Plan sponsors’ lack understanding of plan-spend issues, such as cost drivers, inefficiencies and forecasting. Thankfully, a number of tools are available to help plan sponsors comprehend and contain costs.
Some industry experts suggest that plan sponsors have always struggled to understand plan spend—and nothing ever changes. Others recognize that all of the pieces necessary for success exist. The tools simply need to be outlined and connected.
Read more
Flexible adjudication technology: This is the most underrated and underreported success story in drug plan management in recent years. Today, there is widespread capability across the country to administer, manage and execute more sophisticated plan designs (e.g., multiple tiers and/or customized formularies) using top-notch technology.
Access to plan-specific transactional-level claims data: Most plan sponsors and advisors think the only data available is contained within aggregate-level drug reports such as top 50 or top 100 drugs by cost, which often provide limited insight. Many plan sponsors are unaware of the more detailed, plan-specific data available from plan administrators (i.e., transactional-level data), from which they can extract far greater understanding.
Rise of the pharmacy partner: Up until 2010,very few pharmacy groups—Managed Health Care Services Inc. (MHCSI) is an exception—focused on working with employers to help bring awareness to plan costs and look at solutions to manage plans.
Thanks to outside forces (i.e., drug pricing reforms) that have made the pharmacy world wake up to the reality that there is more to the business than public drug programs, the industry has seen the rise of the pharmacy partner.
Leaders such as Costco Pharmacy, MHCSI, Express Scripts Canada and ArcisRx/Alliance Pharmacy Group and, slowly, some of the established brick-and-mortar chains are bringing new services and offerings to employers that add value and help control plan costs.
For example, Costco has brought clinic offerings to employer partners for years. More recently, Loblaw Companies Ltd. has begun to position dietary services and diabetes management at the forefront of its employer offerings.
At one time, the drug plan market segment was broken: distribution was entirely controlled by retail pharmacies that had economic interests that were not aligned with plan sponsors. New preferred provider network models are changing that, and the timing is critical because decreasing generic drug prices—and hence the reduced profitability of dispensing generic drugs for most pharmacies—means that a new group of misaligned economic models is evolving.
Competition in plan administration: A carrier can’t differentiate with life insurance and with AD&D, and it is difficult to differentiate with dental. What the insurance, third-party administrator (TPA) and PBM industries have realized is that you can differentiate dramatically the drug plan. As a result, there are more resources devoted to differentiation within the space.
In the past two years, there seems to have been more novel carrier and PBM- and TPA-based drug plan management programs rolled out than in the decade before that combined. Examples include customizable tiered formulary designs, evidence-based formularies, and specialty drug management.
Changing focus of manufacturers: Historically, brand name pharmaceutical companies have been concerned with marketing their products to physicians and ensuring listings on provincial formularies. Meanwhile, generic pharmaceutical companies have focused on building relationships with retail pharmacies in order to secure shelf space as the primary supplier of a commoditized product.
The landscape is changing to the benefit of plan sponsors. Brand name pharmaceutical companies are more focused on showing real-world value to plan sponsors to avoid barriers to more expensive products. Established leaders in the area of building relationships with plan sponsors (think Sanofi and Abbott) are starting to see some of their peer companies follow suit. Similarly, generic pharmaceutical companies such as Apotex and Teva are becoming aware of low generic penetration rates in Canada within private plans and are looking to work with plan sponsors to enhance their market share.
Greater resources: A decade ago, the number of pharmacists who worked within the group insurance industry for carriers or advisory firms could be counted on one hand. There were pharmacists managing programs at PBMs, but there were very few experts with deep drug knowledge that intersected directly with plan sponsors.
Today, there has been a wave of pharmacist hires in the group insurance and benefits consulting industries. There are far more resources who actually understand medications, and understand the impact of certain decisions on access to medications and plan member health.