Controlling pharmacy cost through benefit design and improved management
Every quarter, Mercer brings together in-house experts, employee advocates and external thought leaders for an online discussion of the most pressing issues. The program is called #MercerChats and takes place entirely on Twitter, where individuals across the US engage with Mercer’s intellectual capital and other leading thought leadership to share insights and discuss the best solutions to help organizations thrive. Below is a summary of our June 2022 tweet chat, highlighting some of the key themes discussed and insights shared.
Death. Taxes. High drug costs? While some things in American life are unavoidable, the rising cost of prescription drugs doesn’t need to be one of them. But if the pharmaceutical costs are ever going to drop (or, at least, cease to rise), it will come through a broad, concerted effort by many parties.
But whether it’s through legislation, greater transparency or coordinated employer action, there are myriad strategies to driving down drug costs while offering improved patient experience. To get a better sense of some of these solutions (as well as why some of them haven’t been tried yet), we invited some of the country’s leading minds and experts to discuss the state of prescription drug benefits in the US. Below are some of the best highlights and insights from our conversation.
Problem is big
The first step to solving for lower prescription drug prices is understanding the scope of the problem. In this case, that can be a challenge in and of itself. Drug prices are determined by a complex matrix of insurance providers, pharmacy benefit managers, and government programs (which, as Shawna Kittridge pointed out, are only growing in their impact). When you add up all of these stakeholders and the Byzantine regulations that govern them, it can feel like you need an advanced degree just to get a lay of the land.
But it’s only by learning what Sara Drake called the “language of pharmacy benefits” that you can unpack these issues. We need to better understand what we have now and who has access, per Tracy Watts, before we can develop alternative solutions and evolve towards a better future. And there’s no time like the present for us to take up this cause, as health benefit costs continue to rise [https://www.mercer.us/what-we-do/health-and-benefits/strategy-and-transformation/mercer-national-survey-benefit-trends.html] and some projections predict ongoing cost growth acceleration. If we’re not careful, we could arrive at the reality that Sam Espinosa predicted, one in which Americans are forced to plan for their retirement and their future drug costs.
Annual per enrollee pharmacy spend in Medicaid increased over 20% between 2009 to 2018, while the nationwide per capita pharmacy spend increased by 10%. Driven by the increased utilization per enrollee, Medicaid is challenged to manage program cost growth
The complexity of the pharmacy benefit is a significant challenge facing payers. PBMs, rebates, GER/BER reconciliations, administrative fees, copay maximizers, spread pricing, 340B. To navigate the challenges, you first need to learn the language.
Need strategy for high cost drugs:
❓ what do you have now?
🔑effective access
💰 evaluate stoploss
💸alternate payment models
🔎re-evaluate risk
🤔evolve your strategy
There may be a day when we say, I am planning for my retirement and my future drug costs.
Solution is joint
So how do you solve a problem like drug costs? Not alone, and not in one fell swoop. As Kip Piper noted during our discussion, the growth of breakthrough therapies – which have incredible potential to improve patient outcomes – present new challenges in controlling costs, demonstrating that this is not a problem that will resolve itself.
While it may be inconvenient, the truth is that no single law, policy change or employer action is going to deliver cost relief to US buyers. Instead, we need to look for improvement at the margins. Both Donna K. Lencki and Tamara McCleary identified a handful of areas that could offer immediate impact, including rebate programs, improved co-pays and cost-sharing programs, and alternative funding models.
But ultimately, the best solution may require a more holistic, comprehensive review of the broader healthcare program and looking for ways to reduce reliance on high-cost drugs in the first place. Dr. Salim Saiyed said as much during our conversation, sharing that a focus on wellness, nutrition and diet is ultimately core to keeping people healthy and avoiding drug costs in the long run. There may still be truth in the old adage: “an ounce of prevention is worth a pound of cure.”
Look at total healthcare costs. Reduce inappropriate utilization, identify gaps in tracking effects of specialty drugs, introduce specialty cost-sharing tier(s), track patient treatment delays and explore alternative funding models.
A variety of options, such as rebate programs, value based purchasing agreements and more can be applied to help lower benefits and pharmaceutical costs. Greater co-pays and a focus on factoring cost into anticipated patient outcomes can help reduce cost.
On the positive side, we will see a tremendous increase in breakthrough therapies leveraging advanced technologies and methods. Down side, of course, is these will come at a high price, particularly for Medicaid but also Medicare
Focusing on wellness & prevention will be key to keep employees healthy , avoid higher drug costs in long runs. We see all the time patients coming off drugs with proper diet and nutrition