February 27, 2017

Rx management: The last bastion of smoke and mirrors


Prescription drug prices have risen at a rapid pace over the past few years. The forecast for 2017 indicates no relief, with a projected 11.6 percent increase in prescription drug costs, up from 11.3 percent in 2016.* Specialty drug prices are expected to rise by 18.7 percent. Employers and employees alike are feeling the pain of these increases, but there are steps employers can take to ensure that everyone is working together to mitigate prescription drug costs. Here are five ways to implement prescription cost savings within your organization.

Brand vs. generic

Collaboration between employer and employees is beneficial in establishing an understanding of cost savings, which can be achieved when everyone works together. Emphasizing brand name versus generic prescription cost differences, not just co-pay differences, is helpful in setting a cost-savings goal. Including this information in a benefits manual or on a company benefits website/intranet page is a great way to inform employees of the cost differences.

Step therapy

Step therapy is a widely used process to control costs. It is sometimes referred to as “fail first.” The idea is that if an older, less expensive drug works sufficiently in remedying an illness or condition, there is no need to first prescribe a newer, more expensive drug. Should a patient fail on the low-cost prescription, prescribing the “step up” prescription is certainly acceptable. When it is determined that a generic will not be effective or the best option for the patient, a prior authorization can be requested by the prescribing physician.


In the past few years, many prescription savings apps have been developed to allow patients to compare drug prices at local and online pharmacies, some offering discount codes and coupons that can be used right from the app. By simply entering the name of the prescription and desired pharmacy pickup location, patients can see which pharmacy in their area is offering the best price on their prescription drug and which coupons or discounts are available to them. OneRx Drug Savings and Coupons, GoodRx Drug Prices and Coupons, and SearchRx are all great comprehensive apps which have proven to be popular among consumers.

Understanding your PBM contract

A self-funded employer must understand their Pharmacy Benefit Manager (PBM) contract. A contract with a PBM, such as Express Scripts or CVS Caremark, for example, will include well-known terms such as the Maximum Allowable Cost (MAC) or Average Wholesale Price (AWP). Sometimes, lesser-known terms will appear in the contract. For example, does the term “brand/generic algorithm” appear anywhere? This feature basically lets the PBM move generic (with higher discounts) into brand calculations when calculating end-of-contract-year reconciliation to determine contractual discounts applied (on average). It’s imperative that benefits managers understand everything contained in the PBM contract to effectively administer a prescription benefits program.

Pharmacy audit

An employer with 1,000 employees may easily generate 20,000 to 30,000 prescriptions per year so it is important and beneficial to perform an audit of a plan’s prescription program. How well is your plan performing according to your PBM contract? Are you achieving the best prices through contract renewals and performance guarantees? Technology exists to analyze every prescription transaction for cost effectiveness and compliance.

Rx used to be a very small percentage of health care spend. Today it amounts to over 20 percent and is rising faster than any other health care cost components. Above are several simple-to-comprehend ideas that help shed light on managing and understanding what every consumer is contending with.

*Source: https://www.shrm.org/resourcesandtools/hr-topics/benefits/ pages/2017-drug-plan-cost-strategies.aspx

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