First, this case study will seek to highlight the impact of the $4 generic program, which has growing enthusiasm with payors, and has been applied to a Health Plan in the Midwest with over 80,000 members. The Midwest Health Plan is under a fully transparent and pass-through PBM arrangement with ProCare Rx. 
Secondly, this case study will describe the overall impact on the claims volume effect on this segment of generic pharmacy utilization.  Health Plans and Pharmacy Benefit Managers have suspected that claims volume dilution continues to occur from $4 generic claims not being submitted electronically to payors.  Finally, this case study will evaluate the program’s impact at Walmart^®, since the company was and continues to be both the innovator and leader in this segment of the pharmacy market.

ProCare Rx, a leading privately held national Pharmacy Benefit Manager (PBM), recently completed a case study for a Health Plan with 80,000 members in a fully transparent and pass-through arrangement and reports the overall impact and savings experienced from the $4 drug program offered by the pharmacies.

Analysis of a Transparent & Full Pass-Through $4 generic program

The $4 generic program, which was initially developed and launched by Walmart around the third quarter
of 2006, sought to lower the cost on a specific population of generic drugs.  Since then, the selection of drugs covered under the program has steadily grown and represents more than 300 generic products today.  The initiative’s original goal was to create an attractive price to cash payers, attempt to heighten therapeutic compliance, and increase foot traffic at Walmart stores in select markets.  The initiative was well received and became an immediate success in the market, lowering the cost of generic prescriptions for both patients and payors nationwide.  Shortly thereafter, the entire pharmacy market (with some exceptions including Walgreens^®, Rite Aid^® and CVS^®) moved to match the offering for fear of losing market share in the retail pharmacy space.  This program, which was originally designed for the cash and uninsured pharmacy patient, has now expanded exponentially, and has benefited employers and managed care organizations (MCOs) nationwide.  There are just a few exceptions where a small number of states prohibit these types of pricing methods.  Today, the $4 generic program continues to expand and now patients are able to obtain a 90-day supply of most of the $4 generics for only $10; further reducing the generic drug cost of medication for both members and plan sponsors.

However, some members and payors argue that they are not seeing the benefits of the aggressive pricing of
the $4 generic drug program across all of the different pharmacies offering this type of program.  They say that PBMs and Health Plans offering traditional pharmacy benefits are not “passing through” the full discounts.  Instead, they are keeping the additional monies as “spread margins” to offset administrative
costs for the services they offer employers and MCOs.

Health Plans and Pharmacy Benefit Managers (PBMs) contend however, that pharmacies are not submitting $4 generic medication(s) claims since these agents Usual and Customary (U&C) prices return less than what members would pay at the Point of Service (POS) using the standard pharmacy benefit offered through their Plan.  Furthermore, since these claims are essentially 100% member copay claims, pharmacies often choose to not process the claims to allow members to benefit from the greater cash price (U&C) discounts which also contribute to preserving the maximum pharmacy benefit thresholds.  If true, this raises a significant quality of care issue, as this subset of claims may circumvent the concurrent online Drug Utilization Review (DUR) clinical edits, which may lead to unwarranted drug-drug interactions.  By not processing the claim through proper plan channels, the pharmacist will not see the member’s complete pharmacy profile, and will miss any drugs the member may currently be taking that could cause serious injury when mixed with the new generic prescription.  This could expose the pharmacy to unnecessary liabilities if it’s proven the pharmacy had access to a complete check against a more complete online medication profile held by the health plan or PBM.

ProCare Rx, a leading privately held national PBM, recently completed an analysis comparing first quarter 2007 and 2008 generic claims volume to determine the cost benefit between a traditional PBM arrangement the Plan was under in 2007 and the ProCare Rx Transparent Model in 2008.  In addition, ProCare Rx then compared first
quarter 2008 versus first quarter 2009 generic claims volume to compare the impact on overall generic trends and the impact of the $4 generic drug program for a Health Plan in the Midwest with 80,000 members, which began in 2008 with ProCare Rx.  The Plan is contracted in a full pass-through transparent arrangement and the value of all negotiated pharmacy discounts are passed directly to the Plan and its members.

Additionally, ProCare Rx reviewed the overall generic claims volume to measure the net change in claims
volume for this subset of generic claims.  The intent of this effort was to identify and measure any potential impact of the suspected $4 generic claim non-submission phenomenon.

Overall Impact of $4 Generic Program in a Transparent Model, First Quarter 2007 (Traditional Model) versus First Quarter 2008 (Transparent Model)

For the period of January to March 2007 the Plan experienced a 57.90% generic utilization rate with an average total prescription cost for generics of $25.76.  Using the Walmart $4 generic list as a benchmark for drugs eligible for this discount, 43.48% of all generic prescriptions overall were eligible for the $4 generic discount benefit**.  The overall average total cost per prescription of this subset of generics was $19.25 for this period.  The amount per prescription reflects a mix of 30-day supply and 90-day supply utilization, but is heavily weighed to 30-day utilization since the number of claims dispensed reflects a 30-day supply. 

For the same period in 2008, the Plan experienced an 11.30% increase in generic utilization with basically the same plan benefit design; achieving a 64.44% generic fill rate and the average total prescription cost for generics was $13.92 or $11.84 (45.96%), less expensive year over year for the same period.  Using the benchmark generic list mentioned above, 48.06% of all generics were eligible for the $4 dollar benefit.^** The overall average total cost per prescription of this subset of generics was $4.90, which represents a 74.5% decrease versus the same period in the traditional PBM model in 2007.

Table 1. First Quarter 2007 vs. 2008, Generic Utilization, Entire Pharmacy Network

 *Normalized data to account for increased membership to neutralize the effect of membership increase.

**ProCare Rx has identified a benchmark of potential $4 generic products using the $4 Walmart list; some pharmacies may not honor the same list or may not participate at all.  However, by using the benchmark it allows for comparative analysis amongst periods and amongst different chains to determine the performance of such programs inside of a pharmacy benefit.  In addition, these programs are part of the usual and customary (U&C) pricing practices and these product prices cannot be managed as
consistently as non U&C claims in the PBM Pharmacy Networks. Thus, some utilization identified as $4 eligible may not have actually been submitted by pharmacy under such program, which would serve to increase the average cost over the $4 price.

Comparing the results between PBM models clearly and decisively shows the significant positive impact
the $4 generic program has made in lowering the overall generic pharmacy cost of goods to members and the Health Plan.  The ability to review the impact is simplified because of the transparent and pass-through model ProCare Rx is offering the Health Plan. Under this arrangement, the Health Plan’s and PBM’s objectives of maximizing savings and providing optimum member care are fully aligned.  More importantly, this model and its benefits are reproducible nationwide since the generic drug mix remains consistent throughout the managed care marketplace.

The high percentage of $4 generic claims (approaching 44% in first quarter 2008) minimizes the concern that $4 generic claims are not being submitted to ProCare Rx.  During this time period, it appears that the majority of the $4 generic claims are being submitted to the Health Plan.  If pharmacies were not submitting these claims, ProCare Rx would see a lower percentage of $4 generic claims as a percentage of total generic claims.  ProCare Rx has developed analytical tools to allow it to measure the increased utilization of the $4 generic program within its pharmacy network.  And nationally, the overall percentage of $4 generic claims averages 35-40% of total generic claims.  Thus, this Plan is performing above the national average, in part due to its pharmacy network participation in the $4 generic program led by Walmart.

The Positive Impact of $4 Generic Program Continues in 2009

Comparing first quarter 2008 to first quarter 2009, the strong trend in utilization remained consistent for the Midwest Health Plan during first quarter 2009.  For the period of January to March 2009 the Plan experienced a 68.88% generic utilization rate with an average total prescription cost for generics of $11.63.  The overall generic fill rate increased 6.8% (4.4%) over 2008 for the same period.

Using the Walmart $4 generic list as a benchmark for drugs eligible for this discount, 43.91% of all generic prescriptions overall were processed under the $4 discount benefit.  The overall average total cost per prescription of this subset of generics was $6.80 for this period^**.  The amount per prescription reflects a mix of 30-day and 90-day utilization but again was heavily weighed to 30-day utilization since the number of claims dispensed reflects a 30-day supply.

Table 2. Overall Health Plan Performance on Generic Utilization, 1Q2008 vs. 1Q2009

 *Normalized data to account for increased membership to neutralize the effect of membership increase.

**ProCare Rx has identified a benchmark of potential $4 generic products using the $4 Walmart list; some pharmacies may not honor the same list or may not participate at all.  However, by using the benchmark it allows for comparative analysis amongst periods and amongst different chains to determine the performance of such programs inside of a pharmacy benefit.  In addition, these programs are part of the usual and customary (U&C) pricing practices and these product prices cannot be managed as
consistently as non U&C claims in the PBM Pharmacy Networks.  Thus, some utilization identified as $4 eligible may not have actually been submitted by pharmacy under such program, which would serve to increase the average cost over the $4 price.

After neutralizing for higher utilization resulting from increases in membership numbers; overall total generic utilization increased 24.87% and $4 generic drug claims increased 25.18%.  In the first year after implementing this transparent business model with ProCare Rx, this Midwest Health Plan saved over $2 million in total drug spend without significant changes made to their pharmacy plan benefit.  The $4 generic program has been a key contributor to that accomplishment and can no longer be underestimated.  Employers and other payors battling tough economic times must ensure they position themselves to take advantage of the benefits of a transparent pharmacy benefit model.  These agreements allow payors the opportunity to realize the full benefits of the aggressive discounts retail pharmacies are offering their members through the Walmart $4 generic program, and other generic programs offered by national pharmacy retailers.

The overall percentage of $4 generics as a whole remained consistent for the Plan year over year at 43.91%.  Indeed, this demonstrates that the majority of retail pharmacies are transmitting the claims to ProCare Rx and are not circumventing the DUR online protocols.  DUR online protocols are critical to ensuring PBMs and Health Plans are able to alert pharmacies of potential drug interactions or conflicts in therapies.  With the rising adoption of e-prescribing, having this data means that PBMs and Health Plans will be able to maintain and report accurate member drug histories.  This element is critical to the success of e-prescribing as it is based on the premise that pharmacists and physicians can provide the highest level of care when they are able to access a complete medication profile.

Walmart^® Performance Compared to Overall Pharmacy Network

As the innovator in the retail marketplace for the $4 generic drug program, Walmart is leading the charge for delivering aggressive cost savings and is exceeding all key performance metrics.  This is a tangible advantage to the Midwest Health Plan because ProCare Rx is passing through the aggressive pricing of this $4 generic program at POS, in real-time.

Consistent with the findings of the $4 generic program utilization for the entire pharmacy network, it is clearly evident that these claims are being submitted online.  This is proven with the percentage of $4 claims at Walmart stores exceeding the overall average of $4 generics being recorded as dispensed at all participating pharmacies – including Walmart.

Walmart continues to show consistent growth in the $4 generic program and is increasing the selection of
generic drugs included in the program.  This forces the competition to match the aggressive pricing strategies at retail.  In a transparent, full pass-through model, with ProCare Rx passing all discounts at POS, the Health Plan essentially has no Plan pay for these $4 generic drugs and members continue to pay less than their copayments, which can encourage greater compliance and represents a true ‘win-win’ for all parties.

Table 3. Walmart Performance, Summary

*Normalized data to account for increased membership to neutralize the effect of membership increase.

**ProCare Rx has identified a benchmark of potential $4 generic products using the $4 Walmart list; some pharmacies may not honor the same list or may not participate at all.  However, by using the benchmark it allows for comparative analysis amongst periods and amongst different chains to determine the performance of such programs inside of a pharmacy benefit.  In addition, these programs are part of the usual and customary (U&C) pricing practices and these product prices cannot be managed as
consistently as non U&C claims in the PBM Pharmacy Networks.  Thus, some utilization identified as $4 eligible may not have actually been submitted by pharmacy under such program which, would serve to increase the average cost over the $4 price.

Conclusions

This case study objectively illustrates that Transparent PBM models can offer competitive and substantive cost advantages to Payors over Traditional PBM models if they effectively pass-through all discounts generated at POS.  In the transparent, full pass-through model which ProCare Rx offered this Midwest Health Plan, ProCare Rx passed 100% of the savings to the Plan as well as members.  In the industry, the benefits of a true transparent arrangement are beginning to gain momentum and the final outcome of this Plan changing models, including the PBM administration fee that was charged, still resulted in significant savings to the Plan.  Thus, by changing to a transparent model, the overall costs to the Midwest Health Plan did not increase over what the Plan had paid the previous PBM under a Traditional PBM arrangement.

The results of this case study attempt to offer a plausible explanation for the non-claim submission phenomenon that some PBMs and Health Plans state is occurring nationwide in the industry.  ProCare Rx believes the Health Plans and PBMs that do not pass the discounts to the patients is one of the key root causes for participating pharmacies not submitting these claims; since the U&C cash price of these claims is less than what the PBM or Health Plan is charging its members.

Since patients are becoming more aware of these benefits due to increased retailer marketing campaigns, it is expected that members will no longer tolerate paying more than the advertised price – especially when they expect their insurance cards to provide deeper benefits over the U&C prices seen at national retail pharmacies.  Pharmacies will continue to feel the monetary pressure from their customers, and save them money on their prescriptions by processing the prescription as a cash payment.  This will continue until Health Plans and PBMs accept that they will have to pass the entire discount to the member for the $4 generic products regardless of the current business model a payor may have with its Health Plan or PBM.  This case study provides a measurable and proven example of the benefits a $4 generic program can offer a payor when a true transparent and pass-through PBM model is implemented in the marketplace.

To learn more about ProCare Rx, contact Alex Knight.

Medication therapy management (MTM) is becoming more and more important as many patients continue to participate in increasingly complex and difficult pharmacotherapeutic treatment regimens concurrently that target a variety of disease states. Pharmacists are experts at fine tuning treatment regimens to be effective and safe, sharing their expert advice with other healthcare professionals in order improve treatment outcomes and avoiding unnecessary healthcare cost. After years of observation, this concept has shown itself as quite valuable in the arena of healthcare. A study published by Barnett MJ, Frank J, Wehring H, et al. J Manag Care Pharm. 2009;15:18-31 found that “for every $8.44 reimbursed to community pharmacists for providing MTM, the average estimated cost avoided by the healthcare system was $93.78.” As time goes on pharmacists will be utilized more and more to become involved in MTM services as reimbursement has shown as a good investment in quality and cost efficient healthcare.

Diabetes Care

In 2007 the CDC estimated that almost 8% of men women and children in the United States were diabetic. That’s over 23 million! And as time goes on that figure is expected to increase significantly. With a wide array of medications increasingly becoming available in the present times, pharmacists have become a very valuable and important asset to patients with diabetes. Complex insulin regimens, fine-tuned diets, and tedious oral medication schedules can be infinitely challenging for patients attempting to manage their condition on their own.  For many patients, controlling their blood sugar can be like trying to “ride a unicycle on a beach ball”. Pharmacists are stepping in and offering their knowledge to patients by helping to manage patients diabetes, and are a very valuable tool to help patients achieve their successful treatment outcomes.

Cost Savings:  Therapeutic  Substitution

This is a common experience among pharmacists. A patient approaches the counter with a prescription that is “just too expensive!”  As the sluggish economy continues to lay a burden on patients seeking to cut their costs, now is more important than ever to have pharmacists at their side. Working with prescribers, pharmacists offer patients therapeutic equivalent options that, while just as safe and effective, may be more financially bearable through approved substitution.

Vaccine Administration

In 1995, only 5 states allowed pharmacists to administer vaccinations. Today, all 50 states allow pharmacists to administer some sort of vaccine. As we all have observed with H1N1 vaccine, accessibility to the public is very important. Pharmacists have helped to increase vaccine rates in the public and have not stopped pushing to make vaccine services of all kinds available through pharmacies. For example, states such as Missouri have adopted legislation allowing pharmacists to administer meningitis, shingles, viral influenza, and pneumonia vaccines by protocol with a physician as long as they file a “Pharmacist Notification of Intent to Administer Vaccines” with the Board. With a number of amendments last year in numerous states, pharmacists will begin to become a mainstay in role of vaccination administration.
Related Links

http://www.pr.mo.gov/pharmacists-emergency-immunization-rules.asp

http://diabetes.niddk.nih.gov/DM/PUBS/statistics/

HER2 is a protein involved in normal cell growth. It is found on some types of cancer cells, including breast cancer cells. In hormone positive breast cancer, the presence of certain hormones contributes to breast cancer growth. In HER2-positive breast cancer, stimulation of the HER2 receptor contributes to cancer cell growth. Breast cancer is the second leading cause of death among women. More than 192,000 women will be diagnosed with breast cancer this year.

“This drug combination of Tykerb plus Femara provides women being treated for advanced breast cancer with an important treatment option. This entirely oral treatment regimen works by targeting both HER2 and the hormone receptors, thereby slowing the cancer cells’ ability to grow or spread,” said Richard Pazdur, M.D., director of the Office of Oncology Drug Products, in the FDA’s Center for Drug Evaluation and Research.

Women with HER2-positive disease receiving the Tykerb plus Femara combination more than doubled the time they lived without the cancer progressing compared with those receiving Femara alone (35 weeks vs. 13 weeks). Women in the company sponsored study were randomized to receive Tykerb plus Femara or Femara alone. It is too early to determine whether an improvement in overall survival will be observed in the clinical trial.

Tykerb works by depriving tumor cells of signals needed to grow. Tykerb enters the cell and blocks the function of the HER2 protein.

Tykerb was initially approved in combination with a chemotherapy drug, Xeloda (capecitabine) in 2007. This combination was used to treat women with advanced breast cancer tumors with the HER2 protein who had received prior treatment with chemotherapy drugs, including an anthracycline and a taxane, and Herceptin (trastuzumab), an anti-cancer antibody used to treat HER2-positive advanced breast cancer.

Safety information from this study was consistent with previous Tykerb clinical studies in advanced breast cancer. The most commonly reported side effects of the combination were diarrhea, rash, nausea and fatigue. Treatment with Tykerb also has been associated with decreases in heart function, liver damage, and lung tissue inflammation. Fetal harm may occur if used to treat advanced breast cancer in pregnant women. Patients should talk to their health care provider about the potential side effects, drug interactions, and other medical conditions.

Primary generalized tonic-clonic seizures, known formerly as “grand mal” seizures, are considered the most common form of generalized (affecting both sides of the brain) seizure, occurring in approximately 20 percent of patients with epilepsy.  Patients experiencing a generalized tonic-clonic seizure usually lose consciousness and collapse.  This is followed by muscle stiffening (the tonic phase) and then jerking involving both sides of the body (the clonic phase).

In a clinical study, the addition of Lamictal XR reduced seizure frequency more than placebo in patients with uncontrolled primary generalized tonic-clonic seizures, when used in adjunctive therapy for patients 13 years of age and older.  The patients in the study were not adequately controlled despite being on one or two anti-epileptic drugs.

“We were encouraged that the study showed such a significant reduction in the number of primary generalized tonic-clonic seizures in patients who received Lamictal XR in addition to their current regimen.  Over the 19 week treatment period, the median percent reduction in weekly seizure frequency was 75 percent in patients treated with Lamictal XR compared to 32 percent for those taking placebo,” said Victor Biton, M.D., director of the Arkansas Epilepsy Program and Clinical Trials, Inc., in Little Rock, Ark.  “The approval of once-a-day Lamictal XR for this very serious seizure type gives us a convenient and effective new option for improving the care of our patients with epilepsy.”

The most common adverse event was headache, which was reported among 14 percent of patients taking Lamictal XR and 16 percent of patients taking placebo. Other common adverse events in patients taking Lamictal XR included vomiting (10 percent), nausea (7 percent), fever (7 percent), dizziness (6 percent), double vision (6 percent), tremor (6 percent), nasopharyngitis (3 percent), rash (3 percent) and anxiety (3 percent).

Lamictal XR was initially approved in May 2009 for the treatment of partial onset seizures with or without secondary generalization in adults or adolescents. Partial onset seizures, which are limited to one part of the brain, are the most common type of seizure experienced by people with epilepsy.  Partial seizures may sometimes spread to both sides of the brain, an occurrence classified as secondary generalization. The safety and effectiveness of Lamictal XR have not been established in patients under the age of 13.

Patients with generalized tonic-clonic seizures currently taking immediate-release Lamictal twice-daily can be converted directly to once-a-day Lamictal XR using the same total daily dose.

“Completing the acquisition of Eden is the next strategic step in our commitment to establishing a major position in biologic products on a global basis,” said Paul Bisaro, Watson’s president and Chief Executive Officer.  “In addition to development and manufacturing facilities, the Eden acquisition adds substantial intellectual capital to Watson’s biologics activities, as Dr. Crawford Brown and the Eden management team will remain with Watson.  Dr. Brown, co-founder of Eden, brings more than 20 years of international experience in biopharmaceutical development, including the successful pan–European submission for a complex recombinant vaccine which included an EMEA sponsored pre–approval inspection,” Bisaro added.

Founded in 2000, Eden Biodesign is an integrated biopharmaceutical development and manufacturing organization that has provided strategic consultancy, world-class process development, cGMP manufacturing and analytical development services for every significant biopharmaceutical product technology.  Eden’s state-of-the-art facility, located in Liverpool, UK, is custom designed for multi-product operation and supports the development of biopharmaceuticals from proof-of-concept through to cGMP manufacture for clinical trials, market launch and commercial supply.

“We are very pleased to continue our long standing relationship with GE Healthcare,” stated Walter C. Herlihy, President and Chief Executive Officer of Repligen Corporation.  “This agreement ensures continuity in the supply of high quality recombinant Protein A supported by our business continuity plans and quality systems that are required by the biopharmaceutical industry.”

There are currently more than 25 monoclonal antibodies that have received regulatory approval with more than 200 products in various stages of clinical development.  The worldwide revenues from this class of drug exceeded $35 billion in 2009.

ELONVA is indicated for controlled ovarian stimulation (COS) in combination with a GnRH antagonist for the development of multiple follicles in women participating in an assisted reproductive technology program.

With the EC approval, Merck receives marketing authorization for ELONVA with unified labeling valid in all European Union Member States.

“The European approval of ELONVA is a positive step towards reducing the burden of injections for women experiencing difficulty conceiving,” said Mirjam Mol-Arts, senior vice president, Merck Research Laboratories. “Merck is proud of the company’s women’s health portfolio and is committed to providing effective patient-focused fertility treatments.”

ELONVA is the first sustained follicle stimulant.  Due to its ability to initiate and sustain multiple follicular growth for an entire week, a single subcutaneous injection of the recommended dose of ELONVA may replace the first seven injections of any conventional daily recombinant follicle stimulating hormone (rFSH) preparation in a COS treatment cycle.

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