1. Pharmacy – Fully Insured versus Self Funding
HR CE Information
HRCI:
SHRM: 19-5WG27
Pharmacy – Fully Insured versus Self Funding
Tulsa Employee Benefits Group
March 21, 2019

2. 1
Why Pharmacy Matters

3. Why Is Pharmacy So Important?
Pharmacy represents about 25–35% of healthcare spending now
Most frequently utilized benefit
Pharmacy will be approximately 50% of healthcare spending by 2024
Pharmacy is the fastest growing portion of healthcare
Top Concerns
High inflation rates
New high cost specialty drugs
Inadequate utilization management

4. Extent of Compliance and Non-Adherence
For Every 100 Prescriptions Written * * #
The Centers for Disease Control estimates that almost half of everyone taking prescription drugs does so incorrectly.
It leads to medical complications, decreased wellness, and expensive medical bills. 
Patients who are non-compliant with their medication use are 17 percent more likely to wind up in the hospital.
Non-adherence is the reason behind 30 to 50 percent of all treatment failures. *
*Adherence
#Compliance
National Association of Chain Drug Stores Pharmacies: Improving Health, Reducing Costs. July Based on IMS Health data.

5. Intentional and Unintentional Reasons for Non-adherence
Self Reported Reasons for Nonadherence
Medication Adherence in America: A National Report ncpanet.org/pdf/reportcard/AdherenceReportCard_Abridged.pdf

6. Prescription Drug Flows

7. 2
Pharmacy Carve Out

8. Key Questions
Do you have visibility into your pharmacy arrangement? Do you have confidence your PBM contract is competitive? What is your pharmacy strategy; is it a problem or a solution? Can you speak to all pharmacy components as part of the overall healthcare discussion? How do you demonstrate value or ROI on pharmacy? How are you staying ahead of the pharmacy trend curve?

9. Employer Options Carve In
Health plan administering the medical plan also provides the PBM contract
Health carrier holds the PBM contract
Lack of transparency
Relationship with insurer; Rx managed “behind the scenes”
Focus on medical
One-Size-Fits-All
Carve Out
Plan sponsor contracts separately with health plan & PBM administrators
Employer holds the PBM contract
Transparent pricing
Relationship directly with PBM
Focus on pharmacy
Customized plan

10. Employer Challenges with Pharmacy Benefits
Pharmacy benefits are often neglected though they represent 25–35% of employer’s overall healthcare cost.
lack of visibility
Service Level
Contract Complexity
Employers don’t receive pharmacy contract during renewal process
Contracts are often in place for years without evaluation or a market check
Medical provider acting as pharmacy expert
Standard pharmacy contracts without guaranteed discounts and service levels
Pricing and terms dictated by administrator without explaining implications
There is significant opportunity to negotiate contractual terms without reducing employee benefits

11. Argument Against Carving Out
Integration

12. Carve Out Advantages
Greater transparency on manufacturer rebates and drug purchase discounts
Guaranteed discounts at the individual client level
Fully auditable contract
Flexibility in clinical initiatives
Customizable pharmacy arrangement, aligned with employer’s culture and goals
On average, clients save more than 25% in contract savings with an additional 5–10% with an enhanced clinical programs.

13. Review Contract & Drug Utilization Audit Financial Audit
Clinical Review & Audit
Contract Comparison Our line-by-line comparison shows how the group’s contract terms compare to other arrangements
Detailed Pharmacy Claims Reprice We identify savings opportunities based on current pricing and rebates available in the market
Low Clinical Value Medications See how high-cost, low value drugs are impacting the current plan
Utilization Management We illustrate opportunities to improve efficiency and oversight of these strategies
Claims Distribution Overview Find out how the group’s drug mix compares to industry averages
Market Check See how the group’s contract and effective rates compare to some of the top contracts in the market
High Dollar Claim Review Find out which high-cost brand medications are driving trend
Disruption Report See how the group’s members and formulary would be impacted based on our findings and recommendations
Manufacturer Assistance Programs We identify available funds to lower specialty drug costs for the plan and members

14. Estimated Range Savings %
Additional Savings Opportunity from Optional Programs and Limited Network
Estimated Range Savings %
Limited Retail Network Limited Networks come in a range of options from slightly limited to narrow network options.
2.0% to 3.0%
Value Formulary Narrow, Limited, or closed formulary that focuses on the most clinically appropriate and cost-effective brands and generics. Covers many disease states and offers aggressive savings for clients.
1.5% to 11.5%
Mandatory Mail Mandatory Mail requires members to fill their long-term (maintenance) prescriptions by purchasing them exclusively through the PBM mail order channel.
2.0% to 5.0%
Enhanced Maintenance Programs Enhanced Maintenance programs allow members to access 90 days' supply of their long-term (maintenance) prescriptions exclusively through the PBM designated mail channel and/or retail network. Members are required to pay the appropriate mail copay, and the group receives the benefit of the deeper mail discounts.
1.5% to 3.5%
Generic Step Therapy Generic Step Therapy program requires a specific set of criteria be met before a specific brand drug is covered, options include: generic first or use of a brand on high performance formulary list.
Specialty Trend Programs
Specialty Program evaluating the appropriateness of drug therapy of Specialty medications according to evidence based guidelines - before initiation of therapy as well as on an on-going basis.
3.0% to 6.5%
Specialty Step Therapy program designed for specific specialty drugs.
1.5% to 3.0%
Exclusive Specialty Network allows groups to increase savings and management through an exclusive specialty pharmacy network. Savings were modeled based on historical claims and based on gross spend.
1.5% to 4.0%
POTENTIAL SAVINGS
10% to 20+%
After apples to apples – look at additional program level savings
Specialty programs – Limited retail network – Generic Step Therapy prior to Brand use

15. HR CE Information
HRCI:
SHRM: 19-5WG27