As brokers are helping their clients wrap up another open enrollment, what are the most common myths about pharmacy benefits or prescription drug trends they may be hearing?

The cost of pharmacy continues to rise at an exponential rate. Consultants and employers are increasingly worried about rising pharmacy costs and how that will impact their health care spend. As they look for solutions for how to rein in costs while continuing to provide a rich benefit, we often see a few misconceptions across the board impact decision-making. The primary misconception is that status quo is the only way to proceed. But that's not true.

Consultants and employers believe that carving out pharmacy from medical benefits will be a disruption for members who are used to having one place to go for all their questions and concerns, which is a myth. Carving out pharmacy can save both employers and members money while giving them access to providers that focus on delivering a stellar service experience that is easy for members to access.

The second myth we often come across is that, as specialty drugs account for nearly half of Rx spend, nothing can be done to mitigate increasing costs surrounding these claims. While it is true that specialty claims account for the largest chunk of spend, there are processes and programs available today that can assist in insulating the plan from increasing spend over time. Data analysis and interpretation can guide plans to available mitigation techniques.

The third myth is that optimizing the formulary will exclude certain drugs and limit member access to needed medications. By working with pharmacy experts to optimize and manage the formulary, employers can guide members to the right drug, at the right dose, for the right price – while ensuring they have access to the medications they need.

Does carving out pharmacy benefits from medical–or making any other changes to benefits plan–cause disruption for members?

Making a change is a big decision, and before deciding to carve out pharmacy benefits from medical, self-funded employers should thoughtfully evaluate all their options.

However, for employers looking to lower their employee benefit costs or overall pharmacy costs, carving them out from their medical benefits is a good place to start. Carving out and optimizing pharmacy benefits often saves employers up to 25% in the first year without reducing the level of benefit to employees. In addition, carving out often provides more visibility into the plan, more flexibility and control around plan design, cost, and management, and allows the employer to select providers that provide the best customer service and options for them and their members. After all, a medical vendor, carrier, or third-party administrator does not have the same training as a dedicated pharmacy expert when it comes to answering members' questions about specific prescriptions.

There may be a case made that carving out pharmacy removes additional member oversight that a joint medical/pharmacy plan brings to the table and negatively impact members. In reality, medical and pharmacy are often segregated in separate systems with separate oversight processes. Carving out pharmacy simply formalizes the process and allows additional employer control. Those additional controls can either lead to more or less member impact. With appropriate independent clinical oversight, an employer can be guided to clinical programs designed to impact as few members as possible at the lowest possible net cost.

However, the fact is that the majority of pharmacy costs are being driven by an average of 0.5% of members. This means that employers that carve out can maximize their clinical oversight and savings opportunities without disrupting a large portion of their membership.

What are the most common causes of high pharmacy benefits costs, and how can brokers debunk misconceptions around Rx trends?

The primary cause of high pharmacy benefits costs is specialty drug spend. Specialty drugs represent the most innovative of drug solutions to treat conditions thought untreatable in the past. These drugs command a high price point and have become a focal point in the benefits industry today. The reality is that this impact is being caused by less than 2% of claims — meaning it only takes one or two high-cost drugs to have a dramatic impact on the budget and the pharmacy trend trajectory.

In addition to specialty medications, a substantial driver of pharmacy costs is due to unnecessary utilization of high-cost "me-too" and heavily couponed branded medications. Often manufacturers provide coupons or heavily advertise branded medications to generate additional market-share opportunity. These marketing tactics generate demand that may or may not be appropriate.

Even though each of these trend drivers negatively impacts pharmacy trends, there is a misconception that there is nothing that can be done to alter the trajectory. There exists a concern over member impact related to these and other medications with the belief that additional control prevents member access.

Brokers can help their clients understand the biggest drivers of cost in their pharmacy plan by reviewing their pharmacy claims files and applying data analytics. This takes the guesswork out, gives employers full visibility into what's driving spend in their pharmacy benefits, and helps them identify potential risk areas and trend drivers, such as specialty medication and high pharmacy utilization of unnecessary drugs, so they can make more informed decisions about their plans.

Additionally, by leveraging the clinical expertise of a pharmacy benefits optimizer (PBO), brokers will have better insights when it comes to analyzing the data and applying hyper-targeted strategies to help their client address any potential issues. Some strategies lower plan costs and member costs while impacting as few members as possible.

Overall, the trick to balancing costs is to eliminate wasteful spending by ensuring all drugs being paid for are appropriate and that the pharmacy benefit plan is not overpaying unnecessarily. This can be confirmed through appropriate review processes, independent from potential bias.

How can brokers and employers work with pharmacy experts to create a customized formulary so members can get effective treatment without overpaying or being left without access to necessary medications?

The goal of optimizing the formulary is not to exclude drugs and necessary treatments purely to save money, but rather to ensure members have access to essential medications while also redirecting them to more clinically effective, lower-cost alternatives on the formulary as appropriate.

For example, it's possible that members are not aware that a drug they are taking could be less clinically effective than other drugs available to them, or that their doctors do not know the real cost of a drug they are prescribing compared to available alternatives.

By combining advanced pharmacy data analytics with clinical expertise, brokers can help their clients uncover any potential financial and clinical risks lurking beneath the employer's prescription drug program's surface, which can contribute to wasteful spending. The insights provided can reveal opportunities to introduce new clinical strategies that promote medication appropriateness and member safety and quality of life.

Ultimately, by working with pharmacy experts to optimize the formulary, brokers can help drive cost savings for employers and facilitate better health outcomes for members.

What are some other best practices for keeping plan costs in check while continuing to provide a good benefit to members?

When working with a PBO, brokers can help their clients negotiate a more transparent contract with competitive rates and rebates, provide clinical oversight focused on drug appropriateness and cost, and deliver on a service experience that exceeds their expectations.

In addition, applying clinical strategies tailored to the plan's specific risk areas is incredibly important – this can generate incremental savings of 7-10% with minimal member impact, and can significantly improve member quality of life.