How Pharmacy Benefits May Evolve

Pharmacy benefit programs are evolving from simply using cost shifting to providing more complex offerings and adopting new management tools, according to a report by the Pharmacy Benefit Management Institute. The report reveals the following trends:

More Cost-Sharing Among Tiers – The use of four-tier, copay designs continues to grow, fueled by the addition of a separate tier for specialty drugs. Innovative cost-share structures with five or more tiers are emerging, but it is unclear whether they will become mainstream. Tier categories include preferred and non-preferred generics as well as a split by clinically and cost-effective therapies. In addition, the copay differential continues to widen. The average difference between generic and preferred brand copays is $19 compared to $7 about 10 years ago. The average difference between preferred and non-preferred brand copays is $23, compared to $13 a decade ago. As benefit designs move towards more tiers, the use of coinsurance designs are declining. This may be due to concerns over the members’ out-of-pocket costs.

Alternative Incentives for Behavioral Change – Several studies have challenged the assumption that copay waivers increase medication adherence or help to contain overall health care costs. However, when alternative incentives are provided, most employers still focus the incentives on participation.

Management of Purchasing Channels– Benefit programs often vary the cost share by the type of pharmacy in order to encourage members to use certain channels. Copays are less for a 90-day supply filled once in a mail pharmacy than for a 30-day supply filled three times at a retail pharmacy. A new trend is to provide incentives to use certain retail pharmacies. This allows plan sponsors to keep the broad network while managing costs since the preferred retailers typically offer better pricing.

Limited Networks– Limited pharmacy networks were not talked of much before 2012. But they have become more of a consideration after the contract dispute between Walgreens and Express Scripts. Providing the broadest access to providers may no longer trump the more favorable pricing of a narrowed network.

Trend Management– Drug benefit plans often exclude medications deemed nonessential. Even when medications are covered, employers use coverage limitations to promote appropriate use, such as prior authorization, quantity limits, refill-too-soon limits, and step therapy. The vast majority of plan sponsors already use prior authorization, refill-too-soon, and quantity limits. Sixty-five percent of plans use step therapy. The one exception is pill splitting, which has never experienced widespread adoption. PBMs generally do not promote these programs due to safety concerns.

Specialty Drugs– Traditional pharmacy benefit management strategies are now used widely for specialty drugs. The strategies include the use of pharmacy networks, formulary management, prior authorization, and step therapy programs. Quantity limits are also common, in which specialty products are limited to a 30-day supply. Another strategy is to limit the first fill to one or two weeks to ensure the patient tolerates the medication.

Site-of-Care and White Bagging– White bagging is a fairly new strategy, which has gained ground recently. It’s the practice of having medications or supplies delivered directly to the practice setting (outpatient infusion center, physician office, hospital) for use by a specific patient. The idea is to allow the payer to purchase the drugs for less from a specialty pharmacy. Also coverage of drugs can be shifted from the medical benefit to the pharmacy benefit. There are potential drawbacks, such as patient safety, wasted medication, and operational headaches for the provider. Once a drug is received, providers have the burden of storing it separately from their regular inventory. If there is a last-minute change to a treatment plan, a new or additional drug may need to be ordered, resulting in delays in care.

Copay Assistance– Specialty drug manufacturers frequently offer copay assistance programs that cover the member’s share of the cost. Many programs will cover the member’s cost share up to $500 a month, and very few have a maximum income requirement. This may be an effective strategy to maintain patient adherence. However, many employers say the programs only add more complexity.

Over the past few years, there has been a significant increase in the number of copay programs for non-specialty medications, mainly because many brand drugs have come off patent. Plan sponsors say these programs undermine copay tier structures, which provide incentives for patients to use lower-cost alternatives, such as generics. Some advocate the use of coupons to make drugs more affordable, thereby increasing adherence. The authors say that plan sponsors would be prudent to develop a strategy for drug coupons on the traditional pharmacy side. For more information, visithttp://www.theihcc.com/en/communities/pharmacy_benefit_management/8-ways-pharmacy-benefit-design-may-evolve-in-2013_hfpq9mpi.html

Last Updated 09/16/2020

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