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Pharmaceutical Coalition

Pharmaceutical Coalition. Transparency in Pharmaceutical Purchasing Solutions (TIPPS). October 10, 2007. Today’s Discussion. TIPPS Standards & Objectives Review of 2008 Bidding Requirements Presentation by Robert I. Garis, Ph. D. Future of AWP Lunch Recap of 2008 TIPPS Process

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Pharmaceutical Coalition

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  1. Pharmaceutical Coalition Transparency in Pharmaceutical Purchasing Solutions (TIPPS) October 10, 2007

  2. Today’s Discussion • TIPPS Standards & Objectives • Review of 2008 Bidding Requirements • Presentation by Robert I. Garis, Ph. D. • Future of AWP • Lunch • Recap of 2008 TIPPS Process • Refining TIPPS Standards and Coalition Objectives for 2009 • Update of Compliance Project

  3. Coalition Leadership & Staff • Sidney BanwartVice President, Human Services Division, Caterpillar, Inc.Chairman, Pharmaceutical Purchasing Coalition • Todd BispingCaterpillar, Inc. • Marisa MiltonHR Policy Association • Steve WetzellHealth Care Policy Roundtable

  4. Hewitt’s Project Support • Joshua GoldenNational TIPPS Project Leader • Kristin Begley, Pharm. D.Senior Pharmacy Consultant

  5. TIPPS Coalition Member Companies

  6. Pharmaceutical Coalition/TIPPS 2008 Certified PBMs • Aetna Pharmacy Management • Blue Cross and Blue Shield of Alabama • CVS Caremark • Catalyst Rx, A HealthExtras Company • CIGNA Pharmacy Management • Express Scripts, Inc. • Humana • Medco Health Solutions, Inc. • Prime Therapeutics, LLC • RESTAT PBM LLC • SXC Health Solutions, Inc. • Walgreens Health Initiatives, Inc. • WellPoint NextRx

  7. Washington Post Ad

  8. Review of TIPPS Standards and Coalition Objectives

  9. The Pharmaceutical Coalition • Primary Objective: • Leverage the combined purchasing volume of Coalition to change the way pharmaceutical products are purchased • create price transparent environment to encourage competition and consumerism • align incentives of PBMs with employers and patients • establish a platform for value-based purchasing • drive business to certified PBMs that agree with principles

  10. Overview of Bidding Requirements • Bidding Requirements Have Been Streamlined • Six principle bidding requirements fundamental in the selection criteria • Format has been streamlined from nine requirements in 2006 • Still designed to capture the ultimate in financial disclosure and service capability, and allow for a true partnership between a PBM and client

  11. Bidding Requirement 1 • Acquisition Cost for All Retail Claim Payments • Charge the Participating Group no more than the amount that you pay the pharmacies in your retail network for each claim dispensed • Includes all brand and generic drugs.

  12. Bidding Requirement 2 • Acquisition Cost Basis for All Mail Service Claim Payments • Charge no more than the acquisition cost of drugs at the mail order pharmacy, plus a dispensing fee. • Acquisition cost is defined as either: • actual inventoried per unit cost (AAC), or • published Wholesale Acquisition Cost (WAC) • Agree to utilize a MAC list to determine the Participating Group’s cost for any drugs that do not have an associated WAC price

  13. Bidding Requirement 3 • Pass-Through of 100% of All Pharmaceutical Manufacturer Revenue • Pass through 100% of any and all formulary rebates, market-share rebates, and other rebate revenue that the Participating Group’s utilization enables you to earn. • Includes Rebate Administrative Fees, Data Sale Revenue, and Compliance/Adherence program revenue

  14. Bidding Requirement 4 • Specialty Pharmacy Transparency • Charge no more than the acquisition cost of drugs at the specialty mail order pharmacy, plus a dispensing fee. • Pass through any and all pharmaceutical manufacturer revenue. • Provide dose optimization and consolidation programs, where appropriate. • Provide case management for critical disease states (and not build cost of programs into ingredient cost) • Offer a tool to enable cross-walk billing (i.e., J-Code to NDC conversion)

  15. Bidding Requirement 5 • Plan Management/Consumer Engagement • Apply rebate on a per-unit basis specific to NDC-11 at the point of sale (at client’s discretion). • provide members with decision support tools: • web-based formulary lookup tool • web-based drug price comparison tool, with retail pharmacy pricing comparison • web-based or letter-based utilization summary tool that identifies member cost-share savings opportunities • Offer financial performance guarantees to support effective utilization management, by therapeutic class. • Penalties to be assessed on a dollar-for-dollar basis

  16. Bidding Requirement 6 • Comprehensive Audit & Disclosure Rights • Offer full audit rights • Audits of Claims/Utilization Data • Audits of Retail Network Contracts • Audits of Rebate Arrangements • Audits of Clinical Savings Criteria • No limitation to specific list of audit firms (“mutually agreeable”) • Allow self-audit by client • Provide claims data with all financial fields • Outsourcing vendors must also allow audits

  17. Exclusion Criteria • The following criteria are grounds for exclusion from TIPPS certification: • PBM does not agree to all 2008 bidding requirements • PBM does not complete an RFP response, or submits an incomplete RFP response • PBM’s fee exhibit contradicts their RFP response

  18. If a vendor outsources ANY core functionality that is relevant to the bidding requirements, that vendor must provide documentation that the outsourced provider ALSO meets the certification criteria. Includes outsourced mail service, rebate administration, specialty drug management, etc. This documentation MUST include the Audit Rights bidding requirement – audit rights must extend to the third-party outsourced provider Letter templates provided with the RFP for each outsourced functionality Outsourced Services

  19. Robert I. Garis, Ph.D. “The HR Executive: Optimal Pricing in Pharmacy Benefit Programs”

  20. Future of AWP

  21. Lunch

  22. Recap of 2008 Certification Process

  23. Request for Proposals (RFPs) RFP process went as planned: • RFP distributed broadly to all interested PBMs (based on PBM request) • Core TIPPS Bidding Requirements • Additional Questions on Topics of Interest • Outsourcing Documentation Requirements • Certification proposals received from 16 PBMs • Preliminary certification granted to 14 PBMs • Fee Exhibits released, evaluated • Final Certification granted to 13 PBMs

  24. Review of RFP Responses Initial Proposal Review - Process • Initial proposal review conducted with Coalition on July 12th (telephonic meeting) • “Preliminary Certification” status determined for each PBM vendor • Review included a line-item confirmation of all bidding requirement details • Material deviations from bidding requirements identified • Follow-up conducted to resolve deviations where possible/appropriate • Vendors receiving Preliminary Certification were issued a fee exhibit for final approval/certification

  25. Review of RFP Responses Initial Proposal Review - Methodology “Green Light”Vendor meets all certification criteria, or criteria deviations are likely to be satisfactorily resolved. All necessary outsourcing documentation has been provided. “Yellow Light”Vendor has significant deviations which may or may not be resolved. Outsourcing documentation may be outstanding. “Red Light”Vendor’s current response includes serious deviations that are not likely to be satisfactorily resolved.

  26. Review of RFP Responses Initial Proposal Review - Outcome

  27. Review of RFP Responses Red Light Bidders – Issues • MedImpact • Refused to provide documentation for outsourced mail service and specialty vendors • Rx America • Documentation not provided for outsourced specialty functionality • Could not provide acquisition cost basis for specialty drugs • Some contracts with network pharmacies and pharmaceutical companies preclude vendor from allowing full audit rights

  28. Review of RFP Responses Yellow Light Bidders – Most Common Issue • Missing documentation for outsourced arrangements (with vendor working to provide documentation) • Outsourced specialty vendor • Outsourced mail service vendor • Outsourced rebate contracting • Final certification was contingent on receipt of documentation • All Yellow & Green Light vendors provided documentation by final certification deadline

  29. Review of RFP Responses All Bidders – Other Observations • Seven (7) vendors did not currently offer POS rebate administration (agreed to develop within 6 months upon request) • Three (3) vendors would not pass-through revenue from Data Aggregation (but agreed to allow client to opt-out of these programs) • Two (2) vendors did not currently offer acquisition cost basis for mail service (agreed to develop within 6 months upon request)

  30. Review of RFP Responses HealthTrans – Withdrawal of Submission “Thank you for allowing HealthTrans to participate in the HRPA/TIPPS 2008 certification process. Please accept this letter as notification that HealthTrans, after careful consideration, has decided not to proceed with certification this year. As a pioneer and a continuing leader in the area of not only transparency, but also a differentiating business model that reflects our philosophy of visibility, value and validation we could not agree more with the principles espoused by HRPA. We appreciate the opportunities that have emerged from our relationship with both Hewitt and HRPA over the recent past, and HealthTrans looks forward to working with you in the future to further the interests of both clients and consumers.” (HealthTrans)

  31. Review of RFP Responses Final Outcome • Thirteen (13) PBM vendors were granted certification:

  32. RFP - Additional Topics of Interest • AWP Alternatives • With the possible withdrawal of AWP from the marketplace as an available reference price, please describe your organization’s current “plan of action” as it pertains to pursuing alternative pricing metrics. • “Although none of the options meet all the requirements [of a replacement metric], the WAC has the least amount of challenges surrounding it...” • “Medi-Span maintains their position that their process for deriving AWP will remain unchanged...” • “No change is without its challenges; however [we believe] that WAC is the right alternative…” • “[Our] current choice is WAC, but AMP is also being evaluated…”

  33. RFP - Additional Topics of Interest • Follow-On (Generic) Biologics • What specific actions is your organization taking to promote the present or future availability of follow-on (generic) biologics? • “CIGNA Pharmacy Management is involved with the coordinated efforts of PCMA and AHIP in lobbying and promoting FDA action to approve the availability of generic biologics.“ • “Express Scripts is among the leaders of the legislative initiative to develop an FDA pathway for follow-on biologics... and published a financial model of the potential savings of such a pathway.” • “Aetna is FOR a regulatory pathway to allow FDA to approve generic biopharmaceuticals… Aetna is OPPOSED to legislation that messes with patents or directs the FDA as to what to review, how to review it and what to decide (we don't want to pre-judge the science).”

  34. RFP - Additional Topics of Interest • Fiduciary Responsibility • Participating Groups in the TIPPS Coalition may wish to have their PBM serve in various fiduciary roles for their plan. Please state your willingness to act as fiduciary in the following capacities: First Level Appeals, Second/Third Level Appeals, Final Appeal Decision, Clinical (Formulary) Management, Named Co-Fiduciary for Overall Plan Administration, Named Sole Fiduciary for Overall Plan Administration. • Several vendors (Aetna, BCBSAL, MedImpact) agreed to serve as fiduciary in all capacities listed • Several vendors agreed to accept most or all responsibilities after a case-by-case consideration • Many vendors limited their fiduciary roles • Limited to first-level appeals and clinical/formulary management • Would not accept responsibility for medical necessity determinations or overall plan administration • Many vendors offer third-party services to support the appeals process

  35. Evaluating TIPPS Compliance and Savings

  36. Refining TIPPS Standards and Coalition Objectives for 2009

  37. Compliance Project Update

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