High prescription drug costs impact both employers and employees. With the inflation rate continuing to rise on goods and services such as food, housing, and utilities, out-of-control pharmacy costs are creating an additional dent in employees’ budgets. This is concerning, considering approximately one out of four adults already find it difficult to afford prescription medications.
Reducing healthcare costs—especially prescription costs—is essential to relieve the financial burden on employers and employees alike. But what are the best ways to reduce pharmacy spend? In this post, we dig into four of the top strategies to reduce pharmacy costs:
How to Reduce Pharmacy Spend
Approximately 20 percent of an employer’s medical spend is devoted to pharmacy costs. Around 10-30% of that is avoidable waste. Additionally, approximately 60 percent of people between 18 and 64 are prescribed at least one medication. Around 29 percent of those people cannot take the medication as prescribed because of cost. It’s important to ensure employees have what they need to get and stay healthy while reducing prescription costs.
Identify Wasteful Medications
Wasteful medications are drugs that have little to no clinical value. These include:
- Combination drugs that increase costs by combining two ingredients into one drug when the individual active ingredients are cheaper.
- Prescription drugs when there is an over-the-counter option available.
- Brand-name, high-cost generic drugs when a low-cost generic is available.
- A “new” drug created by tweaking an ingredient in an existing drug, adding no additional clinical value.
Plan sponsors often use drug formularies with many wasteful drugs because they think members will be disappointed if a prescribed drug isn’t included in the formulary. However, doctors often prescribe these drugs because they aren’t aware of the high cost.
By identifying wasteful drugs and sticking to a formulary that focuses on effective, affordable medications, you can reduce pharmacy spend and benefit both employees and employers.
Measure the Savings from Wasteful Medications
Once wasteful medications have been identified, calculate the potential savings to determine the impact on pharmacy spend.
In a study conducted by Pacific Business Group on Health and Integrity Pharmaceutical Advisors about cutting out formulary waste, approximately 868 medications from 71 medication groups were determined to be wasteful. The difference in cost between high- and low-cost medications ranged from 25–99.9 percent per medication, for a total annual savings of $63.3 million.
Emphasize Preventative Care
Employees with chronic conditions account for a higher percentage of healthcare spending. Approximately 10 percent of the U.S. population takes a specialty medication, which accounts for around 80 percent of total pharmacy spend.
Emphasizing preventative care and chronic disease management can reduce pharmacy spend. For example, focusing on the early detection of cancer and other chronic diseases can help lower treatment costs.
Even employees considered at-risk for a condition but otherwise healthy can benefit from a focus on prevention and early detection. For employees who are already taking medication for a condition, an early prevention focus can reduce comorbidities that lead to high pharmacy spend.
Implement a Pharmacy Savings Program
One of the best ways to reduce pharmacy spend is to implement a pharmacy savings program focused on drastically reducing prescription costs. For example, Bluebook Rx examines claims data to determine where overpriced medications are being used, then sends a personalized savings report to members with recommendations for lower-cost clinically comparable options.
Members can also receive personal guidance from a licensed pharmacy team. The program can help members potentially save thousands of dollars, and employers millions, by identifying waste and overspending.
Ready to Reduce Your Pharmacy Spend?
Adding Bluebook Rx to your benefit offering can reduce overall pharmacy spend while improving employees’ well-being. Contact us today to learn more.