Strategies to reduce prescription drug costs (Yes, it really is possible)
The media spotlight on the cost of prescription drugs since the start of the COVID-19 pandemic has created a common misperception that the price…
Benefit advisors, who are looking to reduce health care costs for their clients while ensuring continued access for patients, should adopt innovative strategies to get ahead of emerging trends in the pharmaceutical industry. While lowering the percentage of health care spending on prescription drugs cannot be solved with a panacea, there is an abundance of opportunities that benefit advisors and employers can utilize to save themselves and their employees money. In the current market, it’s critical for employers to stay informed and identify industry trends, while creating solutions that work for the company and its specific employee population.
One important factor driving up the cost of certain prescription drugs is the increased cost to bring new drugs to market. The significant increase in development costs, along with limited access for patients to these new drugs, has driven up the overall spend on prescription drugs for many employers. But solutions can lie within employer benefit plans. Given the rise in spending on prescription drugs, benefit advisors and employers should give the same weight to prescription drug costs as other medical expenses when looking to reduce overall health care spend.
There are a variety of strategies that employers and their advisors can implement to mitigate the rising costs. Pharmacy advisors, in coordination with benefit advisors, can advise on strategies to purchase drugs efficiently without triggering price increases for employers or patients. For example, refreshing purchasing contracts every year rather than every three years can help maintain competitive market contracts while reducing inflation on drug costs that have gone stale.
Additionally, employers can tap into cost control by including clinical programs with formulary management or independent review. Purchasing techniques for patients, such as patient assistance and co-pay cards, can also limit price increases for employers and their workers. These strategies can help employers reduce the amount they pay and in some cases nearly eliminate costs for individual patients.
Looking at the near future of upcoming patent expirations for some of the most popular drugs in the industry brings forth new opportunities to engage in biosimilar adoption and market competition. Now is the time to evaluate plan design strategies to drive consumerism and awareness for the soon-to-be booming biosimilar market.
Often, the biggest knowledge gap for benefit advisors and employers comes when they are overly focused on the rising cost of the drugs and not examining the root causes behind prevailing health issues. Many health and wellness problems, such as obesity, are the root cause of risks that can lead to a cascade of other medical issues. In the case of obesity, a patient can then develop high cholesterol, joint issues, or diabetes.
Missing the root cause of health issues can cost a company thousands of dollars in long-term health care costs. What about new employer exercise incentives or credits that could be added to existing benefits programs that would encourage employees to exercise and reduce risk factors for obesity? This could be an example where preventive benefits spending in the short-term mitigates employers’ overall health care costs down the road.
It’s important for employers of all sizes to be in regular communication with their benefits advisors and pharmacy consultants to examine new strategies that stem the tide of rising health care costs. While it’s standard practice for big companies with self-funded insurance plans to work with pharmacy consultants, more than half of midsize employers (defined as having 100-500 employees) don’t engage with pharmacy consultants as part of their benefit programs. Even those midsize employers who do work with them often fail to effectively communicate on a regular basis and could miss out on significant cost savings opportunities.
The importance of working with a pharmacy consultant can be a matter of millions of dollars. It’s no longer enough for employers to react to changes in the pharmaceutical market. To ensure the best prices, benefits consultants and employers should work proactively and in close consultation with pharmacy advisors to mitigate the impact of rising healthcare costs for employees.
Nick Conway is SVP, head of product & Rx Solutions at NFP.
Nelly Rose is vice president of Clinical Consulting at NFP.