Published by Jennifer Herman on October 30th, 2023
Modern breakthroughs in prescription pharmaceuticals have transformed the lives of countless people. Maintaining access to those life-changing medications means finding, reducing, and eliminating wasteful spending whenever and wherever we can. We take a proactive approach to addressing prescription over-spending through our healthcare management team and in conjunction with pharmacy benefits managers (PBM). Together, we work with members to improve utilization, find generics whenever possible, and negotiate better prices for our clients and members.
The point is, it’s not antibiotics for strep throat and antihistamines for hay fever that are driving up costs for members and employers. It’s the big-ticket items. It’s the cutting-edge drugs for treating major health conditions which can yield amazing results but rarely have generic options. You know the ones we’re talking about. So, given the important, often lifesaving, role these drugs play in the lives of members, how are employers and administrators going to manage costs?
We also recognize that specialty drugs, the kind with bigger price tags, may require special negotiations. We find that with a little work, we can secure better rates from preferred pharmacies for these prescriptions, particularly if our PBMs can negotiate an exclusive relationship with the pharmacy for a specific drug.
Our pharmacy benefit administrators work with manufacturers to find ways to save, too. They negotiate lower prices, find copay assistance programs, and just generally try to cajole drug makers into making a better deal for our clients and their members than they would for the next administrator.
A study reported by the Commonwealth Fund[2] examined “drug utilization data from 15 self-insured plan sponsors … to estimate savings from reducing the use of [over-priced] drugs.” The study found that the plan sponsors stood to reduce their pharmaceutical spend by an average of $63 million per year, and that “wasteful prescriptions represented 3 percent to 12 percent of total claims per plan sponsor evaluated, or 6 percent across all data, with an average savings of $413 per script.”
An average of $413 in savings per prescription.
That’s the kind of savings sitting on the table, waiting to be picked up for your clients by our team. We can’t promise that we’ll get it all, but we can say that we’ll never stop trying to save all we can for your clients.
[1] U.S. Department of Health and Human Services, Office of Science and Data Policy, “Issue Brief: Trends in Prescription Drug Spending, 2016 – 2021,” (2022). https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf; retrieved August, 2023.
[2] The Commonwealth Fund, Lauren Vela, “Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans,” (2019). https://www.commonwealthfund.org/publications/issue-briefs/2019/aug/reducing-wasteful-spending-employers-pharmacy-benefit-plans
Making pharma work for everyone
Recent history has shown us that prescription drug costs are a major driver in healthcare spending and will most likely continue to grow as an overall portion of the spending pie chart. You already know this, but here’s some unpleasant stats from the US Department of Health and Human Services[1] for you to chew on:- In 2021, the U.S. health care system spent $603 billion on prescription drugs
- Drug spending increases are largely driven by increased costs per prescription
- High-cost specialty products are driving growth: $301 billion in 2021, an increase of 43% since 2016
- Specialty drugs represented 50% of total drug spending in 2021
- The top 10% of drugs by price make up fewer than 1% of all prescriptions
The point is, it’s not antibiotics for strep throat and antihistamines for hay fever that are driving up costs for members and employers. It’s the big-ticket items. It’s the cutting-edge drugs for treating major health conditions which can yield amazing results but rarely have generic options. You know the ones we’re talking about. So, given the important, often lifesaving, role these drugs play in the lives of members, how are employers and administrators going to manage costs?
Waste elimination
There are many steps we can take to look for wasteful spending on prescriptions. For instance, we look for generic options for big-ticket drugs, the ones that are the major drivers of overall prescription costs. When none are available, we work out deals with preferred brands and pass those savings along. We can also look to managing costs through quantity limits on prescriptions. For instance, if a member is having migraines once per month, then they probably don’t need to pay for a 30-day supply.We also recognize that specialty drugs, the kind with bigger price tags, may require special negotiations. We find that with a little work, we can secure better rates from preferred pharmacies for these prescriptions, particularly if our PBMs can negotiate an exclusive relationship with the pharmacy for a specific drug.
Our pharmacy benefit administrators work with manufacturers to find ways to save, too. They negotiate lower prices, find copay assistance programs, and just generally try to cajole drug makers into making a better deal for our clients and their members than they would for the next administrator.
Miles to go
And here are a few more stats to drive home the importance of having a great prescription benefits team like ours on your side.A study reported by the Commonwealth Fund[2] examined “drug utilization data from 15 self-insured plan sponsors … to estimate savings from reducing the use of [over-priced] drugs.” The study found that the plan sponsors stood to reduce their pharmaceutical spend by an average of $63 million per year, and that “wasteful prescriptions represented 3 percent to 12 percent of total claims per plan sponsor evaluated, or 6 percent across all data, with an average savings of $413 per script.”
An average of $413 in savings per prescription.
That’s the kind of savings sitting on the table, waiting to be picked up for your clients by our team. We can’t promise that we’ll get it all, but we can say that we’ll never stop trying to save all we can for your clients.
Prescription benefits
Employers need to be made aware not only of how much they’re spending on prescriptions, but how much they could be saving with assistance from a top-tier Rx team like ours. Let’s talk about how we can make it happen. Connect with us today for more information.[1] U.S. Department of Health and Human Services, Office of Science and Data Policy, “Issue Brief: Trends in Prescription Drug Spending, 2016 – 2021,” (2022). https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf; retrieved August, 2023.
[2] The Commonwealth Fund, Lauren Vela, “Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans,” (2019). https://www.commonwealthfund.org/publications/issue-briefs/2019/aug/reducing-wasteful-spending-employers-pharmacy-benefit-plans
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Written by Jennifer Herman
Jennifer Herman is Senior Director, Pharmacy Strategies at Luminare Health
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