Addressing rising pharmacy costs
In MHE’s survey, 15% of respondents listed addressing rising pharmaceutical costs as their top concern. Although data show that drug price increases have actually slowed down since 2014, pharmaceutical drug spend by insurers and in turn by patients with high deductibles and copayments has been rising due to increased use, says Yana Paulson, PharmD, chief pharmacy officer at LA Care Health Plan in Los Angeles. For example, in 2017 two-thirds of specialty drug spending growth was due to more individuals being treated and the number of prescriptions being dispensed.
“Payers must increase their focus on structuring drug benefits to not only keep premiums low, but to also ensure that patients with high copays can afford treatment and that enough alternatives are available for specific conditions,” Paulson says.
Another challenge in this area relates to new products coming to market—specifically biopharmaceuticals. “Manufacturers can set high price tags for these drugs, which rarely face competition from alternative products, resulting in high copayments for consumers,” says Nancy Taylor, co-chair of the healthcare and FDA practice at the law firm Greenberg Traurig LLP. “In many cases, patients must use these products routinely for certain chronic diseases and there is little ability to negotiate a lower price.”
Health insurers also face challenges in determining when and how to cover new biopharmaceuticals and whether to use prior authorization or limitations on coverage to reduce over or inappropriate use, Taylor says. Hospital systems may not be able to effectively limit prescribing to a formulary due to a physician’s ordering practices and patient needs.
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Ron E. Peck, Esq, JD, senior vice president and general counsel, The Phia Group, LLC, which provides cost containment strategies for health plans, says communication between participants—pharmacists, physicians, and payers—is of the utmost importance to ensure that the most effective, efficient, and easy-to-follow regimen is prescribed and that patients understand the health and financial benefits of compliance. “Perhaps it even makes sense to incentivize such behavior, such as reducing or waiving copays for medications initially prescribed to treat a condition, but increasing copays for more intensive treatments, needed if and when a patient fails to comply with their treatment plan—eventually worsening their condition,” he says, noting that 20% of new prescriptions go unfilled and 40% of patients do not adhere to prescribed medications. This leads to greater costs down the road for patients and payers.
How to deal
In order to keep pharmaceutical prices down, heath plans need to employ cost containment programs to manage resources. According to Paulson, here are six initiatives that LA Care has done in this area:
- Maximize use of generics by prudent and careful formulary management.
- Increase the use of biosimilars in the specialty drug area. Biosimilars are substitutes for biologics (drugs made using a biological method) similar to the way generics are substitutes for brands (drugs made by a chemical method) and like generics they are usually less expensive.
- Carefully negotiate drug rebates with pharmaceutical manufacturers.
- Negotiate network pharmacy prices, such as discounted prices for in-network pharmacies.
- Carefully select specialty drugs. Don’t base decisions solely on price; instead choose drugs based on safety and efficacy first to maximize value. Then, employ frequent clinical monitoring to ensure efficacy and adherence.
- Offer clinical programs such as reminding patients to get medication refills for chronic conditions in order to avoid hospitalization or emergency room visits and having clinical pharmacists provide medication therapy management consultations, which can, among other benefits, avoid polypharmacy by discontinuing unnecessary drugs.