Unbundling Prescription Drug Plans Can Help Control Employer Health Plan Expenses
In the complex landscape of employer-sponsored health plans, one area often overlooked but ripe for scrutiny is prescription drug coverage. As health care costs continue to soar, smart businesses are reevaluating their approach to this essential component of employee benefits.
By unearthing the hidden intricacies of prescription drug expenses and unshackling them from bundled traditional insurance packages, companies can exercise greater control over costs.
Rising Prescription Drug Costs: A Looming Crisis
- Prescription drug costs have been rising at an alarming rate, outpacing inflation consistently for the past decade, according to Kaiser Family Foundation.
- The percentage employers spent on pharmacy increased to 24% in 2022, up from 21% the previous year, noted the Business Group on Health.
- Specialty drugs, crucial for complex conditions, experienced a staggering 43% increase in costs from 2016 to 2021, according to the U.S. Department of Health and Human Services.
Much of the problem stems from working with Pharmacy Benefit Managers (PBM) to bundle prescription drugs with packages offered by large insurance carriers, which leads to multiple challenges.
- Lack of Transparency: Bundled packages obscure the actual costs of prescription drugs, making it difficult for employers to identify expenses.
- Limited Customization: Employers are limited in their ability to tailor their drug formularies according to the specific needs of their employee demographic.
- Reduced Bargaining Power: Employers lose the ability to negotiate directly with PBMs, missing out on potential cost-saving opportunities.
- Rebates are often kept by the insurance carrier
The Power of Unbundling
There are multiple advantages to separating prescription drugs from your health plan.
- Transparency and Customization: Unbundling prescription drug coverage provides employers with a transparent view of costs. This insight enables them to customize formularies, encouraging the use of more cost-effective medications without compromising employee health.
- Cost Stability: By directly contracting with PBMs, employers can negotiate drug prices, ensuring predictable and stable costs over the long term. This stability facilitates better budgeting and financial planning.
- Reduce Specialty Spend: Employers can defer the cost of specialty programs with better communication and by promoting payer assistant programs in the workforce.
- Leveraging Technology: Unbundling enables employers to leverage advanced data analytics and technology solutions, which can identify cost trends and patterns. This data-driven approach empowers employers to make informed decisions, optimizing their prescription drug coverage for both cost and efficacy.
Employers must break free from the limitations of bundled packages. By understanding the specific needs of their workforce, negotiating directly with PBMs and leveraging innovative technologies, businesses can curtail rising costs, promote plan cost stability and ensure a healthier, more sustainable future for both their employees and their bottom line.
The experts at Oswald can perform an independent evaluation of prescription drug costs.