How a clinical management strategy can reduce pharmacy spend and improve employee health
Before the COVID-19 pandemic hit, pharmacy spend was expected to hit $560 billion in 2020 — a 66% increase since 2015 — and continue to grow at least 6.1% year-over-year for the next seven years. That figure will likely increase with uncertainties surrounding long-term care for recovered coronavirus patients and rising costs of specialty drugs.
Many employers worry about how medication costs will impact their healthcare spend and benefits budgets, which are already strapped. The reality is, however, that pharmacy benefits spending has changed dramatically in the last 10 years — with high-cost specialty drugs now accounting for 40-50% of overall prescription drug spend. Often just one utilizing member can cause a drastic shift in a company’s spend.
Enrollment data serves as a primary source of information when making decisions about benefits plans. When looking at plan utilization for medical benefits, employers and brokers are often able to pinpoint the highest cost drivers around medical spend and make decisions accordingly. But, when it comes to pharmacy spend, it’s typically much more challenging given the way many pharmacy benefits plans are currently structured. Many companies unknowingly have employees taking expensive medications that have low clinical value — or worse, taking an inappropriate drug or dose for their condition, harming them and costing the company unnecessarily.
Consider this real-life example from our team:
An employee of a mid-size food and beverage company was prescribed an injectable orphan drug, Somatuline, at 120 mg per week at the cost of $312K per year. Our clinical team conducted an independent drug review of the company’s claims data and found that the recommended dose of Somatuline was 120 mg per month, not per week.
A specialist from our team reached out to the prescriber to alert them of the situation, and the prescriber adjusted the dose to one syringe per month instead of four. This change improved the patient’s quality of life and reduced the cost from $312K to $101K per year — a significant percentage of the company’s annual pharmacy spend of $880K.
This example is just one of many.
For most employers, just 1% of their members are driving 40% or more of pharmacy benefits costs. According to my colleague Dr. Mark Campbell, PharmD, Vice President of Clinical Solutions — a pharmacist with nearly three decades of experience — there are, of course, many other issues at play here when, as an industry, we are not doing everything we can to get members the right drug at the right time at the right dose the first time.
Implementing a clinical utilization management strategy as part of a pharmacy benefits plan can help reduce costs for the employer. At the same time, it increases value and safety for members by addressing high-cost, lowvalue pharmacy claims.
Here are five components to an effective utilization management strategy:
1. Implement a process to review high-cost pharmacy claims data and ensure that members meet the FDA-approved criteria for receiving medications. Sometimes a thorough review of the member’s health records can show that an alternative therapy is warranted, despite the prescriber’s best intentions.
2. Optimize the dose. Many high-cost claims are for parity priced (same price for all strengths) or weight-based medications. For example, four individual 1mg Pomalyst tablets can cost four times more than just one 4mg tablet. Switching the member’s dosing can save as much as $720K over 12 months of therapy.
3. Review the claim with your Stop Loss Carrier early to validate coverage.
4. Follow cases with regular touchpoints. Member conditions can change and so can their response to therapy. For the benefit of the employee and your benefits program, establish a communication plan to manage their case and make medication adjustments as needed.
5. Enact regular formulary reviews and updates to ensure all medications are clinically and financially responsible.
The cost of drugs is not likely to reduce any time soon. But by incorporating a clinical utilization management strategy into pharmacy benefits plans, employers can dramatically improve the health and safety of their employees while providing more economic value for the business.