Pharmacy – Transparency and Increasing Costs
Transparency. Increasing Costs. An unofficial race to see who can invent the most expensive one. $6 billion a year in advertising to consumers. All of this is tied to pharmacy. I’ve spent a lot of time in August learning more about pharmacy and fully expect to spend much time in the future. The facts are sobering when we consider how the costs of pharmacy continues to layer more risk and costs to employer health plans and the people that take these prescriptions? They’re paying for it too with high deductible health plans and cost shares that are well beyond the $10, $40 and even $70 to which we’ve grown accustomed. With pharmacy having more time on the national stage as of late, we hear more about pricing, rebates and consolidation of health plans and pharmacy benefits managers than ever before. The truth however, remains difficult to really find.
The truth is that actual drug costs are locked down. Without that, we can’t really have transparency. It can be a very frustrating experience to make smart choices and drive real change in this area of health plan spend. Another of the truths is that it’s a shell game. Saving money in one area can increase cost in another. You can listen to my podcast with Regence and MedSavvy to hear more here or via iTunes: Regence: Bringing Transparency to Rx If you would like more transparency in your pharmacy plans, here are steps you can take:
Whether you’re fully-insured or self-funded, get a pharmacy analysis. You must have pharmacy claims data and be willing to sign some releases but it’s a telling exercise.
Evaluate your formulary and ask questions the formulary philosophy. Are drugs like Treximet, Duexis and Vimovo in the formula? Chris Brown from Med Savvy says “These drugs have no place on a formulary. They are very high cost for two chemicals mixed together. There are highly effective, lower cost alternatives available.” They are highly rebated but also high in cost. See the attached comparison from MedSavvy.
Would a narrow retail pharmacy network work for your population?Jason Canning from MedSavvy shared that historically PBM’s have used national and broad networks with more than 65,000 pharmacies. “If you narrow your network to 30,000 pharmacies, you can typically save money and still have significant member access.”
Does your plan include a separate cost share for specialty as opposed to lumping it in with the brand cost share? This is an important philosophical question for employers to ask themselves. Do we absorb the additional cost for these high cost pharmaceuticals, or do we require that a prescription that costs, on average $6,000 per month to have a cost share more in line than say, a brand name drug that may cost $300?
How about requiring mail order for maintenance medications? While it can appear heavy handed, mail order nearly always saves a patient in costs, it’s incredibly convenient and the bottom-line cost from mail order is less since retail pharmacy mark ups and dispensing fees aren’t there.
If you’re self-funded, ask questions: do you have access to plan rebates? What type of arrangement is it? Are there contract guarantees?
If you would like to dig deep into this area of your benefits, I would like to help. True transparency may be somewhere in the future. In the meantime, let’s do the deep cleaning and see what may be buried in the couch cushions. Smart changes can help build more sustainability for the future.
