The Top 3 Ways to Lower Prescription Costs

by | Mar 26, 2024 | Uncategorized

As this series dives into the many layers of healthcare costs, you will quickly find that prescriptions are a significant driver of overall plan spend.  According to The Business Group on Health’s recent survey, 24% of the median percentage of employer’s healthcare dollars are now spent on pharmacy, up from 21% in 2021. In addition, “91% of surveyed employers were concerned, or very concerned, about the pharmacy cost trend overall.” The good news is that prescription costs can be actively managed and lowered.

Below are the top 3 ways to do just that:

1) Partner With a Transparent & Admin Fee Only Pharmacy Benefit Manager (“PBM”)

Plans can work with a transparent, pass-through PBM that uses a per prescription administration fee instead of non-transparent pricing models, such as “spread pricing”.

What is Spread Pricing?

Spread pricing is where a PBM charges the plan sponsor more than they pay the pharmacy for a medication and keeps the “spread” as profit. Plan sponsors typically do not know this practice is occurring.

What is a Better Option?

Utilizing a no-spread, administration fee only model. In this model, PBMs charge plan sponsors exactly what they paid the pharmacy + a disclosed per prescription administration fee. Clients are the direct beneficiaries of this pricing because there is no spread included.

Insider Tip: By removing spread pricing, most plan sponsors can save 10% – 15% on their total Rx spend

Real-Life Example:

·         Pregabalin – cost with national PBM using spread pricing: $168.29
·         Pregabalin – cost with Sona Benefits using no-spread pricing: $30.35 (admin fee included)

What About Rebates?

Along with spread pricing, many traditional PBMs do not pass the rebates they collect from drug manufacturers back to the plan sponsor. The sad truth is that many pharmacy benefit managers are making significant amounts of non-disclosed profit with this method.

Your PBM contract should clearly specify the level and amount of guaranteed rebates owed to your organization.

2) Bring In the Experts

It seems like a no-brainer, but there are pharmacy benefit managers that do not have pharmacists building Rx plan designs, monitoring pharmacy claims, or conducting prior authorizations. 

Clinical pharmacists are the most qualified individuals to assist with self-funded health plans. They have advanced medication training and should be involved early and often in plan decisions, not only for potential savings, but to improve member health.

By incorporating pharmacists onto your health plan team and having them actively review medications, there is an added layer of cost savings and clinical effectiveness. If that is not something your Pharmacy Benefit Manager can offer, you need to look elsewhere.

3) Actively Manage Specialty Medications

In 2023, specialty drugs accounted for 50% of prescription costs while constituting only 2% of prescription volume. 

With the average price of a specialty medication costing approximately $5,000 per month, it is the most important topic impacting self-funded employers. 

So, what can be done?

Utilize Alternate Funding Programs:

These programs are offered directly through drug manufacturers to reduce costs while taking care of patients. 

The two most common programs are Manufacturer Copay Assistance and Patient Assistance Programs.

  • Manufacturer Copay Assistance programs cover the cost of member copays and can be utilized to maximize plan savings.
  • Patient Assistance Programs are unique in that qualifying members can apply and receive specialty medications directly from the drug manufacturer at no cost to them or the plan. These programs have specific applications and income limitations that certain PBMs can help members navigate.

Taking these steps can reduce plans’ specialty costs by 20% – 60%.

Partnering with a skilled benefits advisor team and a transparent Pharmacy Benefits Manager (PBM) significantly enhances cost containment in your self-funded health plan’s pharmacy spending.

If you would like to learn how Sona Benefits can help your self-funded plan using these strategies, please contact Austin Bruder at abruder@sonapharmacy.com for a free analysis.