An innovative solution to rising drug costs

The Problem

The rising cost of health care in the United States is consistently talked about by both consumers and politicians alike, with retail prescription drug costs accounting for approximately $333.4 billion (10% of the overall healthcare spend), 14% of which is paid by consumers on out-of-pocket costs. This figure is expected to grow in the coming years. 

The United States spends 30-190% more on prescription drugs than other developed countries and can pay up to 174% more for the same prescription drug. 

Many Americans ask why.

The simple answer is that Governments in other developed countries (such as Canada, United Kingdom, New Zealand, Australia, and the European Union) negotiate drug pricing directly with the manufacturers, imposing price controls on the drug companies. In the U.S., market exclusivity, protection by monopoly rights awarded upon FDA approval, and patent protection allow for a pricing model of "what the market will bear."

The Medicare Modernization Act of 2003 prohibits the U.S. government from getting involved in negotiations between manufacturers and insurance companies providing coverage. At the end of the exclusivity period, the availability of generic drugs should provide pricing relief, but the patent holder employs numerous business and legal tactics to delay the introduction of generics to the market. Techniques such as 'evergreening' (where small changes are made to formulations to extend patents) and 'pay to delay' (where the brand manufacturer pays the generic manufacturer not to go into competition) are commonplace. 

A study on drug pricing conducted by the West Health Institute/NORC at the University of Chicago in August 2018 found that two-thirds of Americans are concerned about high drug prices, 77% regard the cost of medication as unreasonable, 88% said that medication costs should be a priority issue for congressional candidates in 2018, and more than 80% support proposals for allowing Medicare to directly negotiate pricing with pharmaceutical firms in a bid to lower pricing. 

Rising drug costs are primarily attributed to the introduction of new brands and rising prices on existing brands still under patent. Many of the new brands being introduced are high-priced specialty medications.

A study published in May 2019 in the journal JAMA Network Open7 found substantial increases in insurer and out-of-pocket costs for top-selling name brand prescription drugs. The study analyzed pricing for 49 brand name drugs that each had more than 100,000 total claims in the BCBS network from 2012-2017. The cost of 36 of those drugs increased by more than 50% over the 6-year study period, and all but one of the drugs included had regular annual or bi-annual increases. Some of the largest increases were seen with insulin drugs such as Novalog, Humalog, and Lantus, as well as rheumatology drugs Humira and Enbrel, the costs of which more than doubled.  

The plight of many insulin-dependent diabetics who have been rationing doses, going without, or driving across the border to Canada to obtain insulin at a fraction of the cost has been highlighted in the media in recent times. With the increasing trend towards self-insurance by plan sponsors, rising drug costs are of particular concern. A 2017 cost analysis by the Kaiser Foundation found that while drug costs account for 10% of the overall healthcare spend in the United States, they account for 21% of employer insurance benefits.

On average brand name maintenance medications account for 10% of prescription claims by volume, but up to 70% of the total costs.

Many cost containment strategies are put in place to attempt to minimize the rising costs to the employer. Strategies such as tiered formularies, prior authorization, step therapy, formulary restrictions, mandatory generics, and mail order are now commonplace in prescription plan design. While these approaches are geared at lowering costs to the employer, the associated costs to the employee can often go overlooked. 

Increasing patient cost-sharing has been associated with decreased medication adherence and poorer health outcomes, and there are varying estimates on the number of Americans who do not fill a prescription because of cost. A survey conducted by West Health Institute/NORC at the University of Chicago found that of the 59% of Americans who regularly take medications, 34% have taken less than their prescribed dose or not filled a prescription because of cost. This is backed up by a 2015 survey of CVS Caremark pharmacists which found that 62% of the pharmacists surveyed believe that the high cost of prescriptions is the primary reason for nonadherence.

In 2012, the Annals of Internal Medicine published a review that estimated medication nonadherence could cost the healthcare system $100-289 billion/year, causing 10% of hospitalizations and 125,000 deaths. 

A 2010 retrospective study of middle-aged and elderly subjects with cardiovascular disease found those who reported cutting back on medication use because of cost were more likely to report being hospitalized over a subsequent 2-year period after they had reported medication underuse. 

Similarly, another Harvard School of Public Health study looking at adherence to diabetes medications found that improved adherence was associated with "13 percent lower odds of subsequent hospitalizations or emergency department visits. Similarly, losing adherence was associated with 15 percent higher odds of these outcomes." 

The study's authors projected the following: "Improved adherence to diabetes medication could avert 699,000 emergency department visits and 341,000 hospitalizations annually, for a saving of $4.7 billion. Eliminating the loss of adherence (which occurred in one out of every four patients in our sample) would lead to another $3.6 billion in savings, for a combined potential savings of $8.3 billion." 

It is difficult to place exact figures on the cost of medication nonadherence on any given employee population, but the two studies mentioned above suggest that the economic implications are significant. What is not said is that the implications also extend beyond additional health costs incurred as there are ramifications from the number of days an employee is off work and the impact that has on the business.

How can RxManage help?

RxManage is an International Pharmacy Program providing prescription cost-containment solutions to self-funded employers. The program operates as a voluntary mail order pharmacy benefit for brand name maintenance medications, sitting alongside other pharmacy benefits in the plan. Zero $ co-pay encourages participation, providing a win-win solution with employees saving on co-pays and the employer saving up to 70% on the cost of medications.  

The RxManage program provides a solution to the rising cost of pharmaceuticals to both the employer and the employee. By removing any implementation, administration, or monthly fees, the program can be introduced at no cost/no risk to the employer.

Pricing is transparent and available online to the employer by way of a secure portal should they wish to reference it.

The employer only pays when an employee orders a prescription medication, the cost of which will be up to 70% lower than if the employee had obtained it domestically. For the employee, the program is offered at a zero co-pay (on traditional PPO plans) to incentivize participation.

By removing any cost barriers associated with obtaining medication, the program encourages adherence to the prescribed medication regime, improving health outcomes. Adherence is further improved by the program offering auto-refills whereby the employee is contacted when they are due for their next fill (calculated automatically using an algorithm based on the number of days' supply and shipping times). Barring any changes to their address or medication, the medication is then refilled for them. The employee is given 60 days' notice of needing a new prescription, giving them adequate time to obtain one from their physician and ensuring an uninterrupted supply of medication.

The RxManage program has a formulary of 250+ brand name maintenance medications.

The formulary is a living document maintained by a pharmacist-led data analysis team. Medications are added and deleted according to set criteria and added when they become available from the same manufacturer or license holder internationally as the U.S. brand and can be sourced at a lower price than available in the United States. Medications are removed when a generic alternative becomes available on the U.S. market at a price lower than the international brand is available for on the program. Ensuring that the employer is paying the lowest cost possible for any given medication is a core value of the program. 

All medications sourced from Canada, Australia, the United Kingdom, and New Zealand are brand name medications in original sealed manufacturer's packaging.  

The following medications are NOT offered on the formulary:

• Medications for acute conditions (antibiotics, some anti-inflammatories)  
• Controlled or scheduled medications  
• Medications with narrow therapeutic indices, requiring ongoing monitoring/dose adjustments, or medications subject to the FDA REMS or ETASU programs, where additional manufacturer safety programs are in place. 

Eligibility is checked prior to every order so the employer can be assured that medication is never filled for employees no longer eligible to receive prescription benefits. 

Extensive program support is available to explain and promote the program to the employees. The higher the participation rates, the better the outcomes for all employers and employees involved.

Highly detailed savings reports are available to employers and/or plan sponsors to keep them up to date with the savings they are realizing from using the program. Free analysis of prescription claims data, whether historic or current, is available to demonstrate the potential savings that could be achieved by the group, either before they start using the program or at regular intervals thereafter.