Wait a minute… Anybody remember this, Anthem Partners With CVS Health To Launch New PBM , basically CVS (Caremark) will be Anthem’s backroom PBM meaning “CVS will process claims and handle related ‘prescription fulfillment.'” Now, CVS is allegedly closing in on a deal to Buy Aetna. Let’s lay out some facts:
CVS Health is in retail healthcare, owns a Pharmacy Benefit Manager (Caremark), partnered with Anthem to be their backroom Pharmacy Benefit Manager for IngenioRx, and closing in on a deal to purchase Aetna. Think for yourself, but definitely seems like there might be a conflict of interest there.
In a recent turn of events, pharmaceutical company Pfizer filed a lawsuit against Johnson & Johnson over anticompetitive pricing allegations. Long story short, Pfizer has a biosimilar that competes with a Johnson & Johnson drug. Pfizer claims that J&J has made “’exclusionary contracts’ for Remicade with health insurers, hospitals and clinics effectively prevented them from offering Pfizer’s lower-priced copy so they could retain rebates and other J&J perks.”
“If such tactics are widespread, and I suspect they are, the Pfizer case will be the beginning of a wave of cases, challenging a behavior that helps drug companies erect competition-free zones, long after a drug’s patent has expired,” said Robin Feldman, director of the Institute for Innovation Law at the University of California Hastings.
The idea is that if these contracts are in place they prevent employer groups, employees, even the government from having the option to pick the lower priced drug. What is worse is this lawsuit concerns only two competing drugs. Now imagine there are hundreds of high cost drugs out there that could quite possibly currently be steered away from the cheaper version through similar contracts in what seems like an effort to keep a bigger slice of the pie.
Does this sound all to familiar with some other companies in the pharmaceutical industry?
Check this out, Mylan hit with racketeering suit over big price hikes of EpiPen.
US charging 412 in health fraud schemes worth $1.3 billion
In recent news, more than 400 people have found themselves in a narcotic scandal worth over a billion dollars. These people were illegally billing Medicare, Medicaid and health insurance programs that were serving members of the armed forces. In one situation, “A Florida rehab facility is alleged to have recruited addicts with gift cards and visits to strip clubs, leading to $58 million in false treatments and tests.” Absolutely unacceptable.
Jeff Sessions, Attorney General, explains:
“They seem oblivious to the disastrous consequences of their greed. Their actions not only enrich themselves, often at the expense of taxpayers, but also feed addictions and cause addictions to start,” Sessions said.
To put the blame on one aspect of the waste and abuse in the healthcare industry is wrong. The waste and abuse is coming from multiple lines of business. The reoccurring theme for pharmaceuticals, insurance companies, brokers, physicians, etc. is that at some point the leaders of these companies get greedy. We have all heard the same song and dance. Clearly there are a lot of issues in the healthcare industry. The best thing to do in an industry that is wrought with waste and abuse is to be a good person. Do the right thing even when nobody is looking.
Rising Healthcare Costs Hurts Retirement Contributions
Cost sharing efforts from employers are beginning to dig into retirement savings for many employees.
“According to Bank of America Merrill Lynch’s ‘2017 Workplace Benefits Report’ 79% of employees experienced an increase in healthcare costs last year, leading 63% of women and 62% of men to decrease their retirement-savings contributions.”
This article explains in order to make the most of your 401k be sure to roll over your 401k when switching jobs. Naturally, rolling over your 401k is a good option otherwise you miss out on the opportunity for interest to continue to build on itself. However, the article never approached the actual problem of soaring healthcare costs and the continual increased cost sharing to employees which ultimately is the pain for why people are decreasing contributions to their 401k.
So…what can an employer do to control their healthcare spend and prevent cost sharing to employees? Reference based pricing, value based pricing, etc.; whatever you want to call it, it is a unique method to challenge the status quo of traditional network options. When done correctly this puts the employer sponsored plan in the driver’s seat when working with providers and hospital facilities. A collaborative communication process with hospital facilities and providers outlying a healthy payment methodology puts transparency in the employer’s hands.
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In an industry that is continually berated this might be refreshing to hear. One insurer is battling the Big Pharma by educating doctors on what is cost efficient for medical use in terms of generics, instead of pushing brand name drugs for huge profit margins. The concept is best illustrated through the article:
“Valeant Pharmaceuticals had cranked up the price of one common dosage of its Glumetza medicine for lowering blood sugar to an astonishing $81,270 a year, according to Truven Health Analytics, a data firm. Meanwhile a similar, generic version can be bought for as little as a penny a pill.”
This strategy is keeping the insurer’s drug spend percentage increase in the single digits, before the strategy was implemented the increase was in the double digits. This insurer is tackling the cost of pharmaceutical spend, but how can other employer’s use similar strategies to save their plan costs? One option is utilizing a self-insured plan to gain better control on pharmaceutical spend. Through self-funding the employer gains control of their plan and allows them to be creative with their plan language.
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This article highlights some major concerns in the Healthcare Industry. Let’s break it down. Alleged embezzlement by the major insurance company highlighted in the article from 100’s of self-insured companies. These are major companies including: JP Morgan Chase, Macy’s, etc., employing hundreds of thousands of people, that have been allegedly embezzled from. From an underwriting perspective, the allegedly embezzled claims that went through these plans ultimately lead to higher rates on premiums for the companies, as well as higher premiums for employees.
“Most troubling are accusations that the Plans, even after being alerted to these potentially illegal practices and despite formal complaints being lodged with the DOL, astonishingly continued to delegate and authorize Cigna, to investigate its own alleged wrongdoing!”
Why is that important? From an employee perspective now, look at the value of an annual raise. In industries with low margins, a good employee raise might be a small percentage of their annual salary. The value of the raise is immediately shot out of the window if the premiums and cost of healthcare are more than the actual raise. That is why it is so important to make sure the second biggest expense behind payroll, for most companies, is managed correctly and with good integrity.
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