Specialty drug pricing controls

The list of Specialty Drugs is determined by Prime or Claim Administrator and subject to change.

Recorded reference: Page 49

Published rationale. Specialty is defined by vendor designation rather than function. The definition on page 49 describes typical characteristics but ends by making the list whatever Prime or the Claim Administrator determines, subject to change, and Specialty Pharmacy is a pharmacy designated by the Claim Administrator or PBM. Exhibit 7 Section 10(b) on page 46 says specialty claims are priced at the BPA Addendum specialty rates, separately from retail and mail pricing, and may be dispensed by Prime, an affiliate of Prime or another arranged pharmacy. Page 27 says Prime may keep a portion of the discounts it negotiates with the specialty pharmacy as its fee, and page 28 says the specialty pharmacy may be an affiliate of or partially owned by Prime. The model requires a functional definition, drug level rates that act as a ceiling in every channel and acquisition cost pricing at affiliates. This text allows the vendor to define the category, set the price in an omitted addendum and retain margin, so bad.

Specialty Drugs may be provided by Prime, an affiliate of Prime, or other Specialty Pharmacy that has a written arrangement with Prime or Claim Administrator.

Recorded reference: Page 46

Published rationale. On Page 46, Section 10.b and Page 49, Section 11.33 recognize specialty drugs as a distinct category and permit them to be dispensed by Prime, Prime affiliates, or contracted specialty pharmacies. However, pricing is governed entirely by the omitted BPA Addendum rather than being capped at acquisition cost plus a fixed fee. The contract does not provide drug level acquisition cost protections or prevent markups by PBM affiliated specialty pharmacies, leaving substantial financial exposure for the sponsor.

The list of Specialty Drugs is determined by Prime or Claim Administrator and subject to change.

Recorded reference: Page 49

Published rationale. Page 49 includes a functional description of specialty drugs, but lets Prime or the administrator decide and alter the operative list. Page 46 separates specialty claims from retail and mail pricing and puts their rates in the omitted addendum; it also allows supply by Prime, a Prime affiliate or another specialty pharmacy. Page 27 permits Prime to retain a portion of mail and specialty discounts as a fee. The produced text provides neither acquisition-cost pricing at affiliated specialty pharmacies nor claim-level drug rates as ceilings in every channel. The exact specialty prices cannot be examined because the addendum is absent, but the unilateral list and affirmative retained-margin permission conflict with the model protections.

Specialty Drugs may be provided by Prime, an affiliate of Prime, or other Specialty Pharmacy that has a written arrangement with Prime or Claim Administrator.

Recorded reference: Page 46

Published rationale. Specialty is only partly defined by function, and it is not priced at acquisition cost. Page 49 describes specialty drugs as drugs for limited populations or diseases, often injected or infused, or with special handling, and then says the list is determined by Prime or Claim Administrator and is subject to change. A vendor controlled list can move products into or out of the specialty channel. Page 46 prices specialty claims at the omitted BPA Addendum, separate from retail and mail pricing, and says specialty drugs may be provided by Prime, an affiliate of Prime, or another specialty pharmacy. Page 27 allows Prime to keep a portion of mail and specialty discounts as its fee. There is no drug level rate that acts as a ceiling in every channel, and no acquisition cost rule for affiliate specialty claims. The model contract requires a functional definition, a drug level ceiling in every channel, and acquisition cost at affiliate pharmacies. The unseen addendum may contain a rate. It is not described as acquisition cost, and the produced text authorizes retained specialty margin and affiliate dispensing. That is bad.

The list of Specialty Drugs is determined by Prime or Claim Administrator and subject to change

Recorded reference: Page 49

Published rationale. The model term defines specialty by function, makes drug level rates a ceiling in every channel, and prices specialty claims at affiliate pharmacies at acquisition cost. This draft does none of that. Definition 33 on page 49 defines specialty drugs descriptively and leaves the list to Prime or the Claim Administrator, subject to change without Employer approval, so the vendor decides which drugs fall into the most expensive category. Page 46 says specialty pricing is set separately in the BPA Addendum rather than capped against retail or mail, specialty drugs may be dispensed by Prime or a Prime affiliate, and page 27 lets Prime keep a portion of specialty pharmacy discounts as its fee. Given that the Claim Administrator holds equity in Prime, the channel where most spend concentrates is priced by an affiliate with retained margin. The draft permits the harm the model term prevents.