Employers turn to new tactics to rein in drug costs
- As drug prices continue to rise, employers are seeking new strategies to cope, as the Wall Street Journal details in a new article. Nationally, pharmacy costs are up 9.5% compared to last year, with an increase of 10% forecast for next year, according to consultancy Aon Hewitt.
- The biggest spend is on pricier specialty drugs. For example, at the University of Minnesota, these drugs make up only 1% of prescription volume, but account for 28% of costs.
- Faced with rising costs, employers are relying on a number of tactics to keep costs down. At the University of Minnesota, patients are given 'split fills' in which they receive only half of the drugs they need up front in case they have a bad reaction. If they respond well to the drugs, they are subsequently given the other half of their prescription.
The problem of rising drug prices is being shouldered in large measure by employers. Self-insured employers are especially challenged. In addition to split fills, companies are adopting other tactics to aggressively rein in costs, according to data compiled by the Wall Street Journal. These methods ranged from requiring prior authorization from payers (89% of employer health plans now do this), to using a step-therapy approach in which patients are started on lower-priced or generic medications before moving to costlier options (69% of companies are doing this), and creating tighter formularies.
These employer-level reactions to increasing drug prices are part of a broader backlash sweeping the industry.