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2015-16 Drug Benefit Report, Part II

By January 7, 2016Commentary

Today we continue with the review of the 2015-2016 PBMI drug benefit report (link in yesterday’s post).  As costs continue to escalate, ensuring appropriate utilization continues to be a theme for many employers.  Almost all employers use some utilization management technique.  The most common is prior authorization, used by 80% of employers, and supply or quantity limits used by 85%, followed by step therapy, adopted by 69% of firms, pill splitting by 20% and reference-based pricing by 12%.  Large employers are more likely than small ones to have adopted these programs.  The most common classes of drugs for prior authorization are growth hormones, Retin-A, drugs for sleep disorders, controlled substances and proton pump inhibitors.  Controlled substances, primarily pain medications, have become a focus due to general concerns about abuse of these drugs.  The average number of drug classes subject to step therapy limits is 7, with rheumatoid arthritis, cholesterol lowering. pain medications, high blood pressure, depression, migraine and ADD being the most common classes.

Various clinical management/education programs are also common; with disease management used by about 65% of employers in 2015, fraud, waste and abuse prevention by 50%, therapy adherence by 34%, retrospective drug utilization review by 32%, prescriber profiling by 25% and medication therapy management by 13%.  The relatively low use of medication therapy management and therapy adherence is somewhat surprising given the strong evidence for frequent patient failure to comply with prescriptions and the likely quality outcomes results of that failure and the proven effectiveness of medication therapy management in avoiding adverse events and ensuring that a drug therapy actually works for a patient.  One issue may be that these programs can be expensive to administer.  Many of the therapy adherence approaches that are used, such as mail, the most common, are not likely to have high effectiveness rates.

There has been a heightened interest in limiting pharmacy networks as a cost control method, but few employers seem to be doing this.  Almost all employers offer a mail option for maintenance or chronic condition medications and about 15% make use of this mail option for these drugs mandatory.  About 60% of employers have a “retail 90” option for maintenance prescriptions, and about 30% of these limit the network for that option.  Only about 13% of employers use a true limited network generally, meaning they have eliminated at least one major chain as a filling option.  A larger number, 29%, said they have a preferred network where copays are lower at the preferred pharmacies.  Less than 20% of employers contract directly with pharmacies; most rely on PBM networks.  Maximum allowable cost is the most common method of reimbursement for generic drugs.  AWP methods predominate for brand drugs.  Employers are slowly moving more to “spread” pricing with PBMs, in which the employer pays a set amount per prescription to the PBM and the PBM generally pays less to the pharmacy, pocketing the difference.  Correspondingly, pass-through pricing use is declining; in that method the employer reimburses what the PBM paid the pharmacy but the PBM keeps some or all of any manufacturer rebates or discounts.

Since this is the 21st of these reports, the authors take a look back.  In 1995 drug plans had two-tier flat copays of an average $5.74 for generics and $9.69 for brand drugs.  Today the most common three-tier approach has an average generic copay of $10.78, a preferred brand copay of $30.46 and a non preferred brand copay of $55.56.  In 2002 generic dispensing rates were only 40%, today they are 78%.  But the most dramatic change has to be the availability of new medications with breathtaking price tags.  These are truly giving employers and consumers serious heartburn and will remain the focus of cost management efforts for some time to come.

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