Pharmacy costs is one of the fastest-growing components of health care expense and is expected to increase by 15% per annum with no end in sight. It is estimated that 75% of employers plan to increase prescription drug spend year-over-year. Unfortunately, most organizations are unaware of their excessive remuneration for PBM services. While there is no magic pill to managing the pharmacy benefit, the following five key performance indicators can help to identify a path to lower pharmacy costs while still improving member outcomes.
1. Dump the Legacy RFP Process. Employers must instead create their own airtight fiduciary contract and put it out for bid. How is it that a plan sponsor, regardless of size, can sign a deal which doesn’t hold its PBM accountable to a client-comes-first standard of care?
from Wikipedia…
- Ensure standards of care are consistently followed thereby reducing waste
- Monitor therapy to detect and resolve problems; identify opportunities for referral to MTM, PFA or clinics
- Pro-actively identify opportunities to keep patients on therapy
- Help patients become better informed about their therapy so they can more actively take charge of it
These all of course improve outcomes, reduce re-admissions and prevent emergency room visits which in turn lowers overall medical costs.
4. Keep Two Sets of Eyes on Your PBM. A key strategy to controlling prescription drug benefit costs is to understand and better manage the relationship with your pharmacy benefits manager (PBM). Given the complexity of prescription drug benefit programs, it is an attractive option to simply turn over management of the employee prescription drug benefit to a consultant, ASO, PBM or TPA.
However, it is important to realize that while they are serving clients’ needs, PBMs and TPAs are also in business to make a profit. Therefore, the actions that they take may not always be in the best interest of an employer. For that reason and others, employers are increasingly attempting to better understand the prescription drug benefit [internally] in order to develop new strategies to control costs and to maintain an affordable, quality drug plan for their employees.
Because more benefit dollars are shifting from medical to prescription drugs every year, payers whom have internal expertise in pharmacy are in a better position to assume greater control of their prescription drug benefit thereby reducing costs while improving patient outcomes.
5. Utilization of Internal Pharmacies. To illustrate this point I use the story of Meridian Health Systems, a former customer of Express Scripts, to show the sometimes drastic difference in what PBMs charge payers to fill prescriptions and what they in turn pay pharmacies to dispense those same prescriptions. This difference often leads to greater profits for the PBM and increased costs for the employer.
That amounts to a “spread” of $65.62 for only one prescription. In another instance, Meridian was billed $26.87 for a prescription of the antibiotic azithromycin. Express Scripts paid the pharmacy $5.19 to dispense the prescription, creating a spread of $21.68.
As this practice persisted, Meridian’s health benefits costs skyrocketed, all while Express Scripts continually promised savings. In the first year alone, Meridian’s prescription benefits costs increased by $1.3 million. It wasn’t long before Meridian switched to a more transparent PBM to handle their prescription benefits.
The only reason Meridian Health was able to identify the spread is due to the internal reference or pharmacy it owned. In this case, Meridian Health acted as the middle man and was able to see both sides of the transaction. Imagine for a moment, as a payer, how powerful this tool can be. There are fiduciary PBMs willing to give clients access to the same information from which Meridian Health was able to benefit. I suggest you locate one.
