HIMSSCast: Collaboration is key in the drug discount process

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Micah Litow is president of Kalderos, a company that ensures drug discount programs are in compliance with the laws that created them or the contracts signed to negotiate those discounts.

What's needed is transparency between stakeholders - providers, payers, manufacturers and patients - to make sure the right discount is being given to the right party on the right transaction, he said.

For instance, right now there isn't a ton of transparency on how drug rebates are being used. This lack of clarity and transparency is driving the current scrutiny on the relationship between drug prices and pharmacy benefit managers.

In the end, what patients care about is their out-of-pocket expenses.

"The more transparency you have on your costs and your revenues the easier it is for you to run a business that delivers on the mission statement that you've created," Litow said. "Whatever money we rip out of the administrative spend that's going into trying to figure out how to be compliant with all these programs and we put that money towards innovation, affordability and accessibility, patients will benefit in droves."

For more, listen to Litow's conversation with Susan Morse, executive editor of Healthcare Finance News.

Talking points: 

• Prescription drug discount programs are a great idea – badly executed.
• There's numerous discount programs including the federal 340B drug pricing program, the Medicaid Drug Rebate Program and pharmaceutical companies' own initiatives.
• The $223 billion system is plagued by duplicate claims and a lack of collaboration, which results in higher drug costs for patients, and waste and inefficiency that hurt all parties.
• Pharmacy benefit managers negotiate with manufacturers for rebates (discounts).
• A PBM has a contract with a drug manufacturer for a discounted price for formulary placement.
• If the administrative burden can be simplified, less time is spent on imperfect data feeds and more time and money goes to the mission statement.

More about this episode:

Elevance Health PBM CarelonRx to launch prescription cost savings program

Senate Finance Committee targets PBM reform in new legislation

PBMs are driving up drug prices through fees, PhRMA report claims

Bipartisan legislation seeks to increase healthcare price transparency

Surescripts is bringing price transparency to providers

Drug prices soaring beyond inflation rate, necessitating action, says HHS

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org