Chronis Manolis, R.Ph., is the vice president of pharmacy and chief pharmacy officer for UPMC Health Plan.
Pharmacy tends to be the most utilized benefit in a company’s benefit portfolio and prescription drug costs typically make up a sizeable share of an organization’s overall health-care spending.
While the high cost of drug prices poses a serious financial challenge for employers, there are ways to lower costs and maximize value while also ensuring your employees receive the prescriptions they need.
For answers on how to control drug costs, employers should ask their benefits administrator these five questions to help rein in pharmacy expenses while making sure employees get healthier at the same time:
1. How is drug pricing being maximized by the pharmacy network your benefits administrator has chosen for you?
Although it’s a basic question, many employers fail to ask their benefits administrator about their pharmacy network and its impact on the unit cost of the drug benefit. Remember that drug prices are negotiable, and you want to be sure you’re getting the best prices on the drugs your employees are using. That’s one reason it makes sense to have your pharmacy plan administered by a medium or large-sized health-care benefits company. Partnering with a larger company that has enhanced buying power over the desired pharmacy network will often result in deeper drug discounts.
2. Is our organization using a value-based, clinically-vetted formulary?A formulary is the list of drugs covered by your pharmacy plan. A “skinny” formulary typically includes a limited selection of prescription drugs in the hopes of keeping costs down. The downside of this approach is that skinny formularies can limit access to the specific drugs that employees need. On the other side of the spectrum, a “fat” formulary tends to provide access to a wide array of prescription drugs, but doesn’t always promote the best and most effective drugs for each employee. This approach is expensive for employers yet it doesn’t necessarily help to guide employees to the correct drugs for them. That’s why it’s best to land somewhere in the middle with your formulary, with the right balance of value and access.
3. What about utilization management?
Pharmacy utilization management are the rules your pharmacy plan follows for prescribing and dispensing prescription drugs by providers and pharmacists. At the least, employers will want to know whether their pharmacy program is comprehensively managed using techniques such as prior authorizations, step therapy and quantity management. As an example, if a significant number of your employees are dealing with asthma, it is vital that the drugs your employees take for this condition are managed via evidence-based protocol. If employee prescription use is not being managed properly, you are very likely wasting money on expensive and often unnecessary medications.
4. Is our organization’s benefit design properly aligned with the pharmacy plan? There are several ways that your health plan benefits can be designed — with varying levels of copays, deductibles and coinsurance — that will guide your employees to use prescription drugs in smarter, more effective and less costly ways. Employers should ask their benefits administrator whether their benefit design works in harmony and is aligned with the company’s goals. For example, make sure your pharmacy co-pays are yielding the best balance of responsible employee share of the benefit with appropriate access to the drugs they need to manage their condition.
5. How is our organization handling specialty drugs? Specialty drugs are powerful, high-cost, high-complexity drugs that are used to treat rare and chronic conditions. Despite being used by just 2 percent to 3 percent of employees, these specialty drugs account for nearly half of all employer pharmacy costs. That’s why it is vital to incorporate holistic care management services along with these drugs, including programs such as health coaching, targeted health promotion programs and health-care outreach. These services are proven to help employees stay healthier and maximize the value your employees are receiving from these high cost drugs.
If you can gain control over these five areas of pharmacy coverage, employers will better manage costs while ensuring that their employees have access to the prescription drugs they need to manage their health, which keeps overall medical costs in check.
For more information, visit www.upmchealthplan.com.