A perfect trifecta of big, big, and big has put an out-of-control bend in the healthcare cost curve.
This bend is affected by drug costs driven by big pharma, it’s manufacturer-driven, has rebate-based incentives propagated by big pharmacy benefit managers (PBMs) and big healthcare companies merging to create even bigger companies that create a “watch my other hand” distraction. This continues to take focus away from the proactive pursuit of appropriate pharmacy spend.
The problem is, the bigger these companies, their treasure chests and their shareholder requirements get, the less the incentive for them to embrace approaches that will truly disrupt the cost curve and create greater prescription affordability.
We need broad and disruptive thinking, not point solutions that haven’t worked for years.
The status quo isn’t working
The large PBMs, and some benefit consultants, will say that PBMs have been declaring flat trend for a couple of years. However, this declaration can be made only by artificially deflating the gross prescription spend via an unpredictable rebate check to get to a more manageable net-spend number.
This deflation of the trend via a rebate check does absolutely nothing to ensure the drug mix for an employee population is appropriate. The bottom line is that industry-standard clinical and care management programs have had a negligible impact on both containing prescription costs and driving appropriate patient-centric utilization, as demonstrated by the persistent dysfunction in pharmacy spending.
Examples of this are:
- Prescription spend is greater than $330 billion, or 10% of U.S. healthcare spend, and growing.
- Prescription drug costs are now 25% of a plan sponsors’ healthcare expense.
- The number of patients on seven or more drugs (polypharmacy) is up by 200% over the last 20 years.
- Twelve percent to 18% year-over-year increase in gross prescription spend for plan sponsors.
This calls for a bold and different way of approaching the care management challenge. For example, a different way of thinking about managing the health of the employee population.