What can a purchaser of prescription drug benefits expect to see during 2014? Here are WBC’s (wbcbaltimore.com) top trends that will impact your drug plan management for 2014 and 2015:
1. Specialty Drug Management. Specialty has far outpaced even the more aggressive predictions of their exploding cost trends of just a few years ago. Trending for most plans have exceeded 20% annually and now represent approximately 30% of a plan sponsor’s drug spend. No let up in sight, as retail pharmacies escalate their specialty pharmacy capabilities. Prior authorizations, quantity limits, and better pharmacy control of the specialty drugs flowing through the medical plan are the primary techniques being adopted by savvy plan sponsors.
2. Generic Utilization. Still room to move for better generic fill rates. Many sponsors are averaging in the 74 -76% range. Targets of low 80’s% are attainable. The generic wave will crest in 2015 and other cost control strategies will have to be embraced.
3. New Pricing Benchmarks. The AWP settlement was reached in 2009 so what are most PBMs using to invoice plan sponsors? Why, AWP! Numerous problems have been identified in terms of coming up with a widely-accepted alternative benchmark, but none have surfaced, until now. We like PAC (Predictive Acquisition Cost) and believe it is the best choice for creating an even playing field. PAC can eliminate the huge pricing fluctuation in generics, where multiple manufacturers offer the same medication at widely differing price points. An 80% discount from a $3 per tablet generic is a lot costlier than a 75% discount off of a $.80 per tablet alternative generic!
4. Use of Generic Effective Rate. including an aggressive GER (Generic Effective Rate) provision in your PBM contract helps reduce the amount of manipulation that PBMs control by using multiple MAC lists. They typically will have different MAC lists that are used for the same client and the number of drugs can be changed at the discretion of the PBM. A GER helps control the cost impact by requiring an overall guaranteed net effective rat discount. However, it is only part of the solution. applying a consistent pricing benchmark like PAC enables the plan sponsor to apply the GER against a fairly priced ingredient cost.
5. Narrow Networks. Fewer plan sponsors are electing the full 64,000 store networks. Better pricing by controlling available dispensing options are working. Most plans see very little disruption when applying a 30,000 store or smaller network. Walmart and Costco continue to grow as major retail drug channels and will offer very aggressive pricing.
6. Consumer Drug Pricing Tools. Pricing transparency will be a trend that picks up greatly in the second half of this year and 2015, particularly as plan members experience new out-of-pocket limits and co-pays. Prescription drug costs and vary widely between retail outlets, and many times can be more competitive than mail order fulfillment.
Stay tuned loyal readers! 2014 and 2015 are years of big changes in healthcare delivery and prescription drug benefits are no exception!