Most employers haven't implemented simple programs that can help reduce overall drug spend. Take 'Generic Substitution' for example, most plans have some sort of generic substitution clause allowing the pharmacist to use the lower cost interchangeable drug, but there is no real framework. In order to see real savings, a plan sponsor must enact a 'Mandatory Generic Substitution' model. This ensures that even if a physician indicates no substitution on the script, the plan will only reimburse the cost of the generic alternative. This option still allows plan members to have the brand drug if they choose, however they will pay the difference between the brand and generic costs.
While mandatory generic substitution helps, many employers have lost sight of how to reign in costs associated with single source drugs which account for 30.8% of all drug claims* and 38.8% of drug plan costs*. If plan sponsors want to see meaningful reductions in their drug spend they need to consider a few options:
- Prior Authorization for Specialty Drugs—Plan members with scripts for certain specialty drugs are required to have their physician complete a prior Authorization for seeking approval from the insurer before being eligible for reimbursement. Subject to medical criteria, spending on specialty drugs, that are typically high cost, is less frequent and under controlled conditions.
- Maximum Allowable Cost Pricing— is a program that, as described, sets a maximum amount a plan will pay for certain classes of drugs. Within a class, and where no difference in effectiveness has been clinically proven, the plan pays the price for the most cost effective drug, brand name or otherwise.
* statistic reports from TELUS Health 2014 Drug Trend Report