Sticker shock at the pharmacy counter: What employers can do about the high cost of drugs

Why aren’t people picking up their prescriptions/? A Kaiser Family Foundation poll found that 24% of respondents said they had a hard time affording their medication.  Certain groups of respondents reported even greater difficulty: 58% of people who spent $100 or more per month on medication had difficulty with cost.

High out-of-pocket costs for prescription medications is one of the causes for not taking medications as prescribed.  The term for not taking medications as prescribed is ‘non-adherence.’  Non-adherence is a huge problem.  It is estimated that 33-69% of hospitalizations are caused by medication non-adherence.

Accordingly, making prescription medication more affordable for patients may lower individual suffering and overall health care costs by preventing unnecessary hospitalizations.

Here are three strategies for lowering patient out-of-pocket costs.

#1: Change plan design strategy

One strategy for lowering patient out-of-pocket costs is to offer lower copays for medications that are filled at less expensive pharmacies.

An employer-sponsored health plan pays very different amounts for the same medication depending on where it is filled.  Even with the same pharmacy benefits manager (PBM), the total cost of a prescription can vary widely by pharmacy.

For example, dimethyl fumarate is a medication used to treat multiple sclerosis.  Its cost for a one-month supply can be as high as $2,171 at one pharmacy and as low as $37 at another.

Many employer health plans treat the out-of-pocket cost to the member the same at both pharmacies.  That plan design is a mistake.  It creates no incentive for the member to use a lower cost pharmacy.

Alternatively, an employer health plan could change their plan design to offer lower copays–$5 for example—when the medication is filled at the less expensive pharmacy.

However, employers need to be careful.  Often their PBM will own a specialty pharmacy for filling specialty medications.  However, that PBM specialty pharmacy may not be the most cost-effective.

In the above example, dimethyl fumarate is a specialty pharmacy medication, but it is generic.  That is why some retail and independent pharmacies can offer it at such a low cost.  However, the PBM’s own specialty pharmacy was charging much more.  In this case, the PBM specialty pharmacy was a bad deal.

#2: Replace expensive medications with a generic

Some medications are expensive and can have high patient out-of-pocket costs regardless of pharmacy.  These medications are typically specialty or brand-name.  In this situation, there may be less expensive medications to treat a condition but that require the prescriber to write a different prescription.

For example, Humira and other specialty medications for rheumatoid arthritis can cost thousands of dollars per month.  However, first-line therapy for rheumatoid arthritis is a generic medication called methotrexate.  The American College of Rheumatology even recommends trying methotrexate prior to using a specialty medication for rheumatoid arthritis.

A great way to make medication more affordable for patients with rheumatoid arthritis is for them to use the methotrexate first and have the plan design be such that the copay for the medication be very low–$5 for a one-month supply for example.

#3: Remove wasteful formulary choices from the formulary

A final suggestion for lowering patient out-of-pocket costs for prescriptions is to remove expensive, wasteful medications from the employer health plan’s formulary.

Related: The (specialty) drug discount advantage for self-funded employers

Wasteful medications are those that are ‘Me-Too’ drugs (slight change that adds no value to an existing drug), combination drugs (two inexpensive pills combined into one very expensive pill) and redundant drugs (a less expensive drug already exists).

A Commonwealth Fund analysis of formularies for 15 large self-funded employers found that 868 wasteful drugs were on their formularies and that wasteful drugs made up 3-24% of the employers’ drug spend.

Employers can save plan members from having to pay for needlessly expensive medications by simply not covering them.

High out-of-pocket costs for patients is an addressable problem.  Employers that are willing to put in the effort with the strategies above can literally reduce the suffering of their plan members and prevent unnecessary hospitalizations.  Surely that is a goal worth trying.

Dr. Eric Bricker is Medical Director at SimplePay Health.