If two different brands of medications
made of similar formulas treat an illness
with equal effectiveness, but one costs less, which would you choose? The answer
seems obvious, yet many people and companies pay extra for brand-name drugs.
“There is a lack in confidence that generic versions will have equal effectiveness,”
says Chronis Manolis, vice president of
pharmacy services with UPMC Health
Plan. FDA-approved generic drugs are just
as effective as brand-name drugs and benefit both an employer and an employee by
reducing cost without compromising care.
Smart Business spoke with Manolis about
how the combination of well-designed benefit plans and increased generic drug utilization can benefit employers and employees.
How can an employer maximize the financial
performance of a pharmacy benefit plan?
Instead of simply shifting costs to
employees, an employer should look for a
partner with innovative ideas to promote
appropriate and cost-effective utilization.
A comprehensive pharmacy benefit that
balances care quality and cost can create
confidence in an employer and increase
morale among employees from a benefit
perspective.
Maximization starts with choosing a
pharmacy benefits manager who has comprehensive strategies and capabilities that
address utilization and net cost. Those two
pillars of benefit design will define financial performance.
Net cost strategies include maximizing
network and channel discounts as well as
tactics to address drug mix. Utilization
management programs should be evaluated to ensure alignment with the goals of
the employer.
What are sensible ways a company can
reduce drug cost?
There are two main strategies to control
drug costs. The first is utilization management, which ensures the appropriate and
safe use of a drug. This management strategy includes intelligent formulary design,
prior authorization programs, quantity management and step therapy. For example, step therapy may require a patient to
try a generic form of a drug before having
access to an expensive brand-name drug.
The second strategy involves lowest net
cost. Strategies should include proper drug
mix such as brand versus generic or preferred brands versus non-preferred brands.
Generics provide a tremendous opportunity
to reduce drug costs while providing the
same care and treatment as name-brand
drugs.
How can increased awareness of generics
reduce costs?
There is still a general lack of confidence
in generic drugs in regard to safety and
effectiveness. Generic drugs save patients
money as they begin to foot the bill for
health care costs that their employers can
no longer cover. They also treat illnesses
with great effectiveness. For the first time,
almost all of the major therapeutic categories such as lipid-lowering agents, proton pump inhibitors (PPIs) and anti-depressants have highly effective generic
products as alternatives.
The ultimate goal is to get plan members
talking to their physicians about therapeutic
alternatives. This inquiry into generic drugs will provide a shift from brand-name to
generic drug utilization and help reduce benefit costs. For every 2 percent increase in the
generic dispensing rate, employers can save
1 percent in drug costs.
Some companies are choosing to raise the
co-pays on brand-name drugs while keeping
the co-pay for generics the same or lower, as
a way to encourage members to use these
alternatives. Another strategy is brand-only
deductibles that require members to meet a
deductible if they choose a brand-name
drug, but provide an exemption if they use a
generic form. Additionally, a benefit plan
partner should provide educational materials to help convey the message of generic
effectiveness and reduced cost.
What features should employers look for
when selecting a pharmacy plan and
provider?
A pharmacy benefit partner should provide a transparent offering that clearly
reveals defined costs and coverage.
Aggressive network discounts should be
included in a plan as well as an all-inclusive
administrative fee.
The all-inclusive administrative fee is crucial because a company will get the most
value out of the plan without many of the
extra, hidden charges. Hidden charges that
are sometimes added to an administrative
fee may include customized reporting, clinical program development, and Drug
Utilization Review fees. Furthermore, comprehensive clinical, formulary and benefit
trend offerings should be aligned with the
company’s goals and needs.
Lastly, data integration capabilities by the
partner between pharmacy and medical
claims can provide a company with powerful
information to improve clinical and financial
outcomes. In summary, a partner that combines robust clinical and unit cost capabilities
is critical so an employer can be confident
that their plan is being managed properly.
CHRONIS MANOLIS is the vice-president of pharmacy services at UPMC Health Plan. Reach him at [email protected] or
(412) 454-7642.
