One of the biggest drivers of health care
costs is prescription drug spending. It
is on the rise and is expected to continue in the coming years. An important key
to containing rising health care costs is
intelligent pharmacy benefit design.
Finding a way to manage prescription
drug costs can help employers start to get a
handle on health care costs. In fact, the best
way to combat rising health care costs is
through smart pharmacy benefit design,
says Chronis Manolis, vice president of
pharmacy services for UPMC Health Plan.
“Consumer acceptance of generic drugs
has grown substantially and is continuing to
grow,” Manolis says. “Generic drugs are cost-effective alternatives that offer the same level
of safety and quality as their brand-name
equivalents, often at a lower co-payment, and
many consumers now understand that.”
Smart Business spoke with Manolis about
ways to design pharmacy benefit packages
that can help control health care costs.
Why should employers promote the use of
generic drugs by their employees?
The evidence from the numbers is overwhelming. The average retail price of a
brand-name drug is now approximately $111
compared to the average retail generic price
at $32. That savings will really add up for
employees, in particular those who are managing multiple medication regimens. Consumers can save even more by taking advantage of the growing number of drug programs that offer generics for $4.
Why is this an opportune time to promote the
use of generic drugs?
Many consumers now understand that
extensive media advertising not only raises
the awareness of certain brand-name drugs,
it also accounts for part of the reason those
drugs are so expensive. Generic drugs have
the same chemical makeup but have no
expensive advertising campaigns behind
them. Therefore, they can be offered at much
lower prices. In turn, insurance companies
can offer these drugs to members for a much
lower co-payment. Consumer acceptance of
generic drugs has grown substantially in
recent years, and the current generic market landscape is extremely favorable. Over the
next five years, 63 of the most popular drugs
will be available in a generic version, as the
patents on some of the most popular medications are due to expire. These include
Imitrex, Fosamax and Risperdal in 2008,
Prevacid and Topamax in 2009, Cozaar and
Lipitor in 2010 and Actos and Zyprexa in
2011. In 2007, Ambien went generic. A 30-day
supply of the generic version now costs $15,
compared with $125 for Ambien.
How can generics help lower costs?
Employers need to work with their health
insurer to develop a pharmacy benefit design
that promotes the use of generic drugs by
offering lower co-payments on generics. As
an incentive to get your employees to start
using generics, you may consider a waiver of
co-payments as part of a trial run. Utilizing
mandatory generic benefit designs will
ensure rapid generic uptake amid the many
new generic drugs that will be available
throughout the next several years. To
increase awareness and acceptance of generics, you could implement promotional and
educational campaigns with your benefits
administrator to educate employees. These programs can include educational materials,
work-site promotional materials and pharmacist information sessions to build employee awareness and confidence in generics.
Are there other ways to use your pharmacy
benefits to save on costs?
Keep your employees current on all aspects
of their pharmacy benefits, including:
- Making sure your plan includes utilization management techniques, such as step
therapy, which is the practice of beginning
drug therapy for a medical condition with
the most cost-effective and safest drug therapy and progressing to other more costly or
risky therapies only if necessary - Prior authorization and quantity limits,
which also encourage the use of generics
and reduce costs through safe, appropriate
use of pharmaceuticals - Encouraging the use of a formulary
guide, which is a list of Food and Drug
Administration (FDA) approved medications
that are covered by your insurance, as well as
online tools that can educate employees
about their pharmacy benefits and the availability of generic alternatives
What are some other cost-control methods?
You should consider using mail-order pharmacy fulfillment when appropriate. When a
mail-order plan is used, prescriptions for
maintenance drugs — such as those used for
high blood pressure, asthma, diabetes and
arthritis — can be sent directly to an employee’s home. In many cases, employees can
receive a three-month supply of their prescriptions for a two-month co-payment. Be
sure specialty medication management is
included in your plan. Specialty medications
are high-cost medications — usually injectables or biologics — used to treat complex
clinical conditions. These medications often
require close management by a physician or
a specialty pharmacy because of their potential side effects and frequent dosage adjustments. Typical strategies include specialty
pharmacy distribution and the application of
utilization management tools.
CHRONIS MANOLIS is vice president of pharmacy services for UPMC Health Plan. Reach him at (412) 454-7642 or
[email protected].