Pharmacy cost management: What’s being done to manage costs

The cost of health care in America continues to increase each year, and the price of pharmaceuticals is increasing along with it.
 
According to a May article in the AARP Bulletin, “Why Our Drugs Cost So Much,” prescription drug prices in America are among the highest in the world, in large part because drug companies are able to charge whatever rate the market will bear.
 
What strategies are in place to manage these costs for insured individuals and families and to reduce costs for the employer? Most health insurance companies use similar strategies that involve partnering with a pharmacy benefit management (PBM) company that acts as the intermediary between the insurance company and the pharmaceutical companies, with the goal of obtaining lower prices for prescription drugs for plan sponsors and individuals.
 
Insurers and PBMs achieve savings with price discounts through retail pharmacies, rebates from pharmaceutical manufacturers, and efficiencies of mail-service pharmacies.
 
Blue Cross Blue Shield of Massachusetts, MIIA’s health insurance partner, routinely goes out to bid for PBM services in order to ensure that it’s getting the best costs.
 
BCBS currently works with Express Scripts, the largest PBM company in the United States. Express Scripts provides BCBS members with an integrated retail and mail-service prescription drug program that helps reduce pharmacy claim costs and gives members access to a nationwide network of approximately 68,000 participating pharmacies, including all major chains. BCBS collaborates with Express Scripts to develop innovative clinical and operational programs, as well as long-term strategic plans.
 
“With Express Scripts,” said Thomas Kowalski, director of clinical pharmacy at BCBS, “we offer the efficiencies and advantages of online, real-time electronic processing and utilization controls.”
 
The BCBS pharmacy management business model is focused on driving to the lowest net cost and optimizing rather than maximizing prescription utilization.
 
“We do this by promoting clinically appropriate utilization, negotiating highly competitive discounts, and using the most cost-effective delivery channel whenever possible,” Kowalski said.
 
In a July 2017 article in Workforce magazine, “Contracting a Cure for Prescription Drug Costs,” National Business Group on Health CEO Brian Marcotte described the valuable role of PBM services.
 
“PBMs do a lot to help employers manage pharmacy costs,” Marcotte said. “They perform prior authorizations on medications to ensure medical necessity; manage quality limits to ensure proper dosage; and make sure people take generics first before moving up to expensive alternatives – in medical terms, step therapy.”
 
Best practices
BCBS employs the following best practices to constantly address rising pharmaceutical costs:
 
• Generics-focused formulary: BCBS uses generic pharmaceuticals whenever possible, having determined that every 1 percent increase in the generic fill rate produces a 2.5 percent reduction in gross spending.
 
• Home delivery programs: BCBS offers a cost-effective way to manage maintenance medications, prescriptions that are required indefinitely, where clinically appropriate.
 
• Networks and channel management: Custom retail and specialty networks, as well as customized mail service programs, are used to help optimize the lowest-cost channel.
 
• Clinical management: BCBS implements strong clinical management programs that involve quality care dosing to ensure that the quantity and dose of medications that members receive comply with the Food and Drug Administration recommendations. The insurer also requires prior authorization to ensure that doctors have determined that the medication being prescribed is necessary for treatment, and Step Therapy, which allows BCBS to help doctors provide members with an appropriate and affordable drug treatment.
 
• Medical pharmacy benefit transition (MPBT): BCBS requires a self-injectable medication and certain infused medications to be billed via the retail specialty pharmacy benefit only. Providers cannot “buy and bill” these medications under the medical benefit.
 
Regardless of who they work with for health insurance, municipal employers should consider sitting down with their account representative to talk about the strategies the insurer and its PBM company are using to manage prescription drugs costs.