With the cost of prescription drugs continuing to skyrocket, you may be seeing an effect on your bottom line.
Since 2014, prescription drug prices have risen by 33%, and many employers are seeing climbing pharmacy costs hit their bottom line hard. The drivers of these rising costs are multifaceted, including the rising prevalence of chronic conditions, dramatic increases in specialty medication cost and a complex distribution channel.
The truth is there’s no silver-bullet solution for rising pharmacy costs. But the good news is there are tangible, smart strategies that can create savings now and help your bottom line for years to come. Before you renew your pharmacy coverage this year, make sure your plan includes these cost-savings strategies.
Effective formulary management
A formulary is the list of drugs covered by a health plan, sometimes known as an Approved Drug List. This list informs employees and their health care providers what drugs are covered by their employee pharmacy benefits. Your health insurance carrier determines which drugs are covered on your formulary. With drug prices changing often and new therapies coming to market quickly, you’ll want to ensure your pharmacy partner is diligently reviewing the formulary to ensure proper coverage, reducing waste and saving you money.
Signs of effective formulary management include a frequent review process with diverse perspectives, immediate implementation of positive changes and limiting negative formulary changes to two times per year.
Intentional utilization management
Utilization management is just a fancy way of saying that your pharmacy partner is working with your employee’s physician to ensure they’re receiving the right medication at the right time for the right cost. Examples of utilization management programs include prior authorization, step therapy and quantity limits. These programs are crucial to ensuring safe distribution of medications, as well as reducing overall cost by directing your employees to a lower-cost treatment while still delivering high-quality medical outcomes.
The manufacturer of those high-cost, brand-name drugs may also offer rebates to help offset the cost of the therapy. Your pharmacy partner should maximize the use of available rebates from the manufacturer, but only after optimizing the utilization management program to guide members to lower-cost alternatives first. Focusing too heavily on rebates can actually increase overall spending if not coupled with an effective utilization management program.
Medical and pharmacy benefit integration
Some employers have their pharmacy and medical benefits administered by different insurance carriers or partners. If that’s the case for your business, you may want to consider the cost impact of keeping these programs separate. Without access to both the medical and pharmacy information for a member, carriers may not be able to provide holistic support.
Reach out to your current pharmacy partner or insurance agent to see if you’re getting the benefits of these cost-savings strategies.
Want to learn more about these strategies and other cost-saving pharmacy solutions? Join Priority Health at 1 p.m. May 13 for a webinar featuring three experts sharing their insider pharmacy knowledge with Michigan-based employers. Register online here.