We have all seen the ads for designer drugs, promising to fix serious illnesses and even issues that may not be life threatening but can impact our quality of life. Some may even help you lose weight. Those drugs sound great but they come at a price – and employers are feeling the pinch.
Prescription drugs account for 20 percent to 30 percent of an employer’s spend on health care benefits. That’s an enormous leap from 30 years ago, when prescriptions accounted for about five percent of what an employer spent on employee health benefits.
New drugs entering the market have the ability to repair/replace your body’s cell and genes in order to fight diseases in a way that no one would have thought of. These are truly amazing advancements in life sciences that can alter people’s lives. Unfortunately, these drugs are compounding the effect of rising prescription drug costs that employers face, requiring many to spend more on benefits and shift more costs to employees. This reactionary approach is already unsustainable.
Being proactive can help you cut costs. Here’s how to do it.
- Understand where your money goes and how the game is played. Invest the time to understand how the pharmaceutical manufacturers, wholesale distributers, pharmacy benefit managers, health insurers and drug store chains make their money. Here’s a hint, most are publicly traded companies. And publicly traded companies maximize profits.
- Know which drugs move the needle on your health expenses. There are more than 240,000 prescription drugs on the market but only 20 percent of them are high-end specialty drugs (most likely the ones advertised). Can you sidestep those designer drugs with less expensive solutions? Year over year, generic drugs have little to no inflation. It is the high-cost medications that increase in price, sometimes 20 percent or more from one year to the next.
- Educate yourself on what prescription drugs your members are using and where they’re getting them. Knowing which types of prescription drugs – generics, specialty, infusion, etc. – is half the battle of controlling your costs. Once you know, you can begin to look for ways to improve the efficiency of your plan and improve the health of your employees. You might find less expensive ways to deliver better results to all.
- Consider using a pharmacy benefit manager that is not connected to your health plan. Ask a lot of questions about the drugs being used, how much those drugs cost, and what alternatives you can consider. The pharmacy benefit manager is in the business of making money, so they will never volunteer information that will lower your costs at the expense of their profits.
In short, data and knowledge are key. The more you know, the greater the potential to save money. So, get involved in the process. It won’t be easy, but it will pay off in the long run.
Oswald can help you navigate the world of prescription drugs and employee health benefits. Together, we will determine your needs and create a tailored plan that’s right for you, your employees and your business.
For more information, visit our Employee Benefits page or contact me directly:
VP, Risk Leader, Group Benefits
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.