Pharmacy costs have been rising significantly over the past few decades, impacting employers and health plans. Several factors contribute to the increase in pharmacy spending, including new drug development, patent laws, and the increase in chronic conditions.
How Employers Are Managing Pharmacy Spending?
Shift Pharmacy Spending to Employees
Employers and health plans have been looking for ways to manage the increases in pharmacy spending, which can have a significant impact on their bottom line. One approach has been to shift more of the cost burden to employees, such as through higher co-pays or deductibles. However, this can lead to decreased medication adherence and potentially more expensive health outcomes. It can also make your employees dissatisfied and feel like they lack the medical coverage that they need.
When choosing this method, it is critical to equip members and their families with the most effective transparency tools and resources. Today there are platforms and services aimed at helping members find the best pharmaceuticals to purchase, how to purchase them, and where to purchase them. These services can save members, their families, and the plan thousands of dollars in unnecessary pharmacy costs.
Implement Cost-Saving Strategies
Another approach to managing pharmacy spending has been to implement various cost-saving strategies. These include negotiating better prices with drug manufacturers, using generic drugs whenever possible, sourcing prescriptions from other countries or regions, and utilizing mail-order or specialty pharmacies. Additionally, some employers and health plans have implemented formularies, which limit the drugs that are covered and encourage the use of lower-cost alternatives.
Another area of focus is managing specialty pharmacy costs. Specialty drugs are used to treat complex and rare conditions, but they come at a high price tag. To manage these costs, employers and health plans can implement a specialty pharmacy carve-out, which involves partnering with a specialty pharmacy provider to manage the cost and utilization of these drugs.
Explore Value-Based Care
In recent years, there has been a growing interest in value-based care, which focuses on improving patient outcomes while reducing costs. One way that employers and health plans are utilizing value-based care in the pharmacy space is through outcomes-based contracting. This involves negotiating contracts with drug manufacturers that tie payments to specific health outcomes. For example, a drug manufacturer may agree to lower the cost of a medication if it doesn’t meet certain efficacy standards.
Look for Pharmacy Benefit Management Solutions
Employers and health plans can also explore innovative pharmacy benefit management (PBM) solutions, such as utilizing digital health tools to improve medication adherence and optimize therapy outcomes. These tools include medication reminders, patient education, and telehealth consultations with pharmacists. Many of these tools are free or already included with some healthcare plans, so they are a way to decrease pharmacy spending without adding costs to your budget.
Accept Alternative Payment Models
Finally, some employers and health plans are using alternative payment models, such as reference pricing or value-based insurance design. These models involve setting a maximum price for a particular drug or therapy or offering lower co-pays for treatments that have been proven to be effective.
Work With Us to Manage Your Pharmacy Spending
In conclusion, rising pharmacy spending is a significant challenge for employers and health plans, but there are a variety of strategies they can employ to manage these costs. From negotiating better prices with drug manufacturers to implementing innovative digital health tools, there are many options available. Ultimately, a value-based care approach that focuses on improving patient outcomes while reducing costs is the key to long-term success.
To discover how our experts can assist your organization or business, please call our office today at 240-422-8799 or email Jessica Storck at Jessica.storck@tribridgepartners.com
