Pharmacy spend remains a top priority for many employers. Pharmacy also known as Rx, is typically one of the highest cost drivers in employer-sponsored health plans. It has become increasingly important for CFO’s and Benefit Administrators to understand their Rx spend and how they can better manage and engage employees around what is frequently a multi-million-dollar line item for any employer, but especially large employers (ALE’s).
This analysis pull data from the Magellan Rx management’s award-winning Medical Pharmacy Trend report, 2017, Eight Edition.
It highlights key numbers and statistics to help illustrate the complexity and challenges large employers face when managing their Rx spend followed by an engagement and medication adherence analysis to look at the ‘bigger picture’ and connect all the pieces.
To help put these high-cost drugs in perspective, let us look at the overall cost per member per year (PMPY) for Commercial and Medicare Medical Benefit Drugs. In 2016 The 10 highest Medical Benefit Drugs PMPY Averaged $492,838 for Commercial and $404,330 for Medicare. These drugs affected a total of 0.14 patients per 1,000 in commercial and 0.35 patients per 1,000 in Medicare. All together patients that receive these drugs average more than $4million in medical benefit drug costs over a 10-year period. These high-cost drugs are used to treat conditions like inborn errors of metabolism, hemophilia, blood disorders, hereditary angioedema, cancer, and pulmonary arterial hypertension (Magellan, Rx Pharmacy Trend Report, 2017).
Further, the ten highest commercial drugs range from $300k -$700k per patient per year (PPPY), while Medicare drugs average $120k- 1.4M. If we look at the numbers closer and break down them per member per month, the numbers are equally staggering in an unfavorable way. In 2016, PMPM spending across the top twenty-five drugs for commercial shows a 27% increase and 11% for Medicare. Eight of the top twenty commercial disease states or drugs have more than DOUBLED in PMPM spend between 2012 and 2016 (Magellan, Rx Pharmacy Trend Report, 2017).
Another key area or latest ‘buzz’ trend that CFO’s and Benefit Managers must pay special attention to are specialty drugs. In 2016 10% of patients drove 94% of specialty drug spend. For Medicare 21% of patients drove 96% of specialty drug spend (Magellan, Rx Pharmacy Trend Report, 2017).
These specialty drugs have flooded the market with costs much higher than previous treatments. According to the Bureau of Labor Statistics drug prices surged 9.8% between May 2015 and May 2016. At this pace, drug prices will simply be unsustainable for both employers and more so for plan members.
While it may take several years to get these drug prices in check with regulations, new research, and lawsuits. Employers can educate their employees to help contain or lower Rx Costs. The following list are common ways that employers can help employees make better decisions when talking to their physicians and making buying decisions on their medications.
- Lower copays for generic drugs
- Lower copays for drugs in formularies
- Preferred pharmacies
- Mail-order supplies
- Step therapy
To get ahead of the cost curve, CFO’s and Benefit Managers must act on educating and engaging employees on these Rx initiatives while paying special attention to Specialty drugs. According to PEWtrust.ORG an evidence-based non-partisan organization, specialty drugs account for 38% of all prescriptions even though they are only used to treat 1 to 2% of all patients.
Finally, for these costs to be contained employers must use advanced engagement strategies to ensure that patients adhere to their prescriptions and stay engaged in the care process beyond their physician’s exam room.