Chelko offers proven health benefits expertise for plan sponsors to confidently make decisions that reduce cost and improve member experience within their medical, prescription drug, dental, vision, and wellness plans. And we’ve been doing it for more than 20 years. In an era when huge health systems, insurance companies, and PBMs have woven themselves together to take advantage of corporate health plans, this isn’t easy. But it is possible. It takes a little more attention to detail, courage to reject the status quo, and commitment to fight for better care and lower costs on behalf of your employees and organization. You can’t get there by just accepting what the health plans and PBMs want to sell you, or by letting health systems do or change whatever they want. Which is where our independence comes into play. We work exclusively for benefit plan sponsors and plan sponsors alone ? not the health systems, insurance companies, or PBMs. You never have to worry about whose interests we truly represent. Let’s be clear. Great results are not achieved by denying needed care or taking big risks. Our experts help get you there by demanding more and making smart, data-driven decisions.
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An inconvenient truth, indeed. Thanks for helping pull back the curtain, Antonio!
Drug pricing sanitization and pharmacy benefits redesign at 46brooklyn Research and 3 Axis Advisors
An inconvenient truth: Drug rebates are bad Tell ‘em Rick Chelko Austin Chelko. https://lnkd.in/gyVpCuK4
End of week humor. This WSJ story (of a surprise lab bill related to a dermatology visit from a year ago) is entertaining, but sadly true and instructive. I loved his analogy: "Had this bill been for anything besides health care, I would have been far more surprised. If a restaurant supply company mailed me an invoice, explaining that they had encountered some extra expenses for a burger I ate at a restaurant a year ago, and now I owed them $604.80, I’d be confused. Especially if that restaurant didn’t have prices on its menu." https://lnkd.in/e8yczBMT
Please Congress! Stop the madness! We don't need another state with a prescription drug affordability board and their associated rules and requirements. We also don't need new federal affordability rules. Fix the root causes and then let the market compete. As long as you (Congress) continue to allow direct-to-consumer drug advertising, rebates, and copay assistance programs, we are going to have warped and inflated drug costs. If drugs have to stand on their own true value (from clinical efficacy and cost perspectives) and middlemen aren't paid to favor more expensive medications, drugs costs will settle-down significantly. And, we will be able to avoid the hail storm of well-intended, but even more cost-additive new micro-management rules. And, for the record, I am from Ohio, yet sympathetic to Michigan's cause. But, this is not a state issue, it is a federal issue. https://lnkd.in/eTTAXGhW
Are you feeling a little blue about the recent challenge to the validity of the Blue Zones? I am. ? Since 2005, Dan Buettner’s book, The Blue Zones: Lessons for Living Longer from the People Who’ve Lived the Longest, has been lauded for outlining the nine keys to healthy living (https://lnkd.in/egDccaV7). Referred to as the “Power 9,” he based them on his research of five locations throughout the world where there were an unusually high number of centenarians. ? More recently, independent research has revealed that at least some of these locations also have high levels of pension fraud and bad record keeping. ? Does that mean we should disregard the Power 9? I don’t think so. ? I never believed practicing these nine behaviors would help me live to 100 or beyond. In fact, I don’t particularly have a desire to live that long. However, I do still think the Power 9 are a good model for healthy living. ? As Dr. Michael Roizen says, “People should live to good health, not test to good health.” Our odds of living a long, healthy life are much more dependent on how we live than upon our access to and use of “world class” health care systems or new, high-cost medications.
Improper pharmaceutical marketing lands Pfizer on the hot seat again. Incentivizing prescribers to promote newer, high-cost drugs, such as Nurtec ODT in this scenario,?continues to challenge medical ethics and proper patient care. This tactic leads to over prescribing, increased plan costs, and financial relationships between healthcare providers and the pharmaceutical industry.
An Inconvenient Truth (Part 2): Vendor Overrides are Bad ? My recent post (below) on rebates sparked considerable interest, so I’m doubling down with a parallel topic that’s equally frustrating: broker overrides. I expect this topic won't be as interesting to those reading for reasons I (typically) can't explain. Many of you know these are incentive commissions paid to brokers for bringing in new customers and renewing profitable arrangements—and they’re a pervasive problem in our industry. ? In fact, the issues are so similarly egregious, I can pretty much use the same basic narrative from my rebates article for outlining my grievances. ? The truth is, much like rebates, broker offers of lower (sometimes even zero) fees are really just a subterfuge for hidden fees and higher plan costs. They are not in the best interest of the benefit plan or its members. One could even argue that receiving these incentives is counter to the obligations of a fiduciary. ? This is why we flat out don’t accept them. We work for the Plan, not the vendors. As required by the Consolidated Appropriations Act rules, we avoid conflicts of interest and charge a clearly stated and reasonable fee for our services. ? Is this a meaningful difference? Our experience tells us it is. For example, after (an important distinction) recently managing an RFP on behalf of one of our clients, the winning vendor told us it was going to send us $100,000 in incentive compensation. ? Of course, we rejected it. Just like we always have and always will. Why? Because we believe accepting this money compromises our ability to act in our clients’ best interest and undermines the integrity of the industry as a whole. ? Incentive or contingent compensation (overrides) are designed to reward brokers (often referred to as “producers” for obvious reasons) for: ? ???Selling one vendor’s product over another’s, ???Making sure the products sold are profitable for the vendors, and/or ???Selling the renewal. ? How can we remain unbiased if our bottom line depends on which vendor you choose? ? As the new fiduciary rules continue to evolve, it’s important to ask your broker some tough questions: -Do you take any overrides or money from vendors outside of agreed-upon commissions or fees (either on our account or others)? ? If so, how can you ensure these payments don’t influence: -Who you solicit bids from? -How you compare bids? -How you negotiate final offers? -The recommendations you make? ? Because the truth is, overrides (much like rebates) create inherent conflicts of interest that drive up costs for employers and their plan members (even if employers feel they never "see" them). To truly act in your best interest, brokers must reject these payments and adopt transparent, conflict-free compensation models. Only then can the industry begin to restore trust and deliver genuine value to benefit plans.
An Inconvenient Truth: Drug Rebates are Bad? ? We recently heard of a broker calling on employers with the promise of negotiating higher rebates, and only charging a modest “shared savings” price based on guaranteed increased rebates.?? ? The unfortunate reality is that most buyers and brokers/consultants continue supporting the false narrative of larger rebates equating to a better deal. With rebates growing exponentially (especially in certain classes of drugs), the lure of what seems like a windfall of money is proving increasingly tough to resist for plan sponsors and their advisors.? ? A Problem. Not a Solution.? Despite per employee rebates paid to employers increasing almost threefold?since 2017, our benchmarking data reveals total drug costs have still risen by close to 24% over that same time. Health plans continue chasing rebates simply because they are presented as savings and dangled like a golden carrot. However, it does not address the cost problem as everyone would like. ?There are multiple long-term implications to this approach and here are just a few:? ? - Rebate-driven contracts block employers from pursuing lower cost generics, biosimilars, and therapeutic alternatives. - Rebates incentivize PBMs to allow clinically inferior or simply more expensive drugs for members. It shifts the priority away from comparative effectiveness and lowest net cost.? - Under most contracts, PBMs can hit any guarantee they set for a particular employer. This happens by making formulary changes, cross subsidizing drug channel guarantees, MAC manipulation, changing drug tiers, etc.? Conflicts of interest, laziness, and naivety on the broker/consulting side have muddied the waters even more. So how do you break free from this flawed purchasing strategy??? ? Turning a blind eye to the rebate game starts with finding a like-minded advisor who can help identify and structure a conflict-free, transparent, and clinically-driven PBM arrangement. That means a firm who won’t simply spreadsheet PBM discounts and rebates, and who also understands contract terms and the comparative value of medications and their true net costs.??? ? Does it work? It has for our clients. For example, one of our larger clients transitioned a couple years ago from a rebate-driven to a clinicially-driven PBM arrangement resulting in an 8% loss of rebates and a net cost reduction of over 20%. Overall, our Value-Based Drug Management approach has yielded tens of millions of dollars in savings while enhancing quality of care and member service for a number of employers willing to take this road less traveled.? ? You can watch and wait as PBMs, manufacturers, coalitions, and brokers/consultants continue profiting from your plan, or you can travel the well-established, and improved path of putting clinical efficacy and cost reduction ahead of rebates and, in doing so, confidently fulfill your fiduciary duty.
New survey results. Old news. We know where to go if you want to do something about it. ? 74% of surveyed employers are worried that health care costs are having an impact on employee wages. No need to worry. This is reality and has been for the last 50 years. ? Almost all (99%) of those surveyed said they believe drug prices in particular are a "significant threat" to affordability. They are correct. This has been a growing problem ever since "drug cards" were reintroduced to the market decades ago. (Employers found first generation cards to be too expensive, so they dropped them. Gen 2 cards have proven to be even more so.) ? We have been on top of this issue for over 10 years now. Our drug benefits management strategy has improved clinical care and greatly reduced employer and employee costs. ? Let us know if you want to replace fear and worry with satisfaction and fulfillment. We can help! https://lnkd.in/e6BHxuHb
Felt appropriate to post this a year ago, feels even (maybe) more appropriate to post now! Happy to see employers (and even our competitors) taking action. Hard to believe this was text we released back in 2017... “It is time for employers to change the discussion with their health plans and PBMs. The rebate-driven management strategy is not working. It’s actually driving drug prices and utilization higher. And even more money is being wasted via lax clinical reviews and sourcing.” https://lnkd.in/gJMq_Ekj
I can’t help but notice the abundance of new pharmacy benefit consulting positions posted by our competitors these days. My LinkedIn feed is teeming with them — Employee Benefits Pharmacy Consultant, Pharmacy Account Executive, Assistant Vice President - Pharmacy, etc. All jobs you can find out there right now, if interested.? ? While in some respects this comes as no surprise (prescription drug costs and specialty spend are spiraling out of control), I can’t help but wonder what took them so long. ? That’s probably because we’ve been sounding the alarm on the specialty drug tsunami coming at employers for almost 10 years. In fact, here’s an excerpt from an article we wrote back in 2017 that could easily pass for fresh thinking today: ? “It is time for employers to change the discussion with their health plans and PBMs. The rebate-driven management strategy is not working. It’s actually driving drug prices and utilization higher. And even more money is being wasted via lax clinical reviews and sourcing.” ? https://lnkd.in/gJMq_Ekj ? And back then, we stood behind our words by taking, what was then, the novel step of adding pharmacists and integrating them as part of our consulting team. Don’t get me wrong, it’s great that our competitors are finally starting to catch up and invest in this area, and it certainly serves as nice validation for our firm’s early thought leadership. ? After all, today some of the nation’s largest employers trust us to help manage their drug spend. So, while it may have taken some time for our message to take hold, it’s been worth the effort. ? If you would like to benefit from that hard-earned experience, please reach out. ? #employeebenefits #prescriptiondrugspending #PBMs