managing healthcare costs by adopting the new business model for managing pharmacy benefits
TRANSCRIPT
Managing Healthcare Costs By Adopting The New Business Model for
Managing Pharmacy Benefits
Today’s Headlines…“National health expenditures are projected to
reach $3.4 trillion by 2013.”- Centers for Medicare & Medicaid
Services
“PBMs have been accused of failing to act in the best interests of their clients.” – Consumersunion.org
“Americans consume about 3 billion prescriptions on average….” – National Coalition on Health Care
“Drug spending in the United States rose 11 percent in 2003 to $180 billion.” – National Coalition on Health Care
Need for CHANGE High Operating Costs
Paperwork in America’s health care system is one of the largest costs. In 2003, a study done by The New England Journal of Medicine, “estimated that administrative costs took 31 cents out of every dollar the United States spent on health care….” – NY Times
Hidden $$ Incentives “In a traditional PBM, the plan sponsor may lose $1
to $4 per claim from retained rebates or undisclosed MAIC (maximum allowable ingredient cost) prices.” – Drug Topics
Closed doors between Parties“A few have sued their PBMs for alleged abuses of fiduciary duty, including efforts to conceal rebate revenue.”– Businessinsurance.com
“Drug Switching”Some companies “have been accused of steering clients towards more expensive drugs in order to increase their own compensation….” – Consumerunion.org
Infrastructure inertia results from existing businessmodels and delivery systems that mandate thatrevenues are derived from businesses behaving in acertain way. These behaviors have drivenfragmentation, inefficiencies and administrative burdenwhile doing little to improve the quality of care…Ventegra was formed to create new channels in thedelivery of healthcare that would be more efficient andless fragmented. - Robert Taketomo, Pharm.D, MBA, President and CEO, Ventegra
Time for CHANGE
NOT a PBM… NOT a GPO…
is
*PBM: Pharmacy Benefit Management company**GPO: Group Purchasing Organization
THE NEW BUSINESS MODEL …
The First Contracting Services Organization (CSO)!
is
Ventegra is the first managed care Contracting
Services Organization (CSO) representing our
clients as their fully transparent contracting arm
to control rising drug benefit costs by providing a
choice of Pharmacy Benefit Administration
(PBA) services.
Ventegra’s CSO offers a new channel in the delivery of pharmacy benefit management services
Business Culture is based on “truth and integrity”
Payors regain control with Ventegra’s CSO Alignment of incentives across the board
What’s the Difference?
CHARACTERISTIC PBM GPO TPA
CSO
Not focused on one segment X X
Safe Harbor Protection X X
Fully Transparent to Clients/Vendors X
Formulary Services X X
Pharma Contracting X X X
Acquisition-Cost Strategy X X
Own "Bricks/Mortar" X
Shareholders X X X
Payors’ ChoiceChoose only what you really need
Ventegra offers a wide variety of Pharmacy Benefit Administration Services and Programs
Payors CHOOSE what they want.
Key Ventegra Services and Programs Contracting for pharmaceutical drug
discounts Transparent pharmacy claims administration Mail service prescriptions at true acquisition
cost (Cost-based Model) Ventegra Injectable Program (“VIP”) Robo-Rebatesm System: lets you see the
discounts! Formulary management and controls Pharmacy benefit design strategy
Ventegra is not “going” to be transparent.
Ventegra is transparent.
True Transparency via Full disclosure on ALL discounts/rebates
Any/All administrative services fees disclosed
Full access by payors to the terms of their agreements
Discounts/rebates may be administered by payor
Full pass through on retail pharmacy rates
Acquisition cost for mail order and injectable prescriptions
Transparency in claims processing
All discounts/rebates received by payor
The Difference…
Room for Improvement…
Ventegra makes a historic difference!
Mail Service Injectables Rebate Processing
Issues with Current Mail Order Delivery Systems
Hidden margins on drug costs and claims
Switching programs to more costly drugs
Dispensed quantity discrepancies
Charges for errors may not be reversed
Extra charges for retail prescriptions
$$ Differences between true cost and MAC
Many H
idden Costs
& C
harges!
Ventegra offers solutions!
Ventegra’s Cost-Based Mail Service ModelPotential Financial Return*
(all costs are per tablet/capsule)
*Actual analysis for Health Plan “X” conducted on 2004 data**Before significant generic drug bid contracting process***Rounded to the nearest whole number
DRUG MAC TRUE COST**
% SAVINGS***
Buproprion 100mg $0.48 $0.19 60%
Fluoxetine 20mg $0.30 $0.04 88%
Lisinopril 20mg $0.35 $0.10 71%
Metformin 500mg $0.35 $0.08 76%
Omeprazole 20mg $2.08 $0.95 54%
The “Injectable” Dilemma Unclear definition of “Specialty Injectable”
High $$ Cost (average >$1,000/prescription)
Is it Pharmacy Cost?? Or Medical Cost??
What is the true cost?
– Any hidden charges?
Need for new benefit designs and utilization
management systems
Ventegra offers solutions!
Ventegra Injectable Program (“VIP”)
The TURNKEY Solution Acquisition Cost based business model Discounted injectable pricing direct from
manufacturers Integrated medical and pharmacy claims processing A well-designed distribution system Utilization management and authorization systems Excellent customer service Strategic consulting
Rebate Processing Woes
Contract terms not fully disclosed
Hidden discounts, fees and rebates
Total rebate $$ unknown – costly audits
Payors do not have control
True drug costs unknown
Rebates treated as “revenue” instead of “cost offset”
Ventegra offers solutions!
Web-based = NO costly IT/IS expense Rebates received is what you get = 100% pass through Accurate invoices = NO costly audits Complete report portfolio = TRUE drug cost revealed Forecast reports = MAXIMIZE rebate opportunities Access to contract terms 24/7 via internet = TOTAL
accessibility
Robo-Rebate System: The Benefits are Clear
Formulary Services
Three Formularies– Preferred– Premium– Premium Plus
Consumer Oriented Customized for Payors Formulary management and control Pharmacy Benefit Design Strategy
Alignment of Incentives Payors
- Realize the TRUE value of discounts/rebates- Can do business planning with confidence- Afforded more formulary choices
Providers- Engaged in the formulary process- Administrative simplification
Patients - Patients realize the benefits of reduced drug costs- Greater access to important pharmaceutical products
Pharmaceutical Industry- ALL discounts/rebates reach the intended parties - Improved image with transparent discounts/rebates
The difference is
not in “what we do”…
…but HOW we do it!
GET IN TOUCH WITH VENTEGRASM
Jerry Kugler Vice President Business Development
Peggy FrankPublic Relations
888 Prospect Street, Suite 330La Jolla, CA 92037
(858) 551-8111
www.ventegra.NET
Sources:“National Health Care Expenditures Projections: 2003-2013”, Centers for Medicare & Medicaid
Services, September 17, 2004
“Health Insurance Cost”, National Coalition on Health Care, 2005
“Fact Sheet: Disclosing Relationships Between Pharmacy Benefit Managers and Drug Companies”, Consumersunion.org, 2005
“The Medical Money Pit”, Paul Krugman, New York Times, April 15, 2005
“Under Mounting Pressure, New Breed of PBM is Born”, Fred Gebhart, Drug Topics, September 12, 2005
“Employers Pushing Their PBMs for Revenue Information, Rebate Funds”, Karen Pallarito, Business Insurance, September 19, 2005