Employers have taken on new aggression toward cutting prescription benefit costs while enhancing quality of coverage. Even in a dark economy and among confounding health care reform legislation, prescription benefit managers are having success with new benefit tactics and evidence-based value design.
"Ten years ago, there was more of an attitude of, 'Let's give people what they want, and let's take these restrictions off,'" says John D. Jones, senior vice president, government affairs and pharmacy policy, Prescription Solutions. "Clients didn't want to do anything that was restrictive in nature to their employee base. That's started to swing the other way, and they're much more willing to do aggressive management."
In other words, there's been a paradigm shift from how does an employer make the smallest impact on their employees to how do they get the most out of their prescription benefit dollar.
"Cost sharing, medication therapy management interventions, prior authorization for certain types of drugs that may be prone to abuse or misuse - there's a whole variety of things that can be done," Jones explains.
Better savings and adherence in just 90 days
One tactic is a 90-day retail medication option, such as the one offered to members of Wisconsin-based pharmacy benefit manager Navitus at the Walgreens retail setting. According to the companies, it has led to over $3 million in savings for Navitus clients in seven months.
This program not only increases choice for patients, it gives them access to a pharmacist for a face-to-face consultation, something research shows leads to better medication adherence.
"Customers have told us they prefer retail to mail," says Mike Suwalski, Walgreens senior director of product development, corporate innovation team. "They value that relationship they have with their pharmacist. I think when PBMs understand what patients want and the value that brings to them, and offer those choices and that transparency, I think they really help their employers get the best benefits for their employees."
Another advantage is the ability to get same-day prescriptions, and there are fewer gaps in therapy. In fact, research shows patients getting a 90-day supply generally have a 10-15% increase in adherence.
"Any time you can make it easier for employees to take their prescriptions, you're going to see a back-end decrease in cost of health care," says Suwalski. Further, they found that the 90-day supply is also getting better generic utilization among participants.
"When patients get that 90-day quantity, and it's three generic copays versus three brand copays, the patient is more incentivized to look at generic alternatives. We think that's one of the reasons [90-day quantities] have higher generic utilization rates," Suwalski notes.
Free is the magic number
Some employers are using lower or no copays for diseases they are targeting for generics, like diabetes.
This option appealed to Susan Smith, administrative service executive of Public Employee Benefits Alliance, a benefit purchasing cooperative formed by several Texas political subdivision employers in 2006.
To incentivize patients to take responsibility, she offers a zero-dollar copay if they go to an "Align" pharmacy authorized by their PBM, Restat, for a generic medication. If they go to another pharmacy and are on a generic, it's not as high a cost as the brand name. And if they get a 90-day quantity prescription through Align, the copay is $9.
"Instead of penalizing people if they didn't get generics, they got a zero-dollar copay generic at the identified pharmacy. Everybody loved us," says Smith.
Their generic utilization went up drastically, and people were saying thank you, harboring no hard feelings.
In most programs, there is a 60% participation rate for generic utilization, cites David Kwasny, president of Restat, the nation's largest privately held pharmacy benefits manager. In Align, there is mid- to high-70% utilization, he says.
One way to encourage generic use is to reduce the copay to Align pharmacies, to the extent of even going to a $0 copay for the time being. Or one could raise copays on non-Align pharmacies.
"By having the visibility and the tools that help consumers make good decisions when they can physically see the differences in costs, you see the amount of economic impact on both your own pocketbook and your employer's pocketbook," Kwasny adds.
When she joined Align in August 2010, Smith insisted that they offer the same value-add tier model as her old carrier, this time with multiple participating pharmacies, as opposed to one chain pharmacy. This is not only more convenient, it also helps local pharmacies stay in business.
"We got better average wholesale pricing, so we were able to decrease the copay amount for the covered individual if they wanted to buy smart and reduce their out-of-pocket expense," Smith says. "What we were trying to do is start the process of educating the covered individual and get more treatment compliance."
She confirms that she has become more aggressive with her pharmacy benefit management by moving to an evidence-based prescription plan. Prescription costs went up 29% in a year, so she "had to do something aggressive because [otherwise] people wouldn't have health care."
Programs like Restat's Align teach people to buy more cost-effectively. They've expanded the list of drugs requiring prior authorization and created cost-share drugs, which consist of four drug categories and are more expensive, with $120 out-of-pocket costs.
Each time Smith increased cost sharing for out-of-pocket costs for certain drugs, she showed them options for alternative drugs, conveniently printed on their ID cards.
They do list them in their medication therapy management guide, but she doubts anyone reads it. In addition, comparable to a prescription exchange, Align uses Web tools like Expedia for prescription comparisons. The participant can compare up to five different pharmacies at one time.
Analysis in a Milliman report suggests that alternative pharmacy network programs that foster competition and create transparency for patients can offer a significant savings to employers relative to traditional networks, up to 13% annual savings.
For an assumed range of consumer use of participating pharmacies, an employer with 10,000 lives could save $200,000 to $620,000 per year, depending on benefit design, without changing cost-sharing structures. These are conservative numbers, says Kwasny, who estimates that such a program could save an employer with 5,000 to 6,500 employees up to $2 million a year.
While health care reform helped push education by spotlighting health care and prescription management, the United States still is projected to spend $350 billion on pharmaceuticals by 2015.
"In 10 years, health care costs have gone up by the high single digits, while pharmacy has outpaced that in the 11% to 14% range. We have to do something to control those costs," urges Kwasny.
Smith insists that everyone is responsible for the broken health care system. "We all need to look in the mirror to see who created it. I'm not blaming [any one group]. It's just a delivery of health care that we haven't managed closely. All of us need to educate. Why should we be buying drugs the way we do today? It is so inefficient, and drugs are so expensive. But, it's a process." Smith says.
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