The Employer's Guide Blog for Overseeing PBMs

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Specialty Drugs Paid Under Medical Benefit Circumvent Cost Control Measures

So much for the 10-15% purported cost savings achieved when integrating medical and pharmacy benefits, well not quite. There is a big opportunity to trim prescription drug costs, especially specialty, when the two benefits are integrated. However, if integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:

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  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing
  • There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.

Medical and pharmacy benefit integration is not new. Carriers have been managing it now for almost two decades! Although, the data mined today is far superior due to advances in computer software thanks to machine learning and AI. The other, non-technical, difference is that carriers have decided recently to share this capability and use it as a marketing strategy to keep existing clients or win new business.

Health plans are facing increased costs from specialty drugs, which are expected to represent 55% of all drug costs in a few years, with about half of that managed under the medical benefit and paid for the same way as medical services, according to claims data that was analyzed by CVS Health and cited in its publication Insightsfeature. That means many of those pricey medications are skirting the safeguards put in place to manage the cost of other drugs.

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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