Targets

Our drug gross-to-net profit analysis targets four (4) different basic aspects, when combined, offer a financial panorama of the healthcare landscape for prescription drugs. While some reductions are expected, others may be unjustified (called “Leakage”) and can be identified in:

Rebates - Commercial, Medicaid, and Medicare
Copay Card Buydowns
Wholesaler Fees and Chargebacks
Prior Authorization Electronic Fees

While there are other targets that will be reviewed, the detailed analysis puts the hidden pieces together and:

Identifies opportunities to reduce continued unexpected profit losses
Identifies any major possible operational and compliance issues of key vendors
Makes recommendations to contract language and terms and conditions that may increase profitability.

Our goal is to provide you with insights and the best guidance possible based on real findings that can help you achieve better financial results and protect your organization's assets moving forward.

Rebates and Discounts typically provided to Payers and PBMs account for the largest source of reduction to profit, although most dollars are not Leakage. Contracted buydowns are provided by Manufacturers for agreed upon placement(s) of a drug in particular formulary positions or tiers using specific clinical management criteria. The contract would specify discounts or rebate rates (usually calculated as a percentage of WAC) for each option to secure the formulary placement, preferred tier status and defined clinical management criteria for each drug.
However, the following aspects of payment must be controlled:

Correct rate for each claim based on agreed upon tier placement

Duplicate discounts for claims paid to other Payers/PBMs

Discounts paid for claims filled under 340B or other government programs

Discounts paid for claims dispensed through alternative funding or international fulfillment programs

Other details are provided to contracted clients.
Copay card buydowns that are intended to reduce the member’s cost of the drug have evolved into one of the biggest sources of Leakage. While the average copay card may have been budgeted for 4-6% utilization for a $50.00 buydown 15-20 years ago, that rate has skyrocketed in the last 2-3 years. With the advent of different buydown programs, the frequency has more than tripled and the average buydown is much higher.
How does your actual buydown compare to what you budgeted? Does the language on your copay cards protect you or hurt you?
Our program can review:

Fishing, where multiple attempts are made to find the highest buydown

Accumulator adjusters, where buydowns are applied to accumulators

Maximizer programs, where the member's copay may be increased during the real-time adjudication process to increase the buydown

Alternative funding, where buydowns are used on claims that already had funding applied through contributions to foundations, religious charities, free goods distributions, and other reduced-price offerings

Other details are provided to contracted clients.
Wholesaler fees and chargeback transactions account for a significant source of Leakage. For a contracted fee (usually a percentage of WAC), Wholesalers (or Distributors) primarily provide inventory management, product distribution, product control, required reporting and more. They also manage contracts with downstream dispensers (i.e. pharmacies), inventory allowances, product returns & recalls.
Our program can review:

General Wholesaler rates and allowances

Downstream Pharmacy and Hospital rates

Inventory management using review of:

ANSI X-12 867 data files showing sell-through data

ANSI X-12 852 data files comparing inventory on hand/sales

ANSI X-12 844 data files showing inventory debits/credits

Other details are provided to contracted clients.
Prior authorization electronic fees are those paid for processing of clinical authorizations (approved and declined), appeal costs, and formulary exception expenses charged by Payers as part of managing prior authorization requirements. These may appear buried in administrative fee invoices or as a single line-item expense, making them difficult to quantify without transaction level data supporting the invoices.
Our program can review:

e-PA vendor invoices submitted against line item detail reports that may have never been provided

Payer/PBM invoices that may be provided as an invoice or included in rebate submissions under "other administrative fees"

Other details are provided to contracted clients.