Traditional approaches have failed to contain rising drug costs, making pharmacy expense a major thorn in the side of employers. But now there’s a proven program that cracks the code of mysterious pharmacy benefit manager (PBM) profit margins and uses that information—through negotiation and competitive bidding—to enable employers to dramatically reduce their pharmacy benefit expenses.
It's no secret that health care costs are skyrocketing. But consider this stunning projection from a 2018 Pharmacy Benefit Management Institute (PBMI) report: In the next 15 years, the cost of providing health care is expected to exceed wages.1
For 2018, total budgeted health care costs per employee at U.S. businesses (including employer and employee premiums and employee out-of-pocket expenses) were expected to exceed $15,000, a 5.5% increase over 2017 and a five-year rise of about 27%, according to an Aon study.2
The latest research reveals spending on prescription drugs represents about 15% of overall health care spending, and that figure is only projected to grow.3 The PBMI says the annual rate of growth of year-over-year spending on drugs through 2021 is expected be in the 10% range, more than double the rate in 2016.4
"The end of the generic wave, new and increased use of existing specialty drugs, increased brand drug prices, and the incidence and prevalence of chronic disease among Americans all contribute" to the rising trend, PBMI reports.5
A particularly alarming statistic: Specialty medications—used by only 1% to 2% of Americans—will account for half of total U.S. drug spend by 2020.6
Employers have been battling rising pharmacy benefit costs for years, albeit with limited success. Here are some traditional tactics and why, ultimately, they don’t work very well:
Traditional approaches typically fail because they don’t attack the core problem of rising drug costs: the inability to know PBMs' true profit margin centers. That’s where the Pharmacy Program offered by McGriff, Seibels & Williams (MSW), the PBM brokerage and consulting arm of BB&T, is a game changer.
The MSW Pharmacy Program claims adjudication platform reprices 100% of the claims and counters any tactics a PBM may use to its underwriting advantage. Unfavorable drug classification or other contract terms are nullified, ensuring the most accurate pricing analysis in the marketplace. That information is then used in three ways to lower pharmacy costs for employers:
With the aid of these program tools, employers typically reduce their pharmacy benefit costs by between 12% and 27% in a process that’s invisible to employees and creates little or no disruption.
See below for examples of employers across various industries that achieved savings in this range.
(Actual data for anonymous employers)
|Industry||Employees/members||Winning PBM bidder||3-year estimated savings||% savings|
|Employer #1||Technology||2,500/4,300||Anthem||$3.85 mm||22.4%|
|Employer #2||Defense||32,500/54,000||CVS||$46.4 mm||18.8%|
|Employer #3||Manufacturing||1,400/2,400||National CooperativeRx||$2.55 mm||16.8%|
|Employer #5||Energy||877/2,043||Prime Therapeutics||$1.43 mm||14.6%|
Just about any employer that provides health care on a self-funded basis is a good candidate for the MSW Pharmacy Program. To further confirm the program might be a good fit for your company as a way to maximize pharmacy benefit cost savings, ask these questions:
If you answered "yes" to these questions, then you may want reach out to your Relationship Manager to learn more or to schedule a meeting with an MSW representative.
In fact, you might want to consider utilizing our pricing algorithm for a no-cost gauge of your current drug pricing. We'll compare your current pricing against prenegotiated pricing we've achieved with top PBMs using our pricing algorithm. Give us your last year's pharmacy claims data in an anonymous file, the current PBM contract if available, and other information about plan design and rebates you earned. We'll compare that against deals we’ve negotiated and provide a report assessing your current pricing. The process is painless, takes about 48 hours and doesn't cost anything.