More than half of companies that spend $5 million or more on pharmacy benefits each year budget for 6% to 10% annual increases, which is a potential hike of more than a half-million dollars a year. (Image: Shutterstock)
Employers often overlook pharmacy benefit costs when seeking ways to hold the line on expenses, a new survey finds. Scripta, a cloud-based health-care IT solution in Wellesley, Mass., surveyed 77 human resources professionals at self-insured companies in August.
"Our survey dug into how and why the decision-makers make changes to their pharmacy benefits plan design and what resources they use," said Eric Levin, CEO of Scripta. "The prescription drug market changes daily, and so do employee populations. To control costs, employers should constantly be reevaluating their plan design, yet our survey found that most are only making changes every two to five years. We were surprised to learn that most companies are not making changes because of COVID-19 this year."
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Although the pandemic has affected both the number and types of prescriptions, more than 90% of respondents said they are not making changes to their pharmacy plan design because of COVID-19. That number increases to 100% of companies with more than 1,001 employees. Only 22% of respondents from companies with 1,000 or fewer employees will make changes, which include switching pharmacy benefit managers (PBM), covering COVID-19 testing at 100% and adjusting copay tiers.
Among the other key findings:
Employers believe they have the necessary tools to evaluate their PBM's bill but may not be using them. Although 79% said they have the necessary tools, only 27% receive an analysis of their bill every month. Scripta recommends monthly analysis by a third party.
Most employers systematically accept annual increases. Eighty-eight percent of respondents said their company regularly budgets annual pharmacy benefits cost increases of up 10%. More than half of companies that spend $5 million or more on pharmacy benefits each year budget for 6% to 10% annual increases, which is a potential hike of more than a half-million dollars a year. Four in 19 respondents said it would take an increase of 11% to 20% to make them reevaluate their pharmacy benefit plan.
There often is a disconnect between recognizing the value of lowering pharmacy costs and actually doing it. Ninety-two percent of respondents said lowering out-of-pocket costs for prescriptions is somewhat or very important to their employees. However, only 31% of employers offer a prescription savings program or coupon service.
Smaller companies may have greater opportunities to save. Only 25% of companies with 5,000 or fewer employees offer a prescription savings program or coupon service to employees, compared with 44% of companies with 5,001 or more employees.
Regardless of the size of the company, Levin said, it pays to regularly evaluate expenses. "Between the overall increase in prescription fills and heightened demand for certain medications," he said, "employers would be wise to evaluate any changes since March and how they are affecting overall cost."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
