Introduction
In the realm of corporate wellness and health benefits, pharmacy costs stand as one of the most significant expenditures. As the world grapples with the escalating price of medications, employers find themselves at a crossroads, trying to balance the health needs of their employees with the economic realities of business. For self-funded employers, the stakes are even higher. But fear not, for there are strategies at your disposal to combat these rising costs without compromising on the quality of care. In this piece, we'll unravel the top five ways to lower pharmacy benefits costs, offering you actionable insights.
Implementing a Tiered Drug Formulary
- The Basics of Tiered Formularies: A tiered drug formulary is essentially a list that categorizes medications based on their cost and therapeutic value. Drugs in the lower tiers are generally generic and cost less, while those in the higher tiers are brand-name drugs and are more expensive.
- Benefits to Employers: By introducing a tiered system, employers can guide employees towards cost-effective alternatives without compromising on health outcomes. This system empowers employees to make informed decisions, often leading to considerable savings for the employer.
- Educating the Workforce: While implementing a tiered formulary can lead to cost savings, it's equally vital to educate the workforce about how it works. By understanding the different tiers and the cost implications, employees can actively engage with their physicians about choosing the most cost-effective medication.
Prior Authorization for High-Cost Drugs
- What is Prior Authorization?: It's a process where certain high-cost or specialty drugs require approval before they are dispensed. This ensures that these medications are not only medically necessary but also the most cost-effective solution available.
- Impact on Costs: This approach acts as a gatekeeper, ensuring that expensive medications are only used when absolutely essential. It aids in preventing over-prescription and encourages the use of more affordable alternatives when available.
- Maintaining the Balance: While cost-saving is the goal, it's crucial that the process does not impede urgent medical needs. Therefore, a streamlined and efficient authorization system must be in place to avoid unnecessary delays.
Promoting the Use of Generic Drugs
- Understanding Generic Drugs: Generic drugs are equivalent to brand-name drugs in dosage, strength, and performance but come at a fraction of the cost. They undergo rigorous testing and are approved by health authorities, ensuring their safety and efficacy.
- Cost Savings Potential: Encouraging the use of generic drugs over brand names can lead to dramatic reductions in pharmacy costs. Given that generics offer the same therapeutic benefits at a significantly lower price point, the savings potential is immense.
- Overcoming Hesitation: Some employees may be hesitant about switching to generics due to misconceptions. Hence, it's essential to engage in awareness campaigns, dispelling myths and highlighting the benefits of generic medications.
Utilizing Pharmacy Benefit Managers (PBMs)
- The Role of PBMs: PBMs act as intermediaries between drug manufacturers and health plans. They negotiate drug prices, process prescriptions, and manage drug benefit programs. Engaging a PBM can help employers leverage volume-based discounts and better pricing.
- Benefit to Employers: PBMs offer a two-fold benefit. Firstly, they can negotiate lower prices for medications. Secondly, they can provide data-driven insights into drug utilization, helping employers refine their drug benefit strategies.
- Choosing the Right PBM: While PBMs offer several advantages, it's critical to select one that aligns with the company's goals. Transparency in pricing, ethical practices, and a focus on real cost savings are attributes to look for.
Implementing a Mail-Order Pharmacy Option
- The Concept: Mail-order pharmacies allow employees to get their medications delivered right to their doorstep. They're particularly useful for maintenance drugs taken for chronic conditions.
- Economic Benefits: By bypassing traditional pharmacies, mail-order options can offer medications at a lower cost. Moreover, they often provide a 90-day supply, reducing the frequency of refills and leading to additional savings.
- Enhancing Employee Experience: Beyond the cost benefits, mail-order pharmacies offer convenience, especially for those who may find regular trips to the pharmacy cumbersome. Employers should, however, ensure the chosen mail-order service is reputable and reliable.
Conclusion
Employers today face intricate challenges when navigating the complexities of PBM contracts, discounts, rebates, pharmaceutical costs, and specialty drugs. Recognizing the need for expert guidance in these areas, Corporate Wellness Magazine recommends Matthew Williamson. Celebrated as one of Florida's eminent employee benefits consultants, Matthew has consistently demonstrated his prowess in assisting companies to decipher and optimize these multifaceted contracts and financial mechanisms.
His in-depth knowledge and strategic approach have proven invaluable in securing tangible savings for self-funded employers. For businesses seeking strategic insight and transformative solutions in the pharmaceutical landscape, a direct consultation with Matthew Williamson is imperative. He can be reached at matthew.williamson@ioausa.com or 407.998.5585.
