How can using a tiered formulary benefit a company’s bottom line?
Tying higher member cost to higher cost of care often leads to a better-informed consumer. A tiered formulary tends to drive utilization toward lower-cost, just-as-effective medications. Not only do plan sponsors/employers have lower costs as a result, but members spend less, as well. And lower out-of-pocket costs can lead to regular refills and better compliance, resulting in a healthier work force.
For example, with conditions such as high blood pressure or cholesterol, people feel OK and are not as inclined to get a prescription filled, especially if it is $40 a month. But it’s obvious that if they get it filled every month, year after year, that person is going to be healthier, leading to a healthier work force and better productivity. However, if that person is paying $10 for a generic as opposed to $40 for a brand name, it’s easier on the wallet and he or she is more inclined to get that prescription filled every month.
Do tiered formularies work for every company?
There’s no reason a company shouldn’t utilize a tiered formulary, but communication is important to making it work. Showing treatment alternatives for a particular condition can raise employee awareness of those alternatives. Employers have a lot of latitude in establishing member cost share across the tiers. And a tiered formulary allows for more detailed utilization reports that employers can use for trending, forecasting and fine-tuning benefit structure.
Can a company create its own managed pharmacy plan?
Few companies have the expertise to develop their own managed pharmacy plan. Add to that the fact that the pharmacy benefit is very dynamic, with new drugs available every week, patent expirations and what’s around the corner, and employers should look for expertise on these topics with their insurer or pharmacy benefit administrator.
Steven Marciniak is the director of pharmacy for Priority Health. Reach him at (248) 324-2820 or [email protected].
