The high cost of prescription drugs is bankrupting health plans leaving plan sponsors little choice but to take action. The following describes two methods that will reduce drug spend by as much as 50%.
Rx Reference Based Pricing places limits on reimbursement based on commonly recognized pricing benchmarks of the Plan Sponsor’s choosing, a path to freedom from the dictates of third party intermediaries with vested interests.
Any number of benchmarks can be used. There are the usual suspects like AWP which is probably one of the more common domestic benchmarks used by PBMs. Then there are international sourcing benchmarks that can be used to good effect.
A domestic benchmark we like is NADAC (National Average Drug Acquisition Cost). NADAC pricing can be found HERE and HERE. Methodology used to develop NADAC pricing can be found HERE.
Finding a PBM that uses NADAC benchmarking is akin to searching for the winner of the 1928 Hide & Go Seek Award, still missing at the time of this writing. NADAC benchmarking is against their business model. But never fear, there is one out there that uses NADAC benchmarking, claiming significant savings over conventional methods.
International Rx sourcing is another favorite of ours. A group plan using this method provides plan members with two choices:
Choice A – The old fashion go to the nearest retail pharmacy, pay the difference between the benchmark price and the retail price (the difference is called a copay) and go home happy.
Choice B – Stay home happy and get free drugs via international sourcing with convenient home delivery.
No matter how much you research ways to reduce drug spend one thing is certain. Doing nothing is no longer an option.
ADDITIONAL READING:
What Plans Should Know About the Emerging Models for Pharmacy Program Service Delivery“There are many new models of pharmacy program service delivery under consideration and their number and design are limited only by creativity. [This article discusses] three such models … [1] Product/service disaggregation, [2] Program segmentation, and [3] Industry disruption.” MORE >>
Three Pharmacy Benefit Managers Will Face FTC in Joint Trial for Insulin Rebate Cases
“The case alleges that the three largest PBMs — Caremark, Express Scripts and OptumRX — used unfair rebate schemes to artificially inflate the price of insulin. In mid-October, the PBMs each moved for separate proceedings, arguing that a consolidated trial could create confusion. The judge held that the factual differences in each of the cases were ‘minimal and manageable.’ ” [In the Matter of Caremark Rx, No. 221-0114 (FTC Nov. 14, 2024)] MORE >>
PBMs Strike Back at FTC in New Lawsuit
“Express Scripts, Caremark and Optum Rx … are arguing in a new lawsuit the FTC’s recent actions and administrative process subvert the U.S. Constitution by reforming an industry by ‘regulatory fiat.’ … The PBMs claim the FTC’s viewpoint on PBM pricing and contracting strategy is subjective and would force PBMs to rework agreements.” [Express Scripts, Inc., v. FTC, No. 24-1549 (E.D. Mo. complaint filed Nov. 19, 2024)] MORE >>
New York State Aims to Lower Drug Prices
“Regulations taking effect this month will make pharmacy benefit managers, or PBMs, publish their lists of covered drugs and directories of pharmacies in their networks. The state will also bar PBMs from steering patients to their affiliated pharmacies and allow local pharmacies to offer mail-order and home delivery.” MORE >>
“[T]he average per-employee cost of employer-sponsored health insurance reached $16,501 in 2024, an increase of about 5% year over year, with employers expecting an increase of about 6% in 2025…. The fastest-growing component of health benefit cost continues to be prescription drugs. Pharmacy benefit cost rose 7.7% in 2024, following an increase of 8.4% in 2023. One driver of this spend is the growing utilization of GLP-1 drugs for diabetes and weight loss.” MORE >>
