Prescription Coalition Leader Warns About Increased Rx Costs From PBMs' Refill Practices

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Based on a recent investigation, prescription Coalition leader warns health plans that many PBMs are dispensing through their subsidiary pharmacies far more pills than needed, at great cost to the health plans. Accordingly, CFOs and HR execs trying to contain their costs may be able to save large sums of money if they investigate their PBMs’ refill practices and end PBMs' "Refill Pill Mills."

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Investigate your PBM's refill practices and change them by writing precise refill protocols. Then periodically use a knowledgeable auditor to run a 'quick and dirty' audit to verify your PBM is adhering to your written protocols.

The leader of the National Prescription Coverage Coalition today warned all CFOs and HR Execs that a recent investigation conducted by her firm reflects that many Pharmacy Benefit Managers (PBMs) are dispensing far more pills from their subsidiary pharmacies than plan beneficiaries may be using, causing unnecessary and excessive prescription drug costs.

"Our firm's recent investigation of PBM practices reflects that many PBMs have a standard practice of automatically dispensing refills, even if plan beneficiaries don't ask for them," said Linda Cahn, the Coalition's head. "Making matters worse, the PBMs dispense each refill long before the plan beneficiary needs more pills, causing the plan beneficiaries to end up with scores of extra pills they don't need."

To decrease their costs - and prevent extensive waste - Linda Cahn urged all CFOs and HR execs to investigate their PBMs' refill practices and end PBMs' Refill Pill Mil.

Automatic Refills

Cahn explained that her firm's investigation reflects that PBMs implement automatic refills in many different ways.

Some PBMs appear to be "selling" auto-refills to health plans during coverage implementation telling their clients that the practice will ensure plan beneficiaries never run out of meds.

Other PBMs are transmitting Enrollment Forms to plan beneficiaries and allowing them simply to check a box to receive automatic refills on any prescription that allows refills. Thereafter, regardless of whether a refill is actually needed, the PBMs automatically dispense the refill.

Some never discuss the matter with clients and simply implement an automatic refill policy.

"Whatever the approach, it's inevitable that many people will receive refills who don't want or need them, leading to a lot of unused pills and unnecessary cost," says Cahn. Accordingly, she urges all health plans to investigate whether their PBMs have implemented auto-refills and end the procedure if it's occurring by specifically barring auto-refilling in their Benefit Specification Forms.    

Dispensing Date Creep

Cahn also warned against PBMs' practice of dispensing refills long before plan beneficiaries can possibly run out of pills. Calling the practice "Dispensing Date Creep" she explained that her firm's investigation reflected that the practice is a widespread industry practice.    

If an employee obtains a 90 day maintenance drug prescription with two refills allowed, and the employee fills the first prescription on January 1st, logically, given the number of days in each month, the employee will need the second "fill" on April 1st and the third "fill" a few days before July 1st.

But many PBMs instead dispense refills when only 60% of the previous prescription has presumably been used, meaning every 54 days (90 x 60%=54). Thus, if an employee fills an initial prescription on January 1st, the PBM will dispense the second and third "fills" on February 23rd and April 18th.

At the time of the second "fill" the employee will still have available 36 pills from the first "fill" (90-54=36). At the time of the third "fill", the employee will now have 73 excess pills from the two "fills" the PBM previously dispensed. If the PBM continues this practice, the PBM will be able to dispense an extra 144 pills annually.

"'Dispensing Date Creep' may be terrific for a PBM's profits, but it definitely leads to unused pills and unnecessary costs for health plans," says Cahn.

Cahn provides a Table to better understand the extent of potential waste, based on different PBMs' practices her firm has recently seen during its investigation. As shown in the Table, even if a PBM's practice is to dispense refills after 70% of a previous prescription has been used - or on the 63rd day of each 90 day fill - PBMs will dispense an extra 108 pills each year.

Cahn says every prescription coverage provider can solve the refill problem easily: "Investigate your PBM’s refill practices and change them by writing precise refill protocols.Then periodically use a knowledgeable auditor to run a 'quick and dirty audit' to make sure your PBM is adhering to your written protocols," says Cahn.

According to Cahn, "There’s simply no excuse for the excessive dispensing of pills. Every PBM should be required to dispense refills wisely. "

For more information about PBMs' refill practices - or other problems that may be increasing your prescription coverage costs - contact Linda Cahn at the National Prescription Coverage Coalition or Pharmacy Benefit Consultants. Also, you can write Linda at LindaCahn(at)mac.com or contact her at 973 975-0900.

To sign up to obtain Drug Alerts, go here.

The National Prescription Coverage Coalition has negotiated a unique PBM contract that is available for all Coalition Members. Among other matters, the contract contains approximately 1,000 pricing guarantees, and requires the pass-through of 100% of all rebates and all other third party financial benefits with each Invoice.

Pharmacy Benefit Consultants is a nationwide consulting firm that analyzes existing PBM-client contracts, renegotiates them to improve their terms, and conducts PBM RFPs by drafting an entirely different form of PBM contract and using the RFP's leverage to extract the best possible contract terms for each client.

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Linda Cahn
@cahnlj
since: 12/2010
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