Most employers are using third-party pharmacy benefit managers (PBMs) to process and pay prescription drug claims, according to a recent survey. The findings suggest that employers are opting for PBMs because they offer better drug prices.

According to Buck Consultants report, Prescription Drug Benefit Survey, over half (57 percent) of employers are now using PBMs, which is higher than in 2009 (47 percent.)

Pricing is the top reason employers opt for PBMs, with 67 percent of respondents citing pricing as “highly important.” Pricing is followed by customer service, rated “highly important” among 65 percent of respondents.

Employers can be aggressive when negotiating with PBMs according to Michael Jacobs, principal and national clinical practice leader at Buck Consultants.

“Strong competition among PBMs for employer business has created a buyer‘s market for PBM pricing, and we expect this competition will intensify as health care reform is implemented,” said Jacobs.

Prescription Drug Coverage
Nearly all (96 percent) respondents provide active employees with prescription drug coverage. Fifty percent of respondents offer retirees prescription drug plans, and 75 percent of these employers intend to continue this benefit to Medicare-eligible retirees over the next three years.

The top reasons given for providing this coverage are:

• Positive impact on medical claims
• Business competitiveness
• Attracting and retaining key employees
• Belief that it‘s the right thing to do

Benefits and Cost Management Strategies
Pharmacy benefit costs continue to increase and, on average, currently represent more than 15 percent of employers‘ total health care costs. According to the survey, the most common prescription drug management initiatives in use today are:

• Formularies (90%),
• Utilization management programs (78%)
• Large cost-sharing differentials between cost-sharing tiers (77%)

Furthermore, EAPs (90%), disease management programs (84%), and wellness programs (80%) are also considered by employers to be tools that help manage prescription drug benefit costs and effectiveness.

Specialty Drugs
Specialty medications are typically used by only one percent or less of covered employees, but represent 15 percent or more of pharmacy plan costs. The majority of employers (58%) use the same participant cost-sharing for specialty drugs as used for other prescription drugs.

“Specialty drugs will be the major driver of pharmacy cost increases over the next three to five years,” said Jacobs.

“We anticipate specialty drugs will represent upwards of 30 percent of drug costs within the next three or four years. Considering the double-digit annual cost increases we‘ve seen recently, it‘s clear that more needs to be done to manage the costs of these medications moving forward.”

More than 220 organizations participated in the survey, representing a broad range of industries and more than 2.5 million full-time employees.

Source:

Buck Consultants