Employers Must Employ Big Strategies to Beat Rising Drug Costs
The accelerating growth in drug costs has been felt among employers of all sizes. However, the rise creates greater challenges the fewer employees you have. The primary reason is that one or two employees who suddenly require high-cost specialty drugs can dramatically impact a plan’s annual cost profile.
576,000 Americans spent more than the median household income on prescription medications in 2014.**
There's one area where small and midsize organizations could benefit greatly by replicating actions of the Fortune 500: proactively combatting accelerating pharmacy costs. Prescription drugs are the top driver of healthcare cost increases today, and this is not going to change in the foreseeable future for any employer.
According to a recent report by the Pharmacy Benefit Management Institute, pharmacy costs rose 10.2%, driven by a rapid growth in specialty pharmaceuticals of 19.2%. These trends are expected to continue for some time.
Big Impact on All Firms, But Increasingly So on Small/Midsize Organizations
The accelerating rise in drug costs has been felt among plan sponsors of all sizes. However, the rise is creating greater challenges for plan sponsors with fewer than 2,000 employees. The primary reason is that one or two employees who suddenly require high-cost specialty drugs can dramatically impact a plan's annual cost profile.
Specialty Drugs: The leading drug-related costs are stemming from specialty drugs. New therapies introduced to treat cancer, hepatitis C, and autoimmune disorders come with very steep price tags. In plans with fewer members, the increase in use of these costly pharmaceutics by one or two members can severely strain the benefits plan.
Non-specialty Drugs: Manufacturers of non-specialty brand name drugs without generic alternatives are increasing their prices prior to losing their patent protection. At the same time, the pricing for generic drugs continues to climb.
Mercer Managed Pharmacy Consulting: Can evaluate and recommend the action steps required to better control your pharmacy drug spend, the results of which have delivered an ROI of as much as 20:1 for employers. ***
** Source: Express Scripts: Super Spending: U.S. Trends in High-Cost Medication Use, 2015.
***Results may vary.