Pharmacy Benefits Uncut

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The vast majority of employers consider ever-increasing drug costs to be one of the biggest threats to the financial sustainability of their healthcare plans. They’re desperate for a solution but they don’t know where to start.

If you’re like most employers, you’re probably struggling with where to begin tackling the challenge of getting your pharmacy spend under control while also providing your plan members with access to the drug therapies they require.

So today I'm going to share three foundational strategies to help you optimize your pharmacy benefits plan. Even if you've already begun the revamping process, you may have missed some of the important groundwork.

What Most Employers Miss

Before we dive in, it's important to note some common mistakes employers make without a good starting plan:

• They go down the "cost containment" rabbit hole.

• They take a reactive instead of proactive approach

• They focus on piecemeal solutions that don’t integrate into a larger cohesive framework

• They outsource management of their plan to vendors whose interests don’t align with theirs

These mistakes are normal. Most employers have made at least one of them at some point. But here’s a roadmap to help you avoid these pitfalls.

This is a list of three foundational strategies to implement when you're preparing to overhaul your pharmacy benefits plan.

#1: A Long-Term Outlook

A financially sustainable pharmacy benefits plan that focuses on improving plan members’ health needs to be based on specific long-term goals and objectives.

Without a long-term plan employers often resort to a reactive approach and deal with individual issues as they arise, rather than as part of an overarching structure.

For example, when drug costs increase 9% year-over-year many employers offset these costs by increasing prescription copays, which could lead to inequities in medication access for plan members. These inequities could in turn lead to deteriorating plan member health, which ultimately increases future treatment costs for both the plan and plan member.

But employers with a longer-term outlook can identify specific, tangible problems they want to address and can measure the success of their tactics over a defined timeline.

Some long-term goals for your pharmacy benefits plan could include:

• Decreasing overall drug spend by 20% while eliminating copays for all prescription drugs

• Implementing a biosimilars-first strategy to save up to 40% on biologic therapies

• Offering comprehensive medication management services for all plan member taking more than five medications to decrease drug therapy-related problems and their costs

When you focus on clear, well-defined, long-term objectives you can implement specific solutions designed to meet these goals and avoid those that don’t align with them.

#2: Direct Control of Your Pharmacy Benefits Plan

You need to be in the driver’s seat when it comes to your pharmacy benefits plan if you want to transform it from a bottomless money pit into a financially sustainable cornerstone of your healthcare plan.

I’ve written before about the misaligned incentives and information asymmetry baked into the pharmacy benefits world that are designed to pad the profits of your PBM and other vendors rather than provide value for you and your plan members.

Addressing these issues requires you to oversee every aspect of your pharmacy benefits plan so you don’t need to rely on vendors whose interests don’t align with yours. It’s only through direct control of your plan that you can ensure every dollar of your pharmacy spend results in improved health for your plan members.

Here’s an overview of how to take control of your pharmacy benefits plan:

• Learn the basics: No doubt pharmacy benefits is one of the most complex areas of your health benefits plan, but a little bit of knowledge about its many moving parts of can be invaluable. It’ll give you the ability to critically evaluate solutions and determine whether they’ll actually help to optimize your plan.

• Ask lots of questions: Having a few hard conversations with your vendors, especially your PBM is a prerequisite for achieving value for your drug spend. Sometimes a little bit of pushback is all it takes to secure an exponentially better deal for you and your plan members.

• Don’t put all your eggs in one basket: Depending on a single vendor, particularly your PBM, to manage multiple aspects of your pharmacy benefits limits your agency. Separating functions such as formulary management, prior authorizations, and drug dispensing helps to address conflicts of interest and ensures proper oversight.

• Focus on value: You should be aiming for every dollar of your pharmacy spend to result in improved health for your plan members. Pharmacy spend has been increasing by leaps and bounds over the past few years, but in many cases, it hasn’t led to better health outcomes. Break this streak by relentlessly seeking value.

• Support your plan members: Provide clinical support services such as comprehensive medication management or precision medicine testing for your plan members. Needless to say if they’re not using their medications properly, they’re not going to reap the intended health benefits.

#3: A Data-Driven Approach

You need data to ensure your pharmacy benefits plan is working for you and your members.

Collecting and analyzing relevant data should be the backbone of all your decisions. Here’s what you need:

• Data on your plan members’ preferences and priorities: Understanding the challenges your plan members are facing and the things they value is imperative to the success of your pharmacy benefits plan. They latest and greatest solutions will do very little to move the needle if they don’t address what’s important to your plan members. Implement a systematic method for collecting data on your members’ perspective and integrate this information into your decisions

• Data on your pharmacy claims: You should be the owner of your data and you should have regular, timely access to data on individual claims. Put in place a system to analyze this data independently of your PBM so that you have unbiased information about how your plan is performing.

• Data on clinical outcomes: In addition to pharmacy claims data, you need data on clinical outcomes. Information on things like emergency room visits, hospitalizations, and the need for escalating drug therapies gives you insights into whether your pharmacy benefits plan is achieving the desired improvements in plan member health.

• Data on program utilization: If you offer point solutions or clinical programs gather data on whether your plan members are using them. Many of these initiatives have low uptake resulting in large expenditures with little value. Collecting this data will help you understand if they’re providing benefits for your plan members and enable you to reconfigure them as needed.

The Bottom Line

If you want your pharmacy benefits plan to be financially sustainable, these three foundational strategies are non-negotiable: a long-term outlook, direct control of your plan, and data-driven decision making.

When you focus on them, you set your plan up for success. And when it succeeds, you and your plan members save money and experience improved health.

Start today and implement these strategies one step at a time, and before you know it, your pharmacy benefits will be transformed into a financially sustainable pillar of your overall healthcare plan.

That's all for this week.

See you in two weeks,

Nina

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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