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Consumer Pharmaceutical Marketing And Skyrocketing Employer Health Care Costs

The last time you watched TV, how many times did you see a commercial from a pharmaceutical company?

Perhaps you’ve seen an advertisement for Humira, Harvoni, Tecfidera or one of the many other specialty medications. You know what I’m talking about – the commercials that seem to air so often that you are able to memorize the script, along with the laundry list of side effects, like your favorite song on the radio. What consumers rarely think about is the impact that these advertised specialty medications can have on a company’s budget and employee benefit plan offerings. And believe me – the effects are huge.

The most recent client reports I reviewed show astonishing trends in pharmacy. One client had increased pharmacy trends 14.7% per member, and another increased 22.4% per member. To put this into a personal perspective for the impact these trends are having on employers, can you imagine your mortgage payment increasing 15 – 20% annually? Employers have been forced to combat these rising numbers by implementing plan design changes, cost management edits, quantity restrictions, and altering formulary and network strategies. These changes are subsequently pushed down to employees.

Let’s take a closer look at what is driving these drastic trends. As I mentioned previously, there are a number of specialty medications on the market these days. Specialty drugs are defined as those that treat chronic conditions and typically cost more than $5,000 annually. In many cases, less than 1% of total prescriptions filled are driving nearly 50% of total pharmacy costs. This is due to several pharmaceutical products that treat conditions including cancer, multiple sclerosis, hepatitis C, diabetes, and hemophilia, among many others. Many specialty drugs require special handling or delivery methods, whether injected, infused or taken orally.

To highlight a few specialty drugs, let’s first steer our direction toward those approaching the “patent cliff.” In terms of prescription medications, a patent cliff identifies the time period when a drug’s patent protection approaches the expiration date, allowing generic forms of these drugs to emerge in the marketplace. Glumetza, an anti-diabetic medication, is one of these drugs that recently fell off this patent cliff. Prior to this, the drug manufacturer increased prices exponentially to contest the decreased revenue that follows a patent expiration. In one recent case, the number of Glumetza prescriptions filled increased 5% over the prior year and total spend increased an incredible 305%! Now imagine a self-insured plan absorbing the impact of five people taking specialty medications with costs growing at similar rates. Although this is not the norm for all prescription drugs, trends for some of these specialty medications mirror those of Glumetza as they approach their patent cliff.

Because of this great need to bring pharmacy savings to the table for employers, Visibility Rx is a solution that OneDigital is now bringing to the table. By taking an analytical approach to audit pharmacy contracts, your benefits team, in partnership with OneDigital’s Visibility Rx solution, can identify and combat these trend drivers through improved prescription discounts, lower dispensing fees and increased average rebates. The time is now for employers to take the necessary steps to avoid catastrophic effects on their budgets.

by Emma Tuohy, OneDigital Market Analyst