Tame Drugflation

Integrated carriers promise to reduce administrative headaches and deliver additional savings by making better clinical decisions using integrated medical and pharmacy data. Sounds logical. They fail to tell you that their electronic prior authorization review process will automatically approve more than 90% of scripts, even when they’re not medically necessary or appropriate. And is it any wonder, considering they financially benefit from spread pricing, retained rebates, and dispensing fees every time a high-cost script is filled? Your clients will also say goodbye to visibility into their pharmacy plan data, and the flexibility to tailor their plan to meet the needs of their members. 

The aggregate purchasing power of a coalition will improve your clients’ negotiating strength and unlock better rates and rebates. However, a great price on an unnecessary medication is still a waste of money, and that is exactly what will happen in an arrangement where the PBM continues to act as the gatekeeper. At the end of the day, your clients need a financially independent party to decide which prescriptions should be approved and which should be intercepted. To help their members achieve the best health results at the lowest net cost, your clients need a high-touch service partner that will engage prescribers and members in making better decisions and extracting the full value of the benefit. 

For about 10-15% of National Drug Codes (NDCs), National Average Drug Acquisition Cost (NADAC) offers pricing based on self-reported average drug acquisitions costs at retail pharmacies only. The selling point is transparency. But how transparent are those prices, really? Those averages don’t include the acquisition costs for specialty and mail-order pharmacies, nor do they factor in what your clients’ plan could recoup via discounts or rebates in a more traditional Average Wholesale Price (AWP) arrangement. When the lowest-net-cost math is done, factoring in discounts and rebates, AWP models typically win the day. 

Some medications can be purchased for less overseas but it comes with shortcomings. From legal restrictions on drug importation, concerns about the safety of drugs that don’t face FDA approval, potential drug supply chain impacts and the lack of clinical management and financial oversight that come with purchasing a drug outside of the pharmacy plan, your clients might be risking more than they’d save.  

Most patient assistance programs are intended for indigent and/or uninsured patients, and the programs are cracking down on funding for patients with insurance coverage. Patient assistance funds are far from guaranteed for your clients’ members, making them an unreliable strategy for tackling pharmacy costs.