8/18 Business of Meds (main points)

Types of specialty pharmacy drugs

1. High cost

2. High complexity

3. High touch

High cost specialty drugs

Typically priced more than $1,000 per 30-day supply (or $670 for Medicare/Medicaid). Includes:

1. Self-administered injectables

2. Professionally-administered injectables/infusions

3. and oral medications

Approximately 400 specialty meds are available

Fastest growing component of pharmacy benefit

High complexity specialty drugs

Biotechnology products, or biopharmaceuticals: Any biology-based therapeutic medication that structurally mimics compounds found in the body - from blood delivered factors to customized gene-based therapies.

Orphan or Ultra-Orphan drugs

Medications that are included in a specialty pharmacy drug class strategy

High touch specialty drugs

Medications that require:

1. Temperature control or other special handling/shipping.

2. Ongoing drug management by a pharmacist and/or drug physician specializing in treating the member’s condition.

3. In-depth member education, compliance monitoring, side effect management, and, often, injection technique education.

4. Periodic lab testing for continued treatment analysis.

Biosimilars

Highly similar, lower-cost versions of original biologic drugs

• Not exactly the same structure, but no clinically meaningful differences in safety, purity or potency

• Generally lower cost due to an abbreviated approval pathway

Pharmacy Benefit Manager (PBM)

An organization that manages prescription drug benefits and related services

Goals of PBMs

1. Maximize quality of care

2. Minimize and control drug costs

3. Appropriately influence med use at the

   • Prescriber level

   • Pharmacy level

   • and Patient level

Core PBM responsibilities

PBMs are primarily responsible for:

1. Processing and paying prescription drug claims

2. Contracting with a network of pharmacies

3. Developing and managing:

   • Drug formularies

   • Clinical quality programs

   • Utilization management programs

4. Negotiating discounts and rebates with drug manufacturers

A PBM may provide these services on behalf of health insurance companies, employers, unions, or any other org offering prescriptions benefits.

PBM Rx cost containment strategies

1. Formulary management

   • P&T committee

   • Tiered structures

   • Rebates

2. Utilization management

   • Drug Restrictions: Prior Auth, Quantity Limits, Step Therapy

3. Medication Use Evaluation (MUE) / Drug Utilization Review (DUR)

4. Establishing Pharmacy Networks

   • Preferred, Limited (in-network), Out of network

5. Negotiating reimbursement: AWP, WAC, MAC

Prior authorization

A requirement that the prescriber obtain approval from the insurance plan/PBM before a medication will be covered.

Usually used for expensive, restricted, or specialty meds.

Medication Use Evaluation (MUE)

A systematic review of medication use to determine whether meds are being used appropriately according to established criteria.

E.g., indication, dose, duration, monitoring

Drug Utilization Review (DUR)

A process of reviewing prescription drug use to identify and prevent inappropriate, unsafe, or unnecessary medication use.

It can occur before, during, or after dispensing.

Difference between MUE and DUR

MUE - systematic evaluation of how a med is used

• Across multiple patients

DUR - reviews drug utilization by individual prescription

• Is the drug being used appropriately by an individual?

340B

Special pricing mechanism for public health service agencies

• I.e., FQHCs, IHS, children’s hospitals

Eligible providers can purchase drugs at discounted prices

• Average of 51% of AWP

• Insulin at $5/vial

Usual & Customary (U&C)

The standard cash or retail price for a drug without using insurance.

Price submitted to insurance cannot be higher than this, otherwise fraud

National Drug Code (NDC)

A 3-segment, 10-digit number (barcode)

Universal product identifier used to bill medications