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Employers are always on the lookout for ways to reduce health care costs while improving the quality of care provided to their employees. Pharmaceutical spending accounts for a significant portion of those costs, exceeding 25% and growing.
While it is difficult to estimate the exact amount of wasteful spending by employers on medication without more specific information, studies continue to show there is a significant amount of wasteful spending on medications in the United States health care system as a whole. One study published in the Journal of the American Medical Association estimated that up to $200 billion is wasted each year on unnecessary health care spending, including on medications. Another by the Institute of Medicine says it's now approaching over $750 billion.
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Overall, reducing wasteful spending on medications requires a multifaceted approach involving health care providers, payers, and employers, as well as efforts to educate patients in concert with their physicians about the appropriate prescription and use of medications. One potential solution that has gained traction in recent years is the implementation of Rx optimization programs, also known as Rx navigation or Rx overlay program.
So what exactly is an RX optimization program? (Note: RX optimization programs are also referred to as Rx navigation programs or Rx overlay programs.) Essentially, it's a program that helps employers identify and address wasteful spending on prescription drugs.
These programs focus on simplifying the process for members. Overlay programs highlight for members (and their prescribing providers) actionable steps to get them to lower net cost, high value drugs. These programs are not meant to replace existing pharmacy benefit managers (PBMs), formularies, or rebates.
Instead, they work in conjunction with those tools to provide an additional layer of cost savings. Despite the utilization management protocols that many PBMs already have in place, there is still a significant amount of unnecessary spending on prescription drugs, estimates are often between 28-40% of total drug spend.
This is why an employer would want to consider an Rx optimization program when they already have other cost-saving measures in place. Rx optimization programs can complement existing utilization management protocols by providing additional insights and recommendations for cost savings. Additionally, an RX optimization program can help identify areas of overspending that may have been overlooked by other cost-saving measures.
Examples of cost-saving measures that employers may already have in place include prior authorizations, step therapies, exclusions, $0 copay generics, international drug programs, mandatory mail order, and quantity limits.
Employers (with guidance and oversight by their consultants) may also have negotiated a great contract with their PBM, have access to steep rebates, employ clinicians and Chief Medical Officers, have advanced primary care or direct care, and use white bag, brown bag, and clear bag strategies. And while all these measures can be effective in reducing costs, an Rx optimization program can provide an additional layer of cost savings.
One of the key features of Rx optimization programs is their proactive and reactive outreach to members, their doctors, and their pharmacies. These programs may include teams of active physicians and pharmacy technicians who handle peer-to-peer outreach to members' doctors.
Since a member's doctor is likely not aware of their formulary, PBM, pharmacy contract, or rebates, Rx optimization programs would empower the member with information to ensure that they are receiving clinically effective and practical medication at the best possible price. This collaboration with the member's doctor ensures they receive the best possible care while also reducing unnecessary prescription drug spending.
Rx optimization programs may also assist with site-of-care decisions for infusions, helping to ensure that members receive the most cost-effective treatment option.
Ultimately, an Rx optimization program can help employers reduce unnecessary spending on prescription drugs and improve the overall value of their health care benefits by empowering their members with data currently unavailable to them with PBM tools.
With wasteful spending on prescription drugs estimated to be such a significant portion of total drug spend, it's clear that more needs to be done to address this issue. An Rx optimization program may be just the solution that employers need to achieve their cost-saving goals. Rx optimization programs are designed to identify and address wasteful spending on prescription drugs that has not been addressed by other cost-saving measures. They work alongside them.
But why would an employer consider implementing an Rx optimization program? First, the return on investment (ROI) for these programs can exceed 3 to 1, meaning the cost savings and improved outcomes outweigh the costs of the program itself. Additionally, member access and adherence to medications can improve immediately, leading to better health outcomes and cost savings for both the members and the plan.
Another reason why an employer may consider an Rx optimization program is that PBMs and carriers do not typically provide this service. Or certainly not in the same way. This means that an Rx optimization program can identify and address wasteful spending on prescription drugs that may have gone unnoticed otherwise, while complementing other strategies. Implementing an RX optimization program is the next evolution of Rx consulting, as it enhances member experiences and optimizes Rx plans and strategies.
Perhaps the most compelling reason for employers to consider an Rx optimization program is that it does not disrupt existing plans. There is no need to change formularies, contracts, rebates, or PBMs. Rx navigation programs are low-lift and easy to implement. By not implementing an Rx optimization program, employers are likely leaving money on the table for both themselves and their members.
The financial and health benefits for plan sponsors and members are significant and immediate. With so much to gain and nothing to lose, Rx optimization programs are a smart choice for employers who are serious about controlling health care costs while providing high-quality care to their employees.
In summary, Rx optimization programs provide an additional layer of cost savings on top of existing cost-saving measures. They work in conjunction with PBMs, formularies, and rebates to identify and address wasteful spending on prescription drugs.
With proactive and reactive outreach to members, their doctors, and their pharmacies, Rx optimization programs ensure that members receive the best possible care at the best possible price.
Gentry Lynn, Healthcare Bluebook
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