Specialty Pharmacy Scam - Same Drug Ranges from $37.41 to $2,172

This video provides an in-depth exploration of a significant pricing discrepancy, or "scam," within the generic specialty medication market, specifically focusing on Dimethyl Fumarate, the generic version of the Multiple Sclerosis drug Tecfidera. Dr. Eric Bricker, the speaker, begins by establishing the context: while generic drugs are typically expected to be significantly cheaper than their brand-name counterparts, this is not always the case for specialty generics, leading to massive cost variations depending on the pharmacy. He highlights that Dimethyl Fumarate, despite being a generic available since 2020, exhibits an astonishing price range, with some pharmacies charging up to 58 times more than others for the exact same pill.

The presentation meticulously details these price differences using specific examples and data points, primarily sourced from GoodRx. Dr. Bricker contrasts the prices offered by grocery store pharmacies like HEB, Giant, Publix, ShopRite, and Jewel-Osco, where a one-month supply of Dimethyl Fumarate ranges from approximately $37 to $104. He then starkly compares these to the prices at major retailers and PBM-owned specialty pharmacies, including Costco, Walmart, Walgreens, and CVS, where the same medication costs between $1,500 and $2,172. This dramatic disparity underscores the central argument that the higher-priced entities are adding no value for what is essentially a commodity drug.

Dr. Bricker then shifts to the profound financial implications for employer-sponsored health plans. He explains that Multiple Sclerosis, an autoimmune neurological disease, typically affects individuals between the ages of 20 and 50, placing it squarely within the employed population. Using a ratio of 1 in 203 adults having MS, he illustrates how an employer with 1,000 adults on their plan likely has five employees with MS who might be taking Dimethyl Fumarate. If these employees obtain the drug through PBM specialty pharmacies or high-cost retail chains, the employer could be spending approximately $130,000 annually for just these five patients. In contrast, if the drug were purchased at the lower, cash-pay prices, the annual cost would be around $3,000, representing an annual overspend of $127,000 due to this pricing "scam."

To address this issue, the video proposes a practical and actionable solution for self-funded employers: delist Dimethyl Fumarate from their PBM formulary. Instead, employers should instruct plan members to pay cash for the medication at lower-cost pharmacies (leveraging tools like GoodRx) and then reimburse the employees for the full cost. Dr. Bricker emphasizes that this approach eliminates the need for complex patient assistance programs for this specific drug, as the cash price at certain pharmacies is already remarkably low. He concludes by challenging employee benefits professionals, HR, and benefits consultants to be aware of these discrepancies and proactively implement solutions, asserting that such information should not be news to those managing employer-sponsored health plans.

Key Takeaways:

• Significant Price Discrepancy in Generic Specialty Drugs: Even for generic medications like Dimethyl Fumarate (generic Tecfidera for Multiple Sclerosis), there can be an enormous variability in cost, with prices differing by up to 58 times for the exact same drug depending on the pharmacy.
• PBMs and Major Retailers Charge Exorbitantly: PBM-owned mail-order specialty pharmacies and large retail chains (e.g., Costco, Walmart, Walgreens, CVS) often charge significantly higher prices (e.g., $1,500-$2,172 per month) for generic specialty drugs compared to smaller grocery store pharmacies (e.g., $37-$104 per month).
• No Added Value for Higher Cost: The video argues that the higher-priced pharmacies are providing no additional value for the increased cost, as the generic drug is a commodity produced by companies like Dr. Reddy's.
• Burden on Employer-Sponsored Health Plans: The inflated costs for these generic specialty medications are primarily borne by employer-sponsored health insurance plans, leading to substantial and unnecessary expenditures.
• Substantial Financial Impact on Employers: For an employer with 1,000 adults on their plan, approximately five individuals may have MS and require Dimethyl Fumarate. This could lead to an annual spend of $130,000, whereas the actual cost at lower-priced pharmacies would be around $3,000, resulting in an overspend of $127,000.
• Practical Employer Solution: Formulary Exclusion and Reimbursement: Self-funded employers can combat this by excluding specific high-variability generic drugs like Dimethyl Fumarate from their PBM formulary.
• Cash-Pay and Reimburse Strategy: Instead of PBM coverage, employers should advise plan members to pay cash at lower-cost pharmacies (utilizing tools like GoodRx) and then reimburse them for the full cash amount.
• No Need for Patient Assistance Programs: For drugs with readily available low cash prices, complex patient assistance programs are often unnecessary, simplifying the process and reducing administrative overhead.
• Call to Action for Benefits Professionals: Directors of benefits, HR professionals, and benefits consultants are urged to be aware of these pricing discrepancies and proactively seek solutions to optimize pharmacy spend for their organizations.
• Importance of Transparency and Proactive Management: The video underscores the critical need for transparency in drug pricing and a proactive approach to managing pharmacy benefits to identify and eliminate hidden costs and "scams."

Tools/Resources Mentioned:

• GoodRx: A platform that provides prescription drug prices and discounts, often allowing consumers to find lower cash prices than through their insurance.

Key Concepts:

• Specialty Medication: Drugs used to treat complex, chronic, or rare conditions. They often have high costs, may require special handling or administration, and can include oral pills despite their "specialty" classification.
• PBM (Pharmacy Benefit Manager): A third-party administrator of prescription drug programs for health plans. PBMs negotiate drug prices with manufacturers, contract with pharmacies, and manage formularies, but can also own specialty pharmacies that may charge higher prices.
• Formulary: A list of prescription drugs covered by a health plan. Drugs not on the formulary may not be covered or may require prior authorization.
• Generic Drug: A medication that is chemically identical to a brand-name drug and is typically much cheaper once its patent expires.
• Commodity: A basic good that is interchangeable with other goods of the same type, implying that price should be a primary differentiator if quality is consistent.

Examples/Case Studies:

• Dimethyl Fumarate (generic Tecfidera): A generic medication used to treat Multiple Sclerosis.
• Price Comparison:
  • Low-Cost Pharmacies (one-month supply): HEB ($37.41), Giant ($39.21), Publix ($40.41), ShopRite ($88.07), Jewel-Osco ($104.90).
  • High-Cost Pharmacies (one-month supply): Costco ($1,500), Walmart ($1,593), Walgreens ($2,086), CVS ($2,172).
• Employer Financial Impact: Calculations demonstrating how an employer with 1,000 adults on their plan (estimated 5 MS patients) could save $127,000 annually by switching from high-cost PBM/retail options to low-cost cash-pay pharmacies for Dimethyl Fumarate.