To maintain control of pharmaceutical costs, benefits are being designed to ensure that the most cost-effective care is available without sacrificing quality of care. A variety of innovative pharmacy management techniques being used today may save your business money. Check your health care benefit provider’s pharmacy policies to see if you’re taking advantage of them.
These represent the drug quantity allowed over a set time period of time, and are usually based on clinical evidence to take advantage of parity pricing (i.e., equivalent medication costs regardless of dose) or to conform to Food and Drug Administration(FDA)-approved dosing and current treatment guidelines.
Example A: Suppose one of your employees is taking the cholesterol-lowering drug Zocor with a dosage of one 20-mg tablet per day. Let’s say the employee’s physician would like to double the dose, and prescribes a 20-mg tablet twice per day. A quantity limit would mandate that, instead of prescribing two 20-mg tablets, the physician should prescribe one 40-mg tablet per day. Here’s the cost breakdown:
- One 20-mg tablet daily, at $4.96/tablet = $148.80 monthly
- Two 20-mg tablets daily, at $4.96/tablet = $297.60 monthly
- One 40-mg tablet daily at $4.96/tablet = $148.80 monthly
As you can see by this example, the cost per pill remains the same, regardless of the dose. It therefore makes economic sense to prescribe the 40-mg tablet, if the dose needs to be increased. This arrangement is only implemented for drugs the FDA has approved for once daily dosing. The medical effectiveness remains unchanged.
Example B: Perhaps another employee is having trouble sleeping and is prescribed a sedative, such as Ambien, 30 tablets, to be taken once nightly. Because insomnia is often secondary to another condition (e.g., depression, anxiety, etc.) current clinical guidelines do not recommend chronic use of sedatives to treat insomnia. The plan, therefore, may allow a lesser quantity, such as10 tablets per 30 days.
Prior authorization requires that the health plan have an opportunity to review and approve certain medications before a prescription can be filled. This practice has multiple benefits, not the least of which is protecting member health. It also helps control costs by ensuring proper prescribing practices.
Medications subject to prior authorization are generally very costly, or potentially have serious complications or interactions if not taken properly. In addition, prior authorization is often required for medications that are prescribed for off-label uses which occurs when a drug is FDA.
The concern with off-label dosing is that physicians usually have few or no clinical studies to use as guidance, and patient safety may be an issue. The practice of off-label prescribing may be justified in exceptional cases, and prescribers are usually asked to submit detailed clinical rationale with their request.
Step therapy is a viable approach when there is more than one drug used to treat the same condition and none of the drugs has been proven to be clinically superior to the others. When this situation occurs, it makes sense to require that the least expensive drug (often a generic) within the class be used before other drugs in the class. Generic drugs, which have the same active ingredients as their brand-name counterparts, often have a much longer track record of safety than newer, branded drugs available to treat similar conditions. Current examples of step therapies include the use of Prilosec OTC ($15/month compared to Nexium at $150/month), which is used to treat forms of heartburn like GERD. Another example would be the use of generic antidepressants like fluoxetine before the use of brand name product like Lexapro. The cost difference is $40 per month: fluoxetine is $15 compared to Lexapro, which is $55.
Managing your pharmacy costs will be most effective by incorporating a combination of all of these pharmacy strategies with one additional element employee education. When people understand the rationale for these approaches, it helps them realize that saving money and improving health don’t have to be mutually exclusive. When it comes to pharmaceuticals, the aforementioned approaches not only save money, they help ensure we all receive the most medically effective, safest care.
STEVE MARCINIAK is director of pharmacy services for Care Choices, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked No. 12 among 257 commercial plans nationwide and is the top-rated plan in Michigan, according to U.S. News & World Report/NCQA “America’s Best Health Plans, 2005.”
A recent report in the Detroit Free Press highlighted some of the risks involved in using PBMs’ full suite of services.
“According to the Henry J. Kaiser Family Foundation, a California organization that studies health care costs, benefit managers boost market share in two major ways: adding drugs to the list of medicines employers pay for and encouraging doctors to use those drugs, even if they are more expensive. The more sales grow, the more drug companies pay the benefit managers.”
This practice results in significantly higher prescription drug costs for employers, because much of the costs associated with pharmacy benefits lie in a company’s formulary.
What is a formulary and how does having one save money?
The Academy of Managed Care Pharmacies describes a formulary as “a continually updated list of medications which represent the current clinical judgment of physicians and other experts in the diagnosis and treatment of disease and preservation of health. The primary purpose of the formulary is to discourage the use of marginally effective drugs and treatments.”
A formulary is more than just a list of drugs. It is instituted and managed by a Pharmacy and Therapeutics (P&T) Committee, often comprised of pharmacists, physicians, benefit plan managers and other allied health professionals in and around the community. The committee has the expertise to help physicians decide which drugs should be utilized while maintaining high-quality patient care.
Some organizations have the resources to analyze their prescription benefit and pull their formulary in-house to have better control over which drugs are available to their employees and physicians. This saves money, but most employers need to rely on someone else to manage their benefits.
There are other options. Many health insurers have the resources and the know-how to institute and manage their own formularies, which results not only in significant cost savings for members but can also help ensure drug safety and efficacy.
Managing a formulary is key because of the continuous influx of new drugs in the market. Each drug must be thoroughly reviewed and clinically proven to be 1) clinically effective; 2) safe; and 3) cost-effective. Many health insurers promote the use of proven generics whenever possible. This reduces costs and promotes safety.
PBMs, on the other hand, can offer services that can be helpful to a health insurer.
- Provide broad access to a national network of pharmacies
- Process claims efficiently and cost-effectively
When used in this capacity, PBMs can help control costs and allow health insurers to concentrate on providing other services to their customers.
If your health insurer uses a PBM, there’s no need to panic you aren’t necessarily at the mercy of secret deals and designer drugs. First, verify that your insurer has its own formulary overseen by an internal P&T committee. Second, ask how your insurer uses its PBM.
Third, a good health insurer is always available to answer your pharmacy questions. Your insurer and PBM may actually be keeping your crew healthy and your cargo light.
Steve Marciniak, R.Ph., is director of pharmacy services at Care Choices, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked first in Michigan in clinical excellence in health plans, according to the National Committee for Quality Assurance.