Unveiling the Hidden Costs of International Drug Sourcing
Health Delegates • February 6, 2024
In the complex world of prescription drug management, Pharmacy Benefit Managers (PBMs) and payers are constantly seeking pathways to reduce costs and improve access to medications for their members. International drug sourcing has emerged as a promising avenue, potentially offering significant savings on expensive brand-name medications. However, this strategy also brings to light the intricate balance between immediate cost savings and the longer-term financial implications and other access issues. This blog explores the nuanced landscape of international sourcing and its true cost.
The Appeal of International Sourcing
International sourcing of medications, often seen as a cost-saving measure, allows PBMs and payers to procure drugs at a fraction of the domestic price. Countries like Canada and certain European nations have been popular sources due to their lower drug prices, which can be attributed to government price controls and negotiation policies that are absent in the U.S. market. This approach promises immediate financial relief by reducing the direct cost of brand-name medications, which are a significant expenditure for many health plans.
International Sourcing conundrums
As time has passed more payers have moved to use international sourcing. This has brought about unforeseen challenges in areas not necessarily contemplated when first implemented. Payers have begun to experience shortages in products that they were driving to international sourcing. This has lead to some of the volume moving stateside and thus increased costs associated with the products which have experienced these shortages. Payers have also begun to experience increases in pricing from their international sourcing vendors. The increased prices are a direct result of the increased volume driven through the vendors. Additionally, Canada and other European countries have started to notice supply issues for their citizens due to sourcing those drugs to payers in the United States. This has started the conversation of what is the volume that can be sent out of their country and do they want to continue to allow this as it may impact their own healthcare system. Clinically it can often be difficult to to work through issues with strengths, incorrect drugs, different drug names and more when sourcing from another country. This can potentially lead to clinical issues of subpar clinical treatment.
The Rebate Conundrum
While the upfront cost savings from international sourcing can be attractive, they come with a hidden trade-off: the potential loss of pharmacy rebates. Rebates have become a cornerstone of the current PBM and payer ecosystem, serving as a key negotiating tool with pharmaceutical manufacturers. These rebates, which can amount to a significant portion of a drug's list price, are often used by PBMs and payers to offset other costs or pass on to downstream plans, thereby reducing premiums and out-of-pocket expenses for members. The shift towards international sourcing could lead to a decrease in rebate income, impacting the overall financial health of health plans and potentially leading to increased costs elsewhere.
Evaluating the True Cost
The decision to pursue international sourcing must be informed by a comprehensive understanding of its financial implications. Beyond the immediate savings, PBMs and payers need to consider the potential financial implications which include a myriad of factors based on their international source and reduction in rebate income, which has been a critical component of their revenue and cost management strategies. This evaluation must also take into account the administrative costs associated with setting up and managing international sourcing programs, which can erode some of the expected savings. Finally it's important to look at the overall net cost of these products to ensure that decisions are being appropriately made for products. While low net cost decisions are critical to the decision it's also imperative to ensure that the clinical merits of the decision are considered as outlined above.
The Need for Strategic Balance
For PBMs and payers, finding the right balance between leveraging international sourcing for cost savings and maintaining the benefits of pharmacy rebates is crucial. This may involve selective international sourcing that targets only specific high-cost medications for which the net savings are clearly beneficial. It also calls for a strategic approach to rebate negotiations, ensuring that the value captured through rebates or other strategic formulary and coverage decisions continues to support the financial sustainability of health plans.
Reimaging Rebates
The exploration into international drug sourcing reveals a complex interplay between immediate cost savings and the broader financial implications for PBMs and payers. As the industry continues to evolve, it's imperative for these stakeholders to carefully assess the true cost of such sourcing strategies, considering both the potential savings and the impact on a payers financial outlook. We encourage PBMs and payers to delve deeper into this analysis and engage with
Health Delegates to review their current strategies, ensuring they maximize the value for their members while maintaining financial health. The path forward requires a nuanced understanding of the costs and benefits, aiming for a healthcare model that is both cost-effective and sustainable.
Subscribe for Exclusive Industry Insights
Contact Us
The Power of Transparent Reporting in Pharmacy Benefits Managing pharmacy benefit costs is one of the most complex challenges faced by benefits managers, large employer groups, and health plans consultants. As prescription drug prices continue to rise, finding a way to efficiently manage pharmacy spending and maximize savings is crucial. While rebate programs can offer significant savings, many traditional models lack the transparency and granularity needed to fully understand where savings are coming from—and where they may be slipping through the cracks. At Health Delegates, we’ve revolutionized rebate management with a robust online reporting suite that delivers unparalleled visibility into pharmacy spend, empowering health plans and employer groups to optimize their benefits programs and increase their savings. With over 4 million covered lives under our management, we have the experience and expertise to handle diverse requirements with precision and care. Effective Rebate Management through Transparent Reporting One of the core strengths of Health Delegates lies in our ability to offer a 360-degree view of your pharmacy spending. Our reporting suite is designed to give you thorough, real-time insights into how and where rebates are earned, down to the net cost of each claim. This transparency paves the way for smarter, more informed decision-making when it comes to managing pharmacy benefits. Whether you’re looking to track rebate performance, improve formulary strategies, or optimize drug savings, our reporting tools provide actionable data that allows you to make savings decisions with confidence. Our Approach: Simplifying Cost Management At Health Delegates, we take a straightforward approach to rebate solutions. Our goal is to provide a clear picture of your overall pharmacy benefit costs, so you can make data-driven decisions that optimize savings. We understand that balancing rebates, clinical formulary solutions, and broader healthcare costs can be complex. That’s why we offer a comprehensive solution that enables you to manage all these factors effectively, with a focus on reducing your net drug costs. We aim to be your strategic partner , delivering the insights you need to optimize your pharmacy benefits and maximize your rebate opportunities. With our suite of customizable reports, you can easily drill down into essential data and identify opportunities for savings. Key Reporting Tools to Maximize Savings Health Delegates offers a suite of customizable, client-centric reports that give you a transparent and comprehensive understanding of your pharmacy spending. Here’s an overview of the key reports we provide: Executive Summaries Our executive summaries offer a concise yet thorough overview of your rebate management, summarizing key data points, performance trends, and areas for improvement. This high-level report gives health plans and employer groups an easily digestible snapshot of their rebate program’s effectiveness, helping you make informed decisions and adjust strategies where needed. Operational Reports Our operational reports provide critical insights into the details of your claims. This includes reports on claim submissions, rejected claims, and the reasons behind rejections. These reports are standardized for easy integration into your data warehouse or analytics engine, making it simple to manage rebates and address anomalies as they occur. Financial Reports Timely and accurate financial forecasting is essential for budgeting and planning. Health Delegates provides financial reports that provide estimates of expected rebates, as well as detailed tracking of specific rebate payments received. These reports enable transparent tracking of funds and their sources, drilling down to the claim level, including NDC, to demonstrate the direct value of your rebate program. Clinical Reports Our clinical reports analyze formulary product distribution and provide insights into which drugs are being used most frequently. This helps identify how drug utilization impacts overall rebate earnings and provides valuable data for formulating clinical program strategies. These insights are essential for adjusting formularies and ensuring you’re maximizing rebate potential. Maximize Your Pharmacy Savings with Health Delegates Health Delegates is committed to helping health plans and employer groups unlock the full potential of their pharmacy benefit programs through transparent, detailed reporting. Our tools empower you to make better-informed decisions, optimize your drug spending, and drive greater savings—all while maintaining the high standards of care your members expect. Ready to optimize your pharmacy benefits? Contact us at hdinquiries@healthdelegates.com today to learn how our comprehensive reporting and innovative rebate solutions can help you take control of your pharmacy spending.
Explore how co-manufacturing in the pharmaceutical sector impacts drug costs and consumer choice, and learn about Health Delegates' approach to transparent healthcare solutions.
Learn how Health Delegates' transparent rebate model helps organizations avoid risks and ensures clarity in managing pharmacy benefits.
Discover how Health Delegates offers a transparent rebate model that ensures true cost savings without the pitfalls of traditional rebate guarantees.
Learn how Health Delegates' proprietary formularies and utilization management can transform your pharmacy strategy and cut costs.
Discover Health Delegates' unique approach to Pharmacy Benefits Management (PBM). Our latest blog post explains how focusing on transparency and the lowest net costs can drastically reduce your pharmacy expenses and align incentives.
Discover how Health Delegates can simplify rebate programs, ensuring transparency and maximizing savings with effective, clear strategies.
In the intricate landscape of corporate benefits management, navigating the array of consulting services and pharmacy benefit managers (PBMs) presents its own set of challenges. Opting for consolidated solutions promises simplicity and efficiency on the surface but often conceals a deeper issue: the risk of misaligned incentives leading to inflated costs and compromised benefits management. Understanding the Pitfalls of Consolidated Solutions The allure of streamlined services through a single provider or consultant is understandable, aiming to reduce administrative burdens and potentially harness cost savings. Yet, this approach can inadvertently foster a setting where the interests of consultants or PBMs do not fully align with those of the company and its employees. Recently filed court cases accuse employers of overpaying for prescription drugs, exemplifies the possible neglect in securing competitive pricing, hinting at a broader issue of oversight. Compensation models for consultants that tie back to the volume or cost of procured services and medications can, albeit unintentionally, favor higher-cost options. This structure may prioritize the consultant's financial gain over the best interests of the company and its workforce, clouding the cost-effectiveness and benefits of management decisions and potentially undermining the fiduciary duty owed to employees. The Advantages of a Decentralized Approach to Benefits Management Choosing a decentralized model for managing benefits introduces multiple benefits, including: Competitive Pricing Assurance : Engaging with various providers for different benefits aspects allows for effective comparison and ensures optimal value. Improved Transparency: A decentralized model offers clearer insight into the costs and benefits of each package component, vital for budget management and justifying employee benefits. Fiduciary Duty Compliance : Critical evaluation and selection of benefits components align with the company’s responsibility to act in the best interests of its employees. Strategies for Effective Benefits Management Adopting a thoughtful approach to avoid misaligned incentives and honor fiduciary duties involves several key actions: Routine Audits : Regular evaluations of benefits plans can spotlight inflated costs or misalignments with employee needs. Diverse Vendor Engagement : Collaborating with multiple vendors encourages competitive pricing and terms. Transparent Vendor Selection : A clear and competitive vendor selection process ensures the identification of the best services and prices available. The recently filed case against J&J serves as a valuable lesson for companies to scrutinize their benefits management approach. While consolidated services offer appeal, it’s crucial to be mindful of potential misalignments and the significance of maintaining a competitive and transparent environment. Shifting towards a decentralized strategy can better align with employee interests, uphold fiduciary responsibilities, and unveil potential cost savings. Explore Decentralized Solutions with Health Delegates Facing the complexities and possible conflicts of consolidated benefits management, companies can benefit from expert guidance in this area. Health Delegates specializes in assisting companies with decoupling and decentralizing pharmacy benefits, ensuring alignment with fiduciary responsibilities and optimizing value and cost-effectiveness for employees. Reevaluating your benefits strategy with a focus on decentralization could enhance transparency, competitive pricing, and fiduciary duty compliance. Health Delegates is poised to support you in this journey, offering customized solutions that cater to your unique needs and objectives. Reach out to Health Delegates to discover how we can aid in refining your pharmacy benefit management and rebate strategies . Our expertise is designed to navigate the intricacies of benefits management, aligning your approach with your organizational values and the well-being of your employees.
Pharmacy Benefit Managers (PBMs) are invaluable partners in the healthcare industry, orchestrating prescription drug benefits for health insurers, Medicare Part D drug plans, and large employers. Their role is pivotal in navigating the complex landscape of healthcare to deliver efficient and cost-effective drug benefit management. Recognizing the challenges in PBM contracts, this blog aims to highlight the mutual benefits of fostering transparency, clarity, customization, and a client-centric approach in our partnerships. By focusing on these areas, we can collaboratively address the needs of providers, consumers, and the entire healthcare ecosystem. Advancing Transparency in PBM Contracts A foundation of trust and partnership in the healthcare industry begins with transparency. While there have been concerns regarding the clarity around rebate amounts, drug pricing, and pharmacy service costs, advancing transparent contracts can greatly benefit all parties involved. Transparent contracts that offer clear insights into drug pricing, rebates , and fees not only foster trust but also enable employers and patients to make informed decisions. Encouraging an environment where financial transactions and potential conflicts of interest are openly discussed can lead to better outcomes for everyone in the healthcare value chain. Promoting Clear Definitions and Customization The significance of having clear definitions within PBM contracts cannot be overstated. Ambiguities around terms such as 'generic drugs', ' specialty drugs ', and 'rebates' can lead to misunderstandings. Ensuring that these terms are precisely defined will help in eliminating confusion and fostering a more transparent relationship. Additionally, recognizing the unique needs of each employer or health plan is critical. A tailored approach to PBM services, including formulary design, drug utilization reviews, and pharmacy network design, can address specific needs more effectively, leading to enhanced efficiency and cost management. Embracing Client-Centric Management Adopting a client-centric management approach places the focus squarely on the needs of employers, health plans, and patients. This strategy ensures that PBMs' incentives are aligned with the clients' objectives, such as achieving cost savings, ensuring high-quality care, and improving patient outcomes. A commitment to regular performance reviews, efficient drug spend management, and exceptional customer service are key to a successful client-centric strategy. Such an approach not only benefits clients but also strengthens the partnership between PBMs and their stakeholders. Navigating Legal Challenges and Collaborative Solutions The evolving legal landscape, exemplified by cases like Rutledge v. Pharmaceutical Care Management Association, underscores the importance of collaboration between PBMs, states, and federal entities in navigating regulatory challenges. These legal precedents highlight the need for a balanced approach to regulation that supports fair reimbursement practices and acknowledges the complex interplay between state and federal laws. By working together, we can find solutions that ensure fairness and transparency while respecting the diverse regulatory frameworks. Pharmacy Benefit Managers are essential to creating a more efficient and equitable healthcare system. By embracing practices that prioritize transparency, clarity, customization, and a client-centric focus, we can strengthen our partnerships and achieve shared goals. The journey towards reforming PBM practices is a collaborative effort, requiring engagement from all stakeholders in the healthcare system. Together, we can advocate for and implement changes that enhance the well-being of all parties involved and contribute to a healthier future for everyone. Forge Ahead Together: Collaborative Action with Health Delegates Pharmacy Benefit Managers are central to fostering a more efficient and equitable healthcare system. By embracing practices that emphasize transparency, clarity, customization, and a client-centric approach, we can significantly strengthen our partnerships and achieve our collective goals. The path to reforming PBM practices is one that we must walk together, engaging all stakeholders in the healthcare system to advocate for and implement meaningful changes. It's through collaboration that we can ensure a healthier future for everyone. At Health Delegates , we are committed to going beyond the industry norm. We believe in the power of teamwork and market responsiveness to secure the best possible outcomes for our partners: Beyond Rebate Guarantees: We transcend traditional rebate guarantees, focusing instead on dynamic market adaptation and delivering real value. Our dedicated team works tirelessly to ensure you receive the best possible rebates. For us, it's not about arbitrary numbers; it's about delivering tangible results and fostering long-term partnerships. Simplified Contracting: We understand the complexities of PBM contracts and strive to offer straightforward rebate solutions. Our approach cuts through the clutter of exclusions and complex guarantees, providing the flexibility to make formulary and rebate decisions that genuinely benefit your plan. We aim to harmonize financial and clinical decisions, tailoring our services to meet your unique needs. Retain Full Control and Visibility: With Health Delegates, you maintain complete visibility and control over the financial aspects of your plan. Every rebate, administrative fee, and price protection measure is passed directly through to you, ensuring transparency, eliminating surprises, and building trust. We invite you to reach out to Health Delegates to explore how we can work together to navigate the complexities of PBM and rebate contracts and achieve a more transparent, efficient, and equitable healthcare system. Let's join forces to create solutions that are not only beneficial but also sustainable for all parties involved. Contact us today to learn more about how we can support your goals and foster a thriving partnership.
Introduction to Cell and Gene Therapies Cell and gene therapies represent a frontier in medical innovation, offering new hope for diseases once deemed incurable. These advanced treatments involve altering the genetic material within a patient's cells to treat or prevent disease. In 2024, we are witnessing an unprecedented era in these therapies, marked by rapid advancements and increasing clinical applications. The Essence of CGTs Cell therapy involves the transplantation of living cells into a patient to replace or repair damaged tissue or cells. Gene therapy, on the other hand, involves modifying the genetic material within a patient's cells to treat or prevent disease. Together, these therapies offer a new paradigm in medicine – treating the root cause of diseases at the molecular level. The Evolution of CGTs Since the first successful gene therapy trials in the 1990s, the field has evolved dramatically. Early challenges, such as immune reactions and questions about efficacy, have given way to a new era of sophisticated techniques and a better understanding of genetic mechanisms. Recent advancements have been bolstered by parallel developments in technologies like CRISPR-Cas9, which allows for precise editing of the genome. Advances in Gene Therapy and AI Integration Breakthroughs in Gene Therapy In 2023, the gene therapy field witnessed significant advancements, notably with the FDA approval of cell-based gene therapies for treating sickle cell disease. These therapies, Casgevy and Lyfegenia, signify a monumental leap, particularly with Casgevy being the first CRISPR-based therapy to receive FDA approval. This approval not only represents a breakthrough in treating sickle cell disease but also paves the way for genome editing technologies to treat a wide range of genetic disorders. AI's Transformative Role AI is significantly advancing gene therapy development. It plays a critical role in creating personalized treatment plans by analyzing individual genetic biomarkers. This personalized approach is essential for treating rare diseases, where one-size-fits-all solutions are ineffective. AI-driven bioinformatics and genetic sequencing are enabling more targeted and effective therapies, tailored to each patient's unique genetic makeup. The Rising Success of CAR-T Cell Therapy CAR-T cell therapy, a form of immunotherapy that uses modified T cells to attack cancer, has shown remarkable success, particularly in treating blood cancers. This therapy involves reengineering a patient's own immune cells to recognize and destroy cancer cells. In 2024, there's an expectation that the application of CAR-T cell therapy will extend beyond blood cancers to solid tumors, like colon and ovarian cancer. This expansion highlights the potential of cell therapies in treating a diverse range of diseases. The Expanding Horizons of CAR-T The success of CAR-T cell therapy in blood cancers has been a beacon of hope and a clear demonstration of the power of cellular immunotherapy. The transition into treating solid tumors is a complex endeavor due to the different nature of these cancers compared to blood cancers. However, ongoing research and clinical trials are showing promising results, potentially revolutionizing the treatment of solid tumors. Managing Costs and Innovative Payment Models Tackling High Costs One of the primary challenges with CGTs is their high cost, driven by complex manufacturing processes and the personalized nature of these treatments. This presents a significant barrier to accessibility, making it difficult for many patients to afford these life-saving therapies. Innovative Payment Solutions To mitigate these financial challenges, innovative payment models are being explored. These include outcomes-based payments, where a portion of the therapy cost is covered upfront and the remainder is paid if the therapy achieves specific outcomes. Other models include rebates for therapies that fail to meet predefined outcomes and annuities spread over multiple payments, contingent on continued therapeutic efficacy. The Future Landscape of CGTs Broadening Therapeutic Applications CGTs are not limited to genetic diseases and cancers. Researchers are exploring their applications in metabolic, genetic, and central nervous system disorders. Most of these applications are in early stages, but they hold the promise of expanding the range of treatable conditions significantly. Market Growth and Challenges The global market for CGTs is expected to see substantial growth, with projections of significant sales by 2029. Oncology is expected to continue leading the development of CGTs. Despite this growth, the field faces ongoing challenges such as high development costs, clinical trial failures, and increasing pricing pressures. Addressing these issues is crucial for realizing the full potential of CGTs. The landscape of cell and gene therapies in 2024 is one of rapid advancement and significant potential. These therapies are on the brink of transforming medicine, offering new treatments for a range of diseases. The integration of AI and innovative payment models are key to overcoming current challenges, and the future of these therapies is bright with the potential to treat diseases more effectively and personally than ever before. Subscribe for additional news in healthcare innovation As we stand on the cusp of a new era in healthcare, the journey of cell and gene therapies is just beginning. The advancements in 2024 and beyond promise not just to transform our industry, but to redefine what is possible in the treatment of previously incurable diseases. However, the true power of this revolution lies in our ability to share, learn, and grow together. If you're as inspired by the potential of these therapies as we are, and you're eager to stay at the forefront of this groundbreaking field, we invite you to join our community. Subscribe to Health Delegates and follow us for more insightful updates, cutting-edge research findings, and insight on innovation. Together, let's embark on this exciting journey into the future of healthcare, where every discovery brings us closer to a world of healthier possibilities. Don't miss out on the next breakthrough—subscribe and follow us today for a future where innovation and partnership know no bounds.
Contact Us
We'll get back to you within 2 business days
Contact Us
© Copyright 2024 | All Rights Reserved | Health Delegates® | Privacy Policy | Terms and Conditions