Confronting Price Manipulation & Cost Escalation
Member Focused Approach
Pharmacy costs now account for almost 30% of the average employer's health care spend. The skyrocketing cost of many prescription drugs in the U.S. can be blamed primarily on price increases and new therapies and improvements in existing medications. High cost specialty medications account for almost 50% of an average employer's drug spend. Just one member can cause a drastic shift in a company's claims expense.
Many employers unknowingly have employees taking expensive medications with low clinical value. An effective utilization management strategy can help significantly reduce costs for the employer. It also improves outcomes and the safety for members by addressing high-cost, low value pharmacy claims.
Employers are given multiple options to manage their pharmacy benefits including carve-in, carve-out, pass-through or purchasing groups. Pass-through PBMs provide complete transparency – no margin manipulation or hidden incentives. The price members pay for a prescription drug is the average price pharmacies paid for it, plus set dispensing and administration fees. While these are often effective, they may not always be the best choice.
Traditional spread pricing is found in most PBM contracts. Spread pricing allows Pharmacy Benefit Managers to mark up—sometimes dramatically—the difference between the amount they reimburse pharmacies for a drug and the amount they charge employers. This can sometimes be 10x or more the cost of the actual drug.
While rebates and discounts off Average Wholesale Price (AWP) garner the greatest attention in a PBM analysis, PBM's complicate the process by creating multiple definitions of AWP. It is also common to see drugs reclassified incorrectly to maximize discounts and manipulate the true savings.
Financial terms and contract language must be closely evaluated to identify the most advantageous arrangement for each client. We work to maximize your pharmacy contracts by bringing transparency and full audit rights to our clients.