With all the uncertainties around healthcare legislation swirling, cost control of pharmacy spend remains top priority for employers. On one hand, employers obviously want their employees to have access to the medications they need: drugs like insulin, blood pressure treatments, and cholesterol blockers have long played a critical role in employees’ health. But now new specialty biotech drugs – some of them true medical breakthroughs – are flooding into the market, at costs much higher than previous therapies. Drug prices spiked by 9.8% between May 2015 and May 2016, and there are more sharp increases ahead. Drug costs are quickly becoming unsustainable, for both employers and, increasingly, plan members. Many high-cost brand name drugs may have rebates to reduce their net cost, but the member or patient typically does not see these rebates so their out-of-pocket cost is still high. And even the cost of some generic drugs has risen dramatically.
Fingers are being pointed everywhere—from regulations and research to the cost of lawsuits when new drugs perform poorly. While other stakeholders work on those issues, there are actions employers can take to shift the equation in their favor. Here are a few ideas:
Analyze the data on prescription drug spend in your plan
Prescription drugs are the top driver of health benefit cost increases today. In a recent report by the Pharmacy Benefit Management Institute, pharmacy benefit costs increased 10.2%, driven by 19.2% growth in specialty pharmaceuticals.
It’s important to know what’s driving cost growth in your program. When looking at your data, here are a few things to focus on:
- Drugs – What drugs are plan members using?
- Channel – From where patients receive their drugs and are they leveraging the lowest-cost channels?
- Supplier – Are you maximizing the prescription benefit manager relationships?
- Care – How do the drug therapies match up to best practices and evidence based medicine?
Educate employees on what they can do to lower their Rx costs
Employers can help employees be smarter when talking to their physician about their medications and making purchasing decisions. If your program includes any of these cost-saving Rx benefit features, make sure your employees understand them:
- Lower copays for generic drugs
- Lower copays for drugs in formularies
- Preferred pharmacies
- Mail-order suppliers
- Prior authorization requirements
- Step therapy requirements (members try lower-cost drugs first before they can move up to higher-cost prescriptions)
Focus on specialty drugs now
Specialty drugs for complex conditions account for 38% of all prescription spending even though they are used to treat about 1 to 2% of all patients. (Consider this recent example of how one employer discovered just two plan members were accounting for 2.5% of their total health budget due to specialty medication prescriptions.) The most expensive biologic breakthrough treatment regimens can exceed $750,000 per year. For the entire US healthcare market, specialty medication spending has nearly doubled since 2011, reaching more than $160 billion. With 40-50 new specialty medications set to enter the market each year, there is no end in sight.
To help gain control over your spending on specialty drugs, consider working with an expert to conduct a specialty diagnostic of medical and pharmacy plans to assess the current state and identify areas for improved management. Once the diagnostic results are in, employers can make informed decisions on revisions to their plan structure. We see savings typically in the 5-10% range. However, these savings occur in the short-term, and so it is a good idea to revisit the plan structure at least semi-annually as provider capabilities change over time.
If you’d like to learn more about the specialty pharmacy topic, join me for an upcoming webcast hosted in partnership with HR.com on May 17. We will explore the specialty pharmacy ecosystem and discuss options to stay ahead of the cost curve.
For more on Specialty Rx, please read David’s recent article in Benefits Quarterly.
Check out this article for tips on managing out-of-pocket expenses in a high-deductible health plan. Typically, your paycheck deductions are lower, which is a bonus, but how do you keep from falling behind financially when you need care? Here are the author’s suggestions, plus a few from me.
- Take advantage of preventive services covered at 100%. For example, get a flu shot so you are less likely to get sick.
- Use in-network providers for the lowest possible out-of-pocket expense.
- Consult with a nurse for free by calling the nurse-line for a consultation before scheduling an appointment with a physician; it could save you the cost of an office visit
- Many plans include a telemedicine benefit. The cost of a telemedicine visit is usually around $40-$50, and can be scheduled at your convenience via phone or video chat.
- Investigate "convenience care” clinics in your area. Located in stores like Target, CVS, and Walgreens, they offer a limited number of services at a lower cost than urgent care or a physician office visit.
- When your doctor recommends a prescription drug, ask how much it costs and if there is an over-the-counter or generic option. Check a few different pharmacies for the best price.
- If a prescribed drug is very expensive and you have not used it before, ask whether you could have a smaller number of pills at first to be sure it works. Check to see if there are patient assistance programs to help defray the cost.
- Shop around for services and tests. A variety of tools exist to support comparison shopping; check with your insurance company for help.
- Some employers offer indemnity coverage -- policies that will pay a set dollar amount when you have an accident or are hospitalized. These low-cost coverages can provide peace of mind for those concerned about covering expenses before they meet their health plan’s high deductible.
- If you’ve moved to the high-deductible plan from a more expensive plan, take the savings from lower paycheck deductions and deposit them (tax-free!) in a health savings account. That way you will have some money set aside to help pay for care before you meet the deductible. Many employers will help fund your HSA.
- Take advantage of any opportunities to earn dollars for your HSA by participating in healthy activities like biometric screenings.
These are good suggestions to communicate to employees and their families. Even if you have provided similar guidance in the past, everyone can always use a refresher.