Taking Control of Your Prescription Drug Program

By Ward Humphreys, Vice President Evergreen Re

The CMS estimates that prescription drug expenses will rise from 9.4% of personal healthcare spending to 16% by 2010. With an aging population, a very aggressive pharmaceutical industry, and Pharmacy Benefit Managers (PBMs) that typically derive 70% of their revenue from drug manufacturers, pharmacy costs are one of the most challenging healthcare expenses to control.

Managed pharmacy expense programs are designed to provide health plans and employers with tools and actionable information to manage to the lowest possible retail Rx cost while maintaining quality standards.

Far from a "magic pill" or single tactic for controlling the escalating costs of prescription drugs and drug therapies, there are innovative programs, encompassing multi-faceted strategies, available to help reduce drug trend. Determining which program is best suited to your needs depends on your current pharmacy program, the size of the covered population, and your level of risk tolerance. These dynamic programs include:

• Fully-insured carve-out programs that transfer all pharmacy risk
  
  
• Sample or full audit programs that target accuracy of payment versus plan design, claim eligibility, manufacturer revenue, prior authorizations, claim reversals, etc.
  
  
• Automated communication with contracted Physicians relative to their prescribing behavior versus the plan formulary and their peers
  
  
• Actuarial driven analytics to model the impact of formulary and plan design changes on net costs (inclusive of manufacturer revenue)
  
  
• Highly managed PBM program that internally audits all processes on a real time basis.

With fewer than 5% of pharmacy claims currently audited, payors, health plans, insurers and employers need a system that includes consistent quality assurance and payment auditing. Having an independent watchdog represent your interests is a critical survival tactic. Pharmacy audit and quality assurance programs can identify any disconnects with your current program and indicate the means to fix them. They can also provide the next generation of tools to impact prescribing behavior through regular communication, predictive applications to identify members for early case management intervention, and return a large measure of control to you in managing one of the fastest trending medical expense categories.