It is impossible to escape headlines about the rising costs of prescription drugs these days. With new specialty drugs hitting the market every day, increasing demand, and rising drug inflation, keeping a lid on pharmacy costs can be a challenge. However, the Prices For Prescription Drugs is something that we keep a focused eye on since it affects so many people. These newly released drugs haven’t seen all positive headlines though with many drugs causing certain people extremely detrimental health issues. Take a look on https://drugguardians.com/ to find out more about drug side effects and what you can do to get compensation. Gone are the days where prescription spend was five to 10 percent of a healthcare plan cost. Today drug spend averages around 25 percent and is expected to be over 30 percent in the next five years. With such a large percentage of healthcare dollars going toward pharmacy spend, brokers have to take a more proactive approach and use cost containment strategies as well as Pharmacy Benefit Manager (PBM) review and audits to help keep costs in line.
For many brokers that have operated primarily in the fully insured space, PBMs are not evaluated because they are bundled with the healthcare plan. However, for brokers dealing in the self-funded space, educating yourself on components of a pharmacy contract can be very beneficial.
In the self-funded market, brokers tend to look to their TPA’s for help with selecting the PBM. In many cases, the TPA assigns the PBM of their choice to the broker and plan sponsor. However, these days there is a lot of difference in price and service between PBMs . As a broker it could be a good idea to look around at a few different PBMs to make sure your client will get the best option. With more and more employers moving to self-funding, and prescription costs on the rise, brokers need to educate themselves on some of the specifics they should be asking about their client’s pharmacy benefits. Here are some specific points to ask about: Pricing, transparency, specialty pharmacy management, customer service, rebates, reporting, case installation, formulary management, manufacturer coupon/co-pay assistance, prior authorization procedures, and cost management strategies.
In addition, a broker should be aware of various cost containment tools that PBMs are putting in place to reduce medication costs and to promote the most clinically appropriate drug choice. With all the different medication choices out there these days, the PBM should guide the formulary to make sure the best drug is chosen. The PBM should encourage the use of generics over brand name drugs whenever possible, and evaluate the various options based on scientific evidence, treatment guidelines, safety and cost. Beyond encouraging the use of generics, some of the other cost containment tools are step therapy, prior authorization and quantity limits.
One of the most effective cost containment tools a PBM will put in place is step-therapy. When step therapy is put in place an individual covered under the prescription plan will first be prescribed a less costly drug before stepping up a to drug that is more costly. For example, a person suffering from allergies should first try an over the counter medication. If that does not provide relief, a Tier 1 medication will be prescribed. If the Tier 1 medication does not work, the PBM will review the patient’s situation and make sure they met the step therapy requirements before the plan will pay for a Tier 2 or Tier 3 medication. Step therapy helps to control costs but also steers patients to drugs that have fewer and better understood side effects.
Another tool put in place to control costs is prior authorization. Prior authorization requires the patient to meet clinic’s criteria and the health plan to approve therapy prior to the drug initiation. Prior authorization is used to maximize patient safety and the chances of the drug’s effectiveness. This cost containment solution also reduces the costs for unnecessary or less effective treatments. Prior authorization is usually required for high cost medications with a history of misuse or inappropriate use.
The last common cost containment strategy a broker should be aware of are utilization management tools such as quantity limits, refill-too-soon supply limits and pill-splitting. All of these tools help to make sure that the patient is getting the right amount of drugs rather than an abundance, which can be costly and wasteful. With quantity limits the PBM will systematically restrict how much of a drug should be dispensed at a time. These limits are determined by guidelines set by the FDA, drug manufacturers and medical professionals. Narcotics are a common example of when supply limits are used. With these types of drugs, quantity and day limits may apply. Refill-too-soon supply limits help to make sure individuals are utilizing their drugs appropriately and to reduce stockpiling of mediations. Pill-splitting is the least popular utilization management tool and is not usually a mandatory option offered.
Cost containment tools are important for brokers to be aware of in order to make sure their clients are safely and financially managing their prescription plans. Brokers should be mindful of these tools and make sure to ask TPAs and PBMs about these solutions when reviewing a new or existing prescription benefit plan.
Brokers may be familiar with the basics of a prescription drug plan but they may not be aware that many of their clients could be missing out on hundreds of thousands of dollars, sometimes millions of dollars, due to a PBM using creative pricing strategies and them not always meeting the terms of the contract. The PBM world is complex and ever changing. For this reason, we advise all our clients to regularly review and audit their PBM contract every 18 months to make sure they are not missing out on big savings and to make sure they are getting the appropriate pricing and rebates. The audit process confirms the contract pricing, guarantees the performance of the plan, and holds the PBM accountable for their results. After the audit is performed, the client will need to decide, based on the results, if the best choice is to work with the current PBM to true up the terms of the contact or to begin shopping for a new PBM.
When reviewing your PBM contracts, the first course of action should be to check the language used in the contract. Make sure your contract already includes, or is amended to include, a clause that gives the plan sponsor the right to hire an outside, independent auditor to periodically conduct PBM audits. This way the PBM does not get the right to select an auditor of their choosing that would probably have the best interest of the PBM as a priority rather than that of the plan sponsor.
Another item to look for or add to a PBM contract during the review process is performance guarantees. Performance guarantees hold the PBM accountable for their performance during the term of the contract. Guarantees should be written in for all channels of the pharmacy plan such as retail, mail order and specialty. Guarantees are written in to make sure that the PBM is holding up their end on things like pricing, quality and timeliness. A plan sponsor should make sure that performance guarantees are written in for their specific needs and for the areas where they see risk within the PBM contract. Plan sponsors should be continually monitoring their pharmacy contract to make sure their guarantees are being met.
If the plan sponsor wants to move forward with an audit, keep in mind that there are many types of audits that can be performed on your PBM contract. Some of these audits can be costly and time consuming. The best solution is to work with a consultant that is familiar with PBM contract terminology and the various types of audits. A consultant can review your contract to help identify the type of audit that will yield the most savings for the plan.
