Benefits & Comp 3 min

How HR Can Help Control Prescription Drug Costs For Employees

January 22, 2019
Updated April 22, 2020

Pharmacy is one of the most highly valued benefits in an employee benefits package and it’s also the most costly to companies. The rising cost of prescription drugs has become a major burden on employer-sponsored healthcare plans.

Developing an employee benefits plan with a cost-effective pharmacy solution is critical to your employees’ health and your organization’s bottom line. HR can play a critical role in controlling pharmacy costs while ensuring that employees get the critical drug treatments they need.

The Main Reason for Skyrocketing Drug Costs

The major challenge for employers is the management of the unpredictable and budget-breaking specialty drug costs. These drugs are more complex in their makeup and administration. Many of them are used to treat chronic conditions, which translate into high on-going costs.

While most of these “miracle” drugs are life-saving, the skyrocketing costs are putting companies in a difficult position.

For example, Zolgenzma (a gene therapy that treats spinal muscular atrophy) costs $2.125 million while a specialty drug that treats Hepatitis C costs $100,000 per course of treatment. Other drugs can cost as much as $50,000 per month and some of them only control the symptoms without delivering a cure.

If organizations want to mitigate prescription drug costs for employees, they should focus on options for relieving high-cost drug claims. HR can play an important role in taking control of your benefit plan’s pharmacy costs.

How HR Can Help Control Prescription Drug Costs

Here are some potential solutions to high therapy and pharmaceutical claims costs:

Traditional Pharmacy Benefit Management (PBM)

This is often the go-to, in-house option for most corporations because many PBMs work within the framework of your health plan. PBM and health plan payers can influence drug therapy costs with their in-house programs significantly.

PBM’s are often the most effective solutions that deliver the best-case scenario for both employers and employees. However, it may take some coordination and collaboration between HR, an employee benefits advisor and the pharmacy advisors to review and uncover cost-saving opportunities.

To optimize the ability to control drug costs, HR needs to coordinate the in-house specialty pharmacy program with the pharmaceutical manufacturers’ copay card or patient assistance programs, which offer discounted prices or free products to individuals who meet needs-based criteria. Successful access to these programs can reduce high-cost claims — sometimes by as much as 100%.

In addition, you should keep all the information on prescription, care delivery, patient history, and claim coordination within the established PBM solution. This will not only ensure that patients are getting the best care but also in the most cost-effective way possible.

The Innovator or Carve-Out

Another option to explore is an innovator, or carve-out, option. Third party innovators serve as intermediaries to drug manufacturers’ patient assistance programs. They do so by facilitating patient enrollment due to a PBM claim denial or employer coverage exclusion. Some innovators also coordinate importation and medical tourism options to help patients and organizations explore treatment options that are more affordable.

However, keep in mind that these solutions are inherently riskier. The processes are complicated, requiring HR to facilitate the administration of the plan and its multi-stepped implementation.
Innovators’ long-term viability hasn’t been proven. For example, specialty network discount guarantees and minimum rebate guarantees could be forfeited even if PBMs do agree to work with them. Also, many of these are startups that don’t have an extensive IT infrastructure so you need to carefully evaluate their data exchange protocols to ensure that patient privacy is protected.

Beware of Offshore Options

Even though there are workarounds to offer cheaper specialty drugs to employees through importation, many employers encounter issues such as supply management, quality and safety, delivery, product integrity, and overall clinical management issues.

Meanwhile, some employers are experimenting with medical tourism to carve out high-cost claimants from the U.S. specialty pharmacy. This is done by sending patients to physicians and hospital-facilitated pharmacies in countries with a much lower drug cost compared to the U.S.

Keep in mind that while state-administered programs for wholesale prescription drug importation are being passed and federal legislation has been proposed, this “offshore” option still violates the federal law.

Wrap Up

For employees, their benefits package is just as important as their salaries. They want to know that if something happens to them they can get the care they need. For employers, these benefits packages can carry significant costs due to rising prescription drug costs. Finding the balance between fiscal responsibility and providing competitive benefits for employees is a thin red line that HR professionals have to walk to support a thriving business and its employees.

Matt Shealy is the President of ChamberofCommerce.com. Chamber specializes in helping small businesses grow their business on the web while facilitating the connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.

Guest Blogger