by Dana H. Felthouse, MBA, President, the Pharmacy Benefit Management InstituteAlthough prescription drug cost increases remain in the single digits as a new decade unfolds, the industry will continue to use economic and utilization management strategies to achieve the greatest possible return on its investment in prescription drugs.
The 2009-2010 Prescription Drug Benefit Cost and Plan Design Report presents data collected from 417 U.S. employers representing 7 million members. Employers are continuing to keep their rate of drug cost increases to an average of 4.4%, the lowest since The Pharmacy Benefit Management Institute (PBMI) began conducting this survey in 1995.
Economic Incentives
PBMI’s study illustrates trends in drug plan design and utilization for retail, mail-service, and specialty pharmacy prescriptions. Creating incentives for plan members to purchase the lowest net cost drug saves money for consumers and the sponsors of their drug benefit plans.
The long-standing use of economic incentives to make members better purchasers of prescription drugs helps to curb payer costs. Consider these research findings:
- An overwhelming majority (96.7%) of employers offer access to mail-service pharmacy to dispense maintenance medications used to treat chronic conditions. A total of 17.4% of employers require maintenance medications to be dispensed through mail-service. Nearly 84% of employers use retail pharmacies to dispense 60 or more days’ supplies of medications. This is an increase of 52.3% since 2008. Data show 66.5% of employers using retail pharmacies to dispense maintenance supplies are not restricting dispensing to select pharmacies.
- Nearly 60% of employers offer a specialty pharmacy benefit. There appears to be a decline in the number of employers permitting the dispensing of specialty drugs at retail pharmacies.
- Three or more tier plan designs are used by 84.7% of employers. As in prior years, the most commonly used approach is a three-tier plan design for generics, preferred brands and nonpreferred brands. The trend toward increasing use of more three- and four-tier designs continues for a third year and is illustrated in Table 1.
- Negotiated discounts for retail brand and generic prescriptions continue to increase, reducing ingredient costs and dispensing fees. Specialty pharmacy reimbursement for 2009 is similar to retail brand rates with a slightly higher average dispensing fee. The cost-sharing data do not show broad adoption of a specialty drug cost-sharing tier.
- Generic dispensing rates have increased in both retail and mail since 2008. The range of generic dispensing rates continues to expand as more generic drugs become available for medications commonly used by commercially insured drug benefit plans.
Innovative Approaches
Effective drug benefit plan designs address all of the variables that affect the cost of prescription drugs as well as the number and types of medications used by plan members. Although 51.5% of responding employers said they have not implemented value-based plan design tools in their drug benefit plans, as shown in Table 2, many employers are trying new approaches to increase adherence to drug therapies.
Targeting Appropriate Use
Well-managed drug benefit plans include a variety of drug inclusions, exclusions, and utilization management tools to manage drug mix.
Employers are using a broad range of utilization management tools in their plan designs for all diseases and conditions. These tools range from interpersonal interventions such as academic detailing of prescribers or face-to-face pharmacist consults to claim system edits such as quantity limits and dose optimization. Claim system edits such as refill too soon or quantity limit edits, while often transparent to employers and members, are highly effective in directing the proper use of prescription drugs. The most popular tools are refill too soon (88.9%), quantity limits (88.8%), and prior authorization (80.8%). With the exception of retrospective drug utilization review, there is movement to use more tools overall and in each disease state.
Planning for Future Expenses
The use of multitiered cost sharing amounts creates incentives for members to select the lowest net cost drug that is medically appropriate. When paired with education and clinical utilization management, the rate of increase in prescription drug expenditures slows. Creating an economically sustainable drug benefit is critical as more specialty drugs reach the marketplace. Employers are beginning to respond to the bulging biotech pipeline by working with their pharmacy benefit manager partner—whether a health plan, insurance company, or PBM—to drive dispensing to the optimal drug dispensing channel. The growing complexities of specialty drug therapies call for patients to get the right drug at the right time from the right retail, mail-service, or specialty pharmacy to ensure needed clinical support and care management are provided to plan members.
Dana Felthouse is president of The Pharmacy Benefit Management Institute (PBMI). PBMI provides research and continuing education to help health care purchasers work effectively with PBMs and other industry professionals to improve pharmacy benefit programs and control costs. She can be reached at dfelthouse[at]pbmi.com.