Pharmacy Benefits Uncut

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If you’re like most employers, you’re probably concerned about the skyrocketing cost of your pharmacy benefits plan, and you’re also likely beginning to realize that your PBM (particularly if it’s one of the big traditional ones) might be looking out for its own bottom line rather than managing your pharmacy benefits appropriately.

Yes, focusing on your PBM contract is a key strategy to achieve value-based drug spend. But there are also some lesser-known factors that are driving up your pharmacy spend and if you don’t address them, you’ll struggle to truly transform your pharmacy benefits plan from a bottomless money pit into a pillar of financially sustainable improved health for your plan members.

Here are four little-known things driving up your pharmacy spend and strategies to address them.

Not Understanding the Basics

The truth is, much of the pharmacy benefits industry operates on information asymmetry: your PBM, many other vendors in the pharmacy benefits space, and even stakeholders not directly connected to your organization but whose decisions affect your plan (e.g. the FDA) have access to information you don’t. This imbalance allows them to unfairly profit off your pharmacy spend by inflating your drug costs in a way that often doesn’t improve the health of your plan members, and also possibly sell you services that inflate their bottom line, again without any advantage for you or your plan members.

Investing time and resources to learn the basics about how the employer-sponsored pharmacy benefits industry works could potentially be the thing that provides the highest return on investment for you and your plan members. Because understanding the basics gives you power: the power to make informed decisions that work in favor of you and your plan members, as well as the power to ask hard questions of your vendors to ensure they’re acting in your best interests, rather than their own. And only when you’re in the driver’s seat are you going to be able to reduce your drug costs AND improve the health of your plan members.

Not Providing Access to Clinical Pharmacy Services

The cost of inappropriate medication use is widely underappreciated in the healthcare industry as a whole. Did you know that the annual cost of adverse drug events in the United States is estimated to be as high as $135 billion? That estimate doesn’t even include things like using the wrong drug, taking the wrong dose, or not adhering to therapy. Add in those costs and you’ve more than tripled the bill.

But you can take huge bite out of this expenditure by providing your plan members with access to clinical pharmacy services. A comprehensive medication management program, in which each medication a plan member is taking is assessed for appropriateness and a medication-related care plan is developed, can result in considerable savings not only in terms of drug costs but also in terms hospitalization and emergency room visit costs.

​Precision medicine initiatives focused on pharmacogenomics testing have also been shown to reduce both drug costs and healthcare costs related to inappropriate medication use.

Not Understanding Your Plan Members’ Perspective

Want to revamp your pharmacy benefits plan? It’ll be virtually impossible to do successfully without buy-in from your plan members. You might be thinking of implementing a state-of-the art program for monitoring specialty drugs but if your plan members are struggling to afford their prescription co-payments, you’re probably not going to get a lot of takers.

Your plan members need to be full partners in any changes to your pharmacy benefits plan. If you don’t understand their challenges, priorities, and needs related to medication use, you’ll be hard-pressed to provide appropriate solutions. Often what you think is important to your plan members may not be. Conversely, many of their concerns may not be on your radar.

Make sure you have a comprehensive plan member engagement strategy so that your pharmacy benefits plan offers member-centric solutions focused on affordable, equitable access to effective medications.

Not Addressing Inappropriate Prescribing

Any attempt to rein in your prescription drug costs will have to address prescribing habits. Although many healthcare providers are acutely aware of ever-increasing drugs costs and understand that expensive new drugs don’t always provide benefits compared to older, cheaper alternatives, there are some prescribers who’re contributing to the problem of stratospheric drug costs. They may be influenced by the pharma industry to prescribe newer more expensive drugs, they may be pressured by patients to prescribe drugs based on direct-to-consumer advertising, or they may have conflicts of interest with pharmacies or other healthcare stakeholders that incentivize unnecessary or wasteful prescribing.

The good news is you can influence prescribing habits. Academic detailing, which provides unbiased information (unlike information provided by the pharma industry) about the comparative effectiveness of drugs has been shown to alter prescribing decisions. Similarly, just-in-time prescriber information, which presents prices of medications and potential therapeutic alternatives at the time a prescription is written, could also change prescriber choices. Finally, peer comparison letters sent to prescribers informing them that their prescribing patterns for certain medications is outside the prescribing norms of their peers have been shown to curb inappropriate prescribing.

The Bottom Line

Pharmacy benefits is one of the most complex areas of employer-sponsored health benefits with many moving parts. There's no hack for overhauling your pharmacy benefits plan. No shortcut to achieving drug spend value or a magic formula for eliminating wasteful pharmacy expenditures.

But you can optimize your pharmacy benefits plan by making small, consistent changes focused on ensuring every dollar of your pharmacy spend contributes to improved health for your plan members. As an employer, you have the power to transform the pharmacy benefits landscape.

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Pharmacy Benefits Uncut is produced by Healthcare Decision Making, a consultancy that helps small and medium sized employers optimize their pharmacy benefits plan. We offer a comprehensive range of services focused on three areas: PBM procurement, ongoing management of your pharmacy benefits plan, and self-policing and oversight of your pharmacy spend. To learn more about how Healthcare Decision Making can help you, email Nina Lathia at nina.lathia@healthcaredecisionmaking.com