Pharmacy Benefit Report

Takeda Pharmaceuticals sponsors a regular survey by the Pharmacy Benefit Management Institute of drug benefit plan design and cost trends.   (PB Report) This year the survey was completed by 372 employers covering 5.8 million people.  The major trends elicited by the survey over the last five years include use of more cost-sharing tiers and of more utilization management tools; reductions in cost-sharing for generics; relatively flat overall share of costs for the patients; and a narrowing of the copay differentials between retail and mail-order pharmacy use.  Overall drug costs were expected to increase about 6.3% in 2010, an uptick from the 4.4% in 2009, likely due to greater use of very expensive specialty pharmaceuticals.

About 93% of employers use a multi-tier formulary and 96% use mail-order dispensing, with 19% requiring that mail-order be used to dispense chronic disease medications.  Fifty-eight percent of employers also allow retail pharmacies to dispense these longer-term maintenance medications.   Around 50% of employers use value-based drug benefit designs, which might include lower or no copays on generic drugs or on necessary drugs for chronic diseases.  Only 5% of employers say they cover genetic tests to guide drug prescribing, but we suspect that number is low and employers may not be fully aware of what is covered under their medical benefits.  If a doctor prescribed such a test, it is unlikely that it would not be covered.

The number of employers offering retiree coverage has dropped from 46% in 2007 to 32% now.  Coinsurance use is increasing.  Specialty pharmaceuticals are drawing more attention as they account for a very rapidly rising share of drug spending, and in fact are likely the sole source for the overall growth in medication expenses.  Currently, because of the very high unit costs, beneficiaries pay for a smaller share of those expenses than they do for regular medications, but that will likely change as coinsurance spreads.

Retail pharmacy reimbursement has seen a steady increase in the percent discount off of Average Wholesale Price for the ingredient cost component, but this may not result in lower dollars or lower margin to pharmacies, as AWP, a notoriously slippery concept, has risen significantly over the same period.  For the first time in years, the dispensing fee component saw a slight increase, but is still down over 30% since 2000.  Hard to know if productivity has increased enough to make up for this.  All-in-all, this is a very useful report.