Hospital spend equals 40% of a plan’s spend. Professional spend equals about 20%. That leaves 40% left over. Guess which beast feasts on the remaining 40%?
Reference Based Pricing and Cash Pay strategies have had a good effect on 60% of a plan’s spend but the remaining 40% remains an elusive target for cost containment efforts.
It’s a rigged system. We read about various strategies “experts” promote to reduce drug spend such as step therapy and pre-authorization but they don’t work. Drug costs keep going up.
The best strategy proven to work is to stop paying for expensive drugs. A small county in Texas did that four years ago, eliminating all brand name drugs from their plan.
Plans can capitate 500 generic drugs for about $7 pepm and it will fill the prescription needs for almost every ailment known to man. Compare this to your current Rx spend on a pepm basis. You will be shocked.
Other plans are eliminating specialty drugs.
The following article, published by Vitori, offers their solution to rising Rx costs:
November 08, 2022
The Inflation Reduction Act is a great first step toward lowering prescription drug prices and out-of-pocket expenses for Americans covered by Medicare. What’s unknown is how this will impact future Rx costs for members of employer-sponsored plans. How can employers cut costs now without reducing care?
Recent commentary asserts that drug manufacturers will experience losses as a result of this new legislation and are likely to “shift some of the losses onto commercial payers, leading to higher drug costs for employer-sponsored plan members. We’ve already seen this scenario play out in health care, as Medicare pays considerably lower rates for the same service compared to commercial plans, with hospitals and providers often increasing charges for employer-sponsored plans to make up for the difference.”
The author recommends that employers work with their Pharmacy Benefit Manager (PBM) to better understand their pricing practices and terms of service. While all efforts to improve communication and transparency are commendable, the Federal Trade Commission has already exposed the controversial, self-serving practices of six of the largest PBMs whose sole purpose is to limit competition and increase profits.
Employers and plan sponsors need to go beyond understanding the machinations of this corruption and implement a contemporary pharmacy benefit plan that prioritizes patients over secret profits.
Pharmacy Administration without the Predation
According to the PBM Accountability Project, “It’s no coincidence that out-of-pocket drug costs are rising, while PBM profits are increasing. The process of pricing our medications is unknown to many Americans. The opacity and complexity of the drug pricing system undermines the possibility for dynamic, price competition between PBMs — putting consumers at a disadvantage.”
Vitori Health’s lowest net-cost pharmacy administration offers employers the antithesis of predation and disadvantage. It includes unmatched technology-enabled contracting and built-in advocacy on behalf of members who are reliant on high-cost specialty medications. By securing member financial assistance from pharmaceutical manufacturers, Vitori also removes plan sponsor costs and adds value as cost cascading occurs in the market.
It’s time to stop letting the fox guard the hen house. Contact Vitori Health for information about our non-PBM VitoriRx plan that gives employers and members a clear advantage.
SOURCE: What’s the Best Way to Chop Prescription Drug Costs? Axe Your PBM! (vitorihealth.com)
