Three Ways to Cut Pharmacy Costs
For the sixth consecutive year, the cost of providing medical and pharmacy benefits continues to skyrocket, according to the nonprofit National Business Group on Health (NBGH) survey titled 2019 Large Employers’ Health Care Strategy and Plan Design. Results also project an additional 5 percent increase in 2019.
Americans spent $535 billion on prescription drugs last year, an increase of 50 percent since 2010, according to one estimate.
Pharmacy costs continue to rise. In January 2019, CBS News reported that drug makers began 2019 with a slew of price hike that affect more than 1,000 medications. The average increase amounts to about 6 percent. Inflation in the United States is approximately 2 percent, so a 6 percent cost increase is three times the rate of inflation. The opioid OxyContin experienced a 9.5 percent jump, and the cost for the blood thinner Pradaxa increased 8 percent.
So what can you, as a CEO, do to rein in this rising but necessary cost of providing benefits to your employees? Here are three strategies for cutting pharmaceutical costs.
1. Analyze your data, and steer employees to lower-cost options
Does your HR team have a good idea of which employees use what drugs, and how those numbers are changing over time? The first step to controlling costs is to determine prescription utilization among your employees. Specifically, take a look at the four pharmacy tiers: generic, preferred brand, non-preferred brand and specialty. Each tier offers different deductibles, co-insurance and copays that your HR team can configure to steer your employees to more cost-effective usage. Generic prescriptions typically cost less than their brand-name counterparts.
2. Manage prescription use more closely
For example, consider requiring prior authorizations for high-cost medications or require that employees use certain pharmacy networks to reduce costs.
You might also consider restricting brand-name drugs on your formulary.
A 2018 survey by the National Business Group on Health (NBGH) studied large employers that collectively provide coverage for 19 million people. The study revealed that nearly two-thirds of large employers still contract with a dedicated pharmacy benefit management firm to handle their drug costs, but they have lost faith in the PBM rebate model. (In the United States, a pharmacy benefit manager, or PBM, is a third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program and state government employee plans.)
The NBGH study noted that 59 percent of employers plan to restrict the number of brand-name pharmaceuticals on their drug formularies. In particular, 81 percent of firms will limit the initial supply of opioid prescriptions to get steeper discounts.
3. Focus on prevention
Because there remains a stigma about depression and other disorders, many employees resist seeking out counseling and other measures that could help alleviate their symptoms. The NGBH study mentioned earlier revealed a big jump in the number of companies that plan to conduct anti-stigma campaigns this year to break down barriers to accessing mental and behavioral health services. Also, more companies are offering on-site behavioral health counseling beyond what is typically offered through their employee assistance plans.
By focusing on preventive measures like these, you can potentially reduce the number of prescriptions employees rely on to manage such disorders.
Another highly effective preventive strategy for reducing drug costs is to provide your employees with access to telemedicine, or virtual health-care services.
According to the American Telemedicine Association, telehealth encompasses a range of services, from health monitoring and patient consultation to the transmission of medical records. It’s more broadly defined as any electronic exchange of health information. A growing number of healthcare organizations have embraced telehealth because of the benefits it provides to patients and clinicians. It has not only expanded and improved access to health-care services, but also increased patient engagement and enabled more efficient care models.
Telehealth services reduce hospital readmission rates by enabling doctors to monitor patients outside the office. Because of this, many hospitals have started to include some form of remote monitoring as part of their post-discharge plans. By equipping patients with wearable devices or other wireless technologies, clinicians can monitor vital signs and symptoms and adjust care as needed without an in-office visit.
For example, Alignment Healthcare developed a program to remotely monitor chronically ill and recently discharged patients and reduce 30-day readmission rates. Enrollees were given a package of Bluetooth-enabled monitoring equipment, including a Samsung tablet, blood pressure cuff, pulse oximeter and scale.
Not only can these cost-cutting strategies reduce your pharmaceutical costs; they are likely to have a positive impact on employee retention as well.
To receive an evaluation of your health-care plan and potential ways you can save costs on pharmaceuticals, contact Superior Benefits today.
Tampa Bay Emerging Leaders raised $16,000 for the Florida Sherriffs Youth Ranch providing neglected children with a stable home. Kids are cared for by “Cottage parents” who help the children develop a strong work ethic, sense of responsibility and respect.
Who We Are
We are a National Employee Benefits Consulting firm because we go beyond the expected. Minimizing your business healthcare budget while maximizing your benefits is our top priority.
3705 West Swann Avenue
Tampa, FL 33609
2423 South Orange Ave,
Orlando, FL 32806
110 E Broward Blvd
Fort Lauderdale, FL 33301