control costs for expensive medications. Techniques of utilization management include prior authorizations, step therapy, and quantity limits.
Prior authorizations require a pharmacist to review the physician’s prescription for “proper” utilization. With step therapy, the PBM requires patients to try and fail lower-tiered medications prior to coverage of a requested agent. Lowered-tiered medications are the ones that cost the PBM less money to procure. Creating quantity limits allows the PBM to place a cap on total medication use, thereby saving them money on a patient.
For PBMs, discounts/rebates took on an enhanced meaning. With a PBM, a rebate is a discount provided by the pharmaceutical manufacturer to the insurer to place the pharmaceutical company medication on a lower tier or in a preferred status. Built-in to the cost of the rebate, the negotiator, which is the PBM, takes a percentage of the rebate for them. Rebates can be flat rate or market share/outcomes driven. As mentioned, rebate revenues can be shared by the insurer and the PBM, but also sometimes by the employer (who contracted the insurer, who then contracted the PBM to negotiate).
Rebate negotiation is all about leverage. A pharmaceutical manufacturer can negotiate smaller rebates, yet still gain preferred/lower-tier status if it is first in class, has no generic equivalents, or has unique safety improvements. Manufacturers also gain the upper hand in rebate negotiations when they manufacture most of the medications in a disease state or have a medication that can be used across multiple disease states. On the other hand, the PBM gains more leverage when a product is not first in class, has generic competition, has less market share, or the PBM covers many lives and works with multiple insurers. Consolidation among PBMs therefore helps them to gain more negotiating leverage.
Access Denied
With their newfound strength, some PBMs have entirely denied access to certain medications. Earlier this year, CVS/Caremark negotiated discounted deals with 3 manufacturers so that their 3 biologics had exclusive coverage over any others. Even patients who had been on another biologic for years were required to switch to one of CVS/Caremark’s discounted biologics. These even more restrictive formularies can and have had a very negative effect on patients who had previously had their psoriasis stable for (sometimes) years.
Working Toward Solutions
Unfortunately, it seems perpetually harder for dermatologists to place their patients on what they feel is the best choice medication for each patient. But there are some ideas to help physicians cope with all of this.
The American Academy of Dermatology has prior authorization templates that can be used to make the prior authorization or any tier process easier to work through. They are accessible at www.aad.org/priorauth. Several bills are pending on a federal level to ease the price stranglehold on medications. In addition, some states have passed bills easing the step therapy process for physician prescriptions.
In whatever ways we can, our job is to help our patients receive the medication that we feel will help them the most regardless of the new price strategies being developed around us between big pharma and big pharmacy.
Dr Green is associate clinical professor of dermatology at George Washington University School of Medicine. He is the past chair of The American Academy of Dermatology’s (AAD) SkinPAC; current vice-chair of AAD’s State Policy Committee; and on the Medical Board of the National Psoriasis Foundation, and Board of Directors for the American Society of Dermatologic Surgery.
Disclosure: The author reports no relevant financial relationships.
It seems to be getting more difficult to treat psoriasis in the past few years, even though more medication choices are available than ever before to prescribe. Managed care is in the way, a roadblock between us prescribing and our patients receiving their needed medication. Managed care seems to have not only narrowed our choices, but it also seems to have created more paperwork for us to work through to have our patients start or even continue the narrowed choice of therapy the insurance companies will let us select from.
In the 20th century, we could prescribe and our patients quickly received almost any medication prescribed. A prescription was written, the patient took the prescription to the pharmacy, and the pharmacy filled the medication. If the pharmacy did not have the medication in stock, the pharmacist ordered the medication from their wholesaler, who would get the medication in stock in a matter of days at the most. The pharmacy billed the patient’s insurance for the cost of the medication (that they paid for from the wholesaler) adding on a fee for their profit margin. The wholesaler was the middleman, who purchased the medication directly from the manufacturer and then sold it to the pharmacy for a profit.
The Rise of Rebates
About 20 years ago, some pharmaceutical manufacturers began offering coupons/rebates to patients when their doctor would give them a prescription for their product (and the corresponding coupon). The manufacturer would take up to a certain dollar amount or percentage amount off the patient’s insurance copay or payment directly when they received their medication from their pharmacy. The pharmacy then submitted this manufacturer’s coupon to the pharmaceutical manufacturer to get reimbursed for the discount. This step does take extra work on the pharmacy’s behalf, but it is very much like what they do on a daily basis with coupons for retail products.
Adding coupons/discounts, however, sometimes clouded the picture as to what the pharmaceutical company was actually paying the insurance company for a patient’s prescription. The insurer sometimes received a negotiated discount from the pharmaceutical manufacturer when a pharmacy accepted a coupon/rebate (in addition to capping the patient outlay for the product). While the patient’s copay outlay and the before discount retail cost for the prescription was known, the exact amount the insurer paid for the remainder of the prescription’s cost was unknown.
With the rising popularity of costly biologic medications in the 21st century, the tried-and-true formula of pharmaceutical manufacturer to wholesaler to pharmacy to patient became more expensive for stakeholders. Insurers were asked to pay much more for medications then they were used to and local pharmacies would have to spend a lot of money to purchase and store biologics in their pharmacies. Everyone began looking for ways to reign in the high costs for paying for these new very expensive medications. Thus, the specialty pharmacy was born.
Utilization Management
Specialty pharmacies became the new middleman that replaced both the wholesaler and the pharmacy in the original pharmaceutical manufacturer to wholesaler to pharmacy to medication to patient format. Insurers, who preferred not to waste their resources by spending time negotiating rebates and discounts for these expensive medications outsourced to these new pharmacy benefit managers (PBMs) to negotiate rebates on their behalf. Or sometimes insurers created their own PBMs to try and negotiate prices for these expensive medications. PBMs created “utilization management” to help try and control costs for expensive medications. Techniques of utilization management include prior authorizations, step therapy, and quantity limits.
Prior authorizations require a pharmacist to review the physician’s prescription for “proper” utilization. With step therapy, the PBM requires patients to try and fail lower-tiered medications prior to coverage of a requested agent. Lowered-tiered medications are the ones that cost the PBM less money to procure. Creating quantity limits allows the PBM to place a cap on total medication use, thereby saving them money on a patient.
For PBMs, discounts/rebates took on an enhanced meaning. With a PBM, a rebate is a discount provided by the pharmaceutical manufacturer to the insurer to place the pharmaceutical company medication on a lower tier or in a preferred status. Built-in to the cost of the rebate, the negotiator, which is the PBM, takes a percentage of the rebate for them. Rebates can be flat rate or market share/outcomes driven. As mentioned, rebate revenues can be shared by the insurer and the PBM, but also sometimes by the employer (who contracted the insurer, who then contracted the PBM to negotiate).
Rebate negotiation is all about leverage. A pharmaceutical manufacturer can negotiate smaller rebates, yet still gain preferred/lower-tier status if it is first in class, has no generic equivalents, or has unique safety improvements. Manufacturers also gain the upper hand in rebate negotiations when they manufacture most of the medications in a disease state or have a medication that can be used across multiple disease states. On the other hand, the PBM gains more leverage when a product is not first in class, has generic competition, has less market share, or the PBM covers many lives and works with multiple insurers. Consolidation among PBMs therefore helps them to gain more negotiating leverage.
Access Denied
With their newfound strength, some PBMs have entirely denied access to certain medications. Earlier this year, CVS/Caremark negotiated discounted deals with 3 manufacturers so that their 3 biologics had exclusive coverage over any others. Even patients who had been on another biologic for years were required to switch to one of CVS/Caremark’s discounted biologics. These even more restrictive formularies can and have had a very negative effect on patients who had previously had their psoriasis stable for (sometimes) years.
Working Toward Solutions
Unfortunately, it seems perpetually harder for dermatologists to place their patients on what they feel is the best choice medication for each patient. But there are some ideas to help physicians cope with all of this.
The American Academy of Dermatology has prior authorization templates that can be used to make the prior authorization or any tier process easier to work through. They are accessible at www.aad.org/priorauth. Several bills are pending on a federal level to ease the price stranglehold on medications. In addition, some states have passed bills easing the step therapy process for physician prescriptions.
In whatever ways we can, our job is to help our patients receive the medication that we feel will help them the most regardless of the new price strategies being developed around us between big pharma and big pharmacy.
Dr Green is associate clinical professor of dermatology at George Washington University School of Medicine. He is the past chair of The American Academy of Dermatology’s (AAD) SkinPAC; current vice-chair of AAD’s State Policy Committee; and on the Medical Board of the National Psoriasis Foundation, and Board of Directors for the American Society of Dermatologic Surgery.
Disclosure: The author reports no relevant financial relationships.
It seems to be getting more difficult to treat psoriasis in the past few years, even though more medication choices are available than ever before to prescribe. Managed care is in the way, a roadblock between us prescribing and our patients receiving their needed medication. Managed care seems to have not only narrowed our choices, but it also seems to have created more paperwork for us to work through to have our patients start or even continue the narrowed choice of therapy the insurance companies will let us select from.
In the 20th century, we could prescribe and our patients quickly received almost any medication prescribed. A prescription was written, the patient took the prescription to the pharmacy, and the pharmacy filled the medication. If the pharmacy did not have the medication in stock, the pharmacist ordered the medication from their wholesaler, who would get the medication in stock in a matter of days at the most. The pharmacy billed the patient’s insurance for the cost of the medication (that they paid for from the wholesaler) adding on a fee for their profit margin. The wholesaler was the middleman, who purchased the medication directly from the manufacturer and then sold it to the pharmacy for a profit.
The Rise of Rebates
About 20 years ago, some pharmaceutical manufacturers began offering coupons/rebates to patients when their doctor would give them a prescription for their product (and the corresponding coupon). The manufacturer would take up to a certain dollar amount or percentage amount off the patient’s insurance copay or payment directly when they received their medication from their pharmacy. The pharmacy then submitted this manufacturer’s coupon to the pharmaceutical manufacturer to get reimbursed for the discount. This step does take extra work on the pharmacy’s behalf, but it is very much like what they do on a daily basis with coupons for retail products.
Adding coupons/discounts, however, sometimes clouded the picture as to what the pharmaceutical company was actually paying the insurance company for a patient’s prescription. The insurer sometimes received a negotiated discount from the pharmaceutical manufacturer when a pharmacy accepted a coupon/rebate (in addition to capping the patient outlay for the product). While the patient’s copay outlay and the before discount retail cost for the prescription was known, the exact amount the insurer paid for the remainder of the prescription’s cost was unknown.
With the rising popularity of costly biologic medications in the 21st century, the tried-and-true formula of pharmaceutical manufacturer to wholesaler to pharmacy to patient became more expensive for stakeholders. Insurers were asked to pay much more for medications then they were used to and local pharmacies would have to spend a lot of money to purchase and store biologics in their pharmacies. Everyone began looking for ways to reign in the high costs for paying for these new very expensive medications. Thus, the specialty pharmacy was born.
Utilization Management
Specialty pharmacies became the new middleman that replaced both the wholesaler and the pharmacy in the original pharmaceutical manufacturer to wholesaler to pharmacy to medication to patient format. Insurers, who preferred not to waste their resources by spending time negotiating rebates and discounts for these expensive medications outsourced to these new pharmacy benefit managers (PBMs) to negotiate rebates on their behalf. Or sometimes insurers created their own PBMs to try and negotiate prices for these expensive medications. PBMs created “utilization management” to help try and control costs for expensive medications. Techniques of utilization management include prior authorizations, step therapy, and quantity limits.
Prior authorizations require a pharmacist to review the physician’s prescription for “proper” utilization. With step therapy, the PBM requires patients to try and fail lower-tiered medications prior to coverage of a requested agent. Lowered-tiered medications are the ones that cost the PBM less money to procure. Creating quantity limits allows the PBM to place a cap on total medication use, thereby saving them money on a patient.
For PBMs, discounts/rebates took on an enhanced meaning. With a PBM, a rebate is a discount provided by the pharmaceutical manufacturer to the insurer to place the pharmaceutical company medication on a lower tier or in a preferred status. Built-in to the cost of the rebate, the negotiator, which is the PBM, takes a percentage of the rebate for them. Rebates can be flat rate or market share/outcomes driven. As mentioned, rebate revenues can be shared by the insurer and the PBM, but also sometimes by the employer (who contracted the insurer, who then contracted the PBM to negotiate).
Rebate negotiation is all about leverage. A pharmaceutical manufacturer can negotiate smaller rebates, yet still gain preferred/lower-tier status if it is first in class, has no generic equivalents, or has unique safety improvements. Manufacturers also gain the upper hand in rebate negotiations when they manufacture most of the medications in a disease state or have a medication that can be used across multiple disease states. On the other hand, the PBM gains more leverage when a product is not first in class, has generic competition, has less market share, or the PBM covers many lives and works with multiple insurers. Consolidation among PBMs therefore helps them to gain more negotiating leverage.
Access Denied
With their newfound strength, some PBMs have entirely denied access to certain medications. Earlier this year, CVS/Caremark negotiated discounted deals with 3 manufacturers so that their 3 biologics had exclusive coverage over any others. Even patients who had been on another biologic for years were required to switch to one of CVS/Caremark’s discounted biologics. These even more restrictive formularies can and have had a very negative effect on patients who had previously had their psoriasis stable for (sometimes) years.
Working Toward Solutions
Unfortunately, it seems perpetually harder for dermatologists to place their patients on what they feel is the best choice medication for each patient. But there are some ideas to help physicians cope with all of this.
The American Academy of Dermatology has prior authorization templates that can be used to make the prior authorization or any tier process easier to work through. They are accessible at www.aad.org/priorauth. Several bills are pending on a federal level to ease the price stranglehold on medications. In addition, some states have passed bills easing the step therapy process for physician prescriptions.
In whatever ways we can, our job is to help our patients receive the medication that we feel will help them the most regardless of the new price strategies being developed around us between big pharma and big pharmacy.
Dr Green is associate clinical professor of dermatology at George Washington University School of Medicine. He is the past chair of The American Academy of Dermatology’s (AAD) SkinPAC; current vice-chair of AAD’s State Policy Committee; and on the Medical Board of the National Psoriasis Foundation, and Board of Directors for the American Society of Dermatologic Surgery.
Disclosure: The author reports no relevant financial relationships.
