We’re thrilled to report that yet another Coalition Member that followed our Coalition’s recommendations and took aggressive steps to control its prescription coverage costs has now achieved a 16% cost decrease.
Sound too good to be true?
Our Coalition Member implemented a host of changes on January 1, 2017. Here’s a Table comparing the Coalition Member’s 4th quarter 2016 total prescription coverage costs with its 1st quarter 2017 total prescription coverage costs after it implemented our Coalition’s recommendations:
The Coalition Member’s “per employee per month” (PEPM) cost change was even greater between the 4th quarter 2016 and the 1st quarter 2017 – more than 18%:
Comparing costs year to year – from the 1st quarter 2016 to the 1st quarter 2017 – the Coalition Member’s decreased costs were still greater – more than 22%:
If you’re interested in achieving similar savings for your Plan, we’d urge you to review a quick summary of some of the recommendations we made – and this Coalition Member implemented – which we describe below.
Adjusting Copay/Coinsurance Structure
The Coalition tries to help every Coalition Member tweak its copay structure to ensure it’s a good balance between (a) incentivizing Plan Beneficiaries to pay attention to drug costs so they will try to purchase lower-cost drugs, and (b) ensuring Plan Beneficiaries’ incomes are taken into consideration so all Beneficiaries will have access to necessary drugs.
The Coalition Member in this instance slightly adjusted its copay requirements for retail and mail drugs. It also slightly increased its specialty drug requirements by implementing a particularly effective approach, namely coinsurance with a “minimum” and “maximum” payment amount.
For example, for lower cost Specialty Drugs, beneficiaries are now required to pay 20% of the drug cost, with a minimum payment of $100 but a “cap” of $300. For higher-cost Specialty Drugs, the minimum – maximum range is $200 to $600.
Expand Specialty Drug Coupon Use
Our Coalition contract that we negotiated during a 9 month PBM RFP resulted in a cutting-edge PBM contract with the PBM the Coalition ultimately selected – Envision – that enables Coalition Members to take advantage of high-value Specialty Drug coupons to reduce not only Beneficiaries’ costs, but our Coalition Members’ costs as well.
How does this Program work? Since the total cost of any drug is divided between the Beneficiary (via a copayment or coinsurance) and a Plan, if a Plan raises the copay for a specific drug by the value of a coupon, the Plan’s costs decrease by that same amount. If the Plan then requires the Specialty Drug Pharmacy to process the relevant Specialty Drug coupon, the Beneficiary’s copay is reduced back to what it would have been – or even lower (if the coupon states drugs will cost “no more than” a certain amount).
Given the obvious win-win, our Coalition had already implemented a Specialty Drug Coupon Copay Program for many Specialty Drugs that had reduced our Coalition Members’ costs significantly. Why? Because several specialty drugs have coupons worth several hundred – or several thousand – dollars per 30 day prescription. On January 1st, we expanded this Program resulting in tens of thousands of dollars of additional savings for this Coalition Member.
Note: Most Plans are prevented by their existing PBM contracts from implementing a Specialty Drug Coupon Copay Program. And many – if not most – PBMs refuse to implement these programs.
Therefore, your Plan may be unable to do so until you can escape your current PBM contract and negotiate a better PBM contract with a different vendor. Alternatively, as soon as you can escape your current contract, you can join a Coalition – like ours – that runs this type of innovative Program. Unfortunately, few Coalitions do.
Customize Your Formulary and Stop Covering Unnecessary Drugs
In several previous Rx Alerts, we’ve described why if you want to control your costs, you need to stop relying on your PBM’s “standard” Formulary and instead customize your own Formulary. Why? Because PBMs have conflicts of interest and often favor higher-cost drugs if manufacturers will pay them enough to do so.
The Coalition Member we’re describing already had a customized 6 tier Formulary in place, with 2 tiers each for Generic Drugs, Brand Drugs and Specialty Drugs and each “tier pair” divided between lower-cost Preferred drugs and higher-cost Non-Preferred drugs.
To ensure greater savings as of January 1st, our Coalition – and Envision – invested the time and resources to review every drug and reassign tiers based on price changes that had occurred during the year.
The Coalition also recommended that the Coalition Member stop covering numerous high-cost unnecessary drugs.
Prescription Drugs with Over-the-Counter Substitutes
For starters, we explained why it doesn’t make sense to provide coverage for certain prescription drugs that have numerous over-the-counter substitutes available. Currently, there are at least three different therapeutic categories where substantial savings can be obtained by blocking the prescription drugs and having your Beneficiaries use OTC substitutes: (i) proton pump inhibitors (use OTCs like Nexium and Prilosec); (ii) nasal steroids (use OTCs like Flonase and Nasacort); and (iii) non-sedating antihistamines (use OTCs like Claritin and Zyrtec).
We also explained why it makes no sense to cover very high-cost “combo” drugs, like Duexis and Vimovo, given that these drugs are nothing but “convenience drugs” that combine an OTC proton pump inhibitor (like Nexium) and an OTC NSAID (like Aleve). Does your Plan really want to pay $800 to $1200 for just one 30 day script of Duexis or Vimovo when your members can obtain the OTCs separately for about $20 for the same period?
Note, too: Drug manufacturers are continuing to obtain FDA approval for more such “combo” drugs – like the recently approved Yosprala – so you can’t just block the existing drugs and think your Plan is protected! You need to position your Plan to respond to marketplace changes, either (i) by monitoring the marketplace yourself; or (ii) by retaining a consulting firm that will actually perform these tasks for your Plan; or (iii) by joining a Coalition that actually undertakes these activities for its Coalition Members.
Brand Drugs with Chemically Identical Generic Substitutes
Our Coalition presented our Coalition Member with a list of Brand Drugs that have lost their patents, where lower-cost alternative Generic Drugs are available. And we reviewed Envision’s costs for the Generics to ensure their costs were as low as were available in the marketplace, which they were (which often is not the case).
There are numerous drugs that can – and should – be blocked using this approach, including many drugs that are probably costing your Plan a small fortune. The “usual suspects” are Abilify, Crestor and Seroquel XR, which many PBMs continue to favor on their “standard” formularies. But there are many other drugs too.
Note also: There are $26.5 billion of Brand Drugs facing patent expiration in the upcoming year. If you want to reduce your costs, your Plan should track each of these drugs and block them as soon as lower-cost Generics become available. Or your Plan should join a Coalition that will actually perform that work for your Plan as a Coalition Member.
Numerous Other Drugs with Lower-Cost Substitutes
The Coalition also conducts a “high-to-low cost analysis” for each of our Coalition Members – specific to their claims data. We don’t just look at the “Top 25 Costing Drugs” as most PBMs do – we “sort” every drug that our Coalition Member’s beneficiaries have taken. We do so because we know every Plan is spending large amounts of money for drugs below the “Top 25”.
Based on our high-to-low cost analysis for this Coalition Member, we made several dozen specific recommendations for this Coalition Member to lower its costs. While some of our recommendations were Plan-specific, some were applicable to almost all Plans – including most likely yours – and included the following:
We recommended that the Coalition Member block –
- Several prescription acne treatments (like Solodyn, with a 30 day rx cost of more than $1,000, even though numerous low-cost OTCs are available)
- Two foot fungus topical treatments (Jublia and Kerydin, with costs above $500 per treatment, even though they have very limited efficacy and far lower-cost treatments are available)
- Several anti-depressants (like Pristiq, with a 30 day rx cost of almost $300, even though numerous low cost generics are available )
- Several ADHD drugs (like Vyvanse – ditto – but with a 30 day rx cost of about $250)
- Two outrageously priced diabetes treatments (Glumetza and Fortamet, costing mega-thousand dollars per 30 day script, even though numerous diabetes treatments cost far less)
Based on our “high-to-low cost drug sort”, we also recommended that this Coalition Member implement several customized Prior Authorizations and Step Therapies.
What Your Plan Can Do
If your Plan has experienced repeated year-to-year cost increases, you should take action to end this pattern:
Retain an outside expert that is entirely independent and free of any conflicts of interest (like our consulting firm). Make sure to get any firm you’re considering (including ours) to execute a Conflict of Interest Disclosure Form that carries stiff penalties if the firm fails to disclose conflicts, because many consulting firms are being paid large amounts of money by PBMs. There’s a free, download-able Form you can use as a template on our website.
Then ask your consulting firm to conduct a top-down analysis of your entire prescription coverage program: Analyze your copay structure and conduct a thorough “high-to-low cost analysis” of your claims data to determine the high-cost drugs you’re squandering money on.
Then get the firm to identify lower-cost substitutes that are equally or more effective and calculate how much you’ll save if you change your coverage program. Also, have the firm conduct a “disruption analysis” to determine how many of your beneficiaries will be impacted if you make certain changes.
Armed with this information, it’s virtually certain you’ll realize that given the savings you can achieve, the impact on your beneficiaries is reasonable.
If you can get out of your current PBM contract at the end of the year, you’ll still have time to do so if you join a Coalition. Even if you’re stuck in your current contract for another year (or more), we’d still urge you to analyze your claims data and determine where your PBM is flushing your money down the toilet. By doing so, you’ll position your Plan to start pressuring your PBM to act differently.
Bottom Line: If your Plan wants to achieve dramatic savings like our Coalition Member did, it’s certainly possible for your Plan to do so. But you need to take action to accomplish that goal.
# # #
To read other Rx Drug Alerts, go to the Top Menu Bar, and click on Rx Alerts.