2020 was a very good year for pharmaceutical manufacturers. According to an independent analysis by the Institute for Clinical and Economic Review (ICER), Americans spent an additional $1.67 billion on seven drugs whose price increases were not supported by new or improved clinical evidence. And this was after pharmaceutical rebates and other concessions!
How is this egregious behavior possible? Manufacturers continue raising prices, sometimes without clinical justification, and push higher costs to PBMs. And PBMs continue including super-expensive drugs on employer health plan formularies, pushing higher costs along to employers and plan members.
What’s an employer to do? Here are two strategies that can help control spiraling costs while ensuring a safe, clinically-effective formulary.
Build a Better Formulary
The best approach is to create a non-PBM pharmacy plan whose formulary is based on comparative effectiveness research. The only drugs that make it onto the formulary are those whose medical efficacy has been fully researched and documented.
A high-cost drug can be included, if warranted, along with lower priced alternatives that may be equally effective. Since not every drug is right for everyone, clinical management of the formulary ensures members don’t pay more than is medically necessary.
Implement Pricing Controls
Employers can achieve the lowest net cost for the plan by using non-PBM pricing controls and technology. The formula for success looks like this:
Clinical Integrity + Optimized Pricing Technology =
Lowest Net Cost & Maximum Value
In summary, PBMs can’t deliver optimal pharmacy plan performance because their revenue model is at odds with medical evidence and ethical procurement and administration practices. Employers and covered members deserve better value than PBMs can provide and the confidence that their formulary delivers the best clinical outcomes at the lowest net cost.