Lowering Your Rx Drug Costs
March 31, 2022
How to Lower your Business's Rx Drug Costs
Prescription drug costs and fulfillment are top of mind for employer-sponsored health plans for a good reason. Fueled by an aging population and a pipeline of new and expensive specialty drugs, prescription drug cost trends are projected to continue. Pharmacy Benefit Managers (PBM) develop and maintain drug formularies, contract with pharmacies, negotiate rebates and contracts with manufacturers and oversee the processing and payment of pharmacy benefit claims. Self-funded health plans need to be able to partner with a PBM that is aligned with their goal of delivering cost-effective treatment options to members in a manner that is consistent with organizational culture.
The Custom Benefit Consultants, Inc. (CBC) team works with actuaries, PBMs and plan decision makers to help align self-funded health plans with a prescription drug program that best suits the needs of all stakeholders. Some of the key attributes to consider when evaluating PBM options include:
- Transparency – Negotiated discounts and pricing arrangements with drug manufacturers and pharmacies will ultimately determine the cost of prescription drugs on your plan. A transparent arrangement helps ensure that the PBM will work for the plan sponsor by paying the pharmacy the same amount that the plan pays the PBM. When the PBM negotiates a better price with the pharmacy, the plan sponsor takes full advantage of that negotiation.
- Rebates – Manufacturer rebates are discounts paid by drug manufacturers after a prescription is dispensed. Rebates can be paid to pharmacies, medical facilities, PBMs and plan sponsors. Understanding how and to whom rebates are shared, and negotiating rebate structures so that they are passed through directly to the plan sponsor can help to mitigate prescription drug costs.
- Preferred Drug Lists (Formulary) – A list of prescription drugs covered by a prescription drug plan or another insurance plan that offers prescription drug benefits. The preferred drug list (PDL) for a health plan will dictate which prescription drugs will be covered. PDLs should be crafted carefully to optimize patient care with drug costs, rebate structures and access.
- Specialty Drugs – Specialty drugs or specialty pharmaceuticals are a designation of pharmaceuticals that are classified as high cost, high complexity and/or high touch. Though they account for only 2% of prescription drug utilization, they often drive 50% or more of prescription drug spend. The administration, cost structure, and access requirements should be tightly managed and effectively communicated due to the impactful nature of these types of prescriptions.
- Mail Order Prescriptions – Mail order prescriptions enable members to have their prescriptions delivered by mail to their home. Health plans will often incentivize the fulfillment of mail order drugs through reduced copays and out of pocket amounts. Employer-sponsored health plans should understand the cost structure of mail order prescriptions versus the walk-in pharmacy counterparts to maximize member convenience and mitigate unneeded plan costs.
Prescription drug fulfillment is central to the healthcare ecosystem. Understanding cost structures, operational workflows and member impacts will help to drive cost containment efforts. The CBC team works hard to stay on top of dynamic prescription drug cost trends.
Rx Drugs, Prescription Drug Costs, Fullfillment, Group Health Insurance, Cost Savings