Inside The Governor’s Task Force Meeting to Reduce Drug Prices
“Wisconsinites should be able to afford the prescription medicine they need to lead a healthy lifestyle.” That was the sentiment delivered by Wisconsin Governor, Tony Evers, last August when he issued an executive order creating a drug task force to reduce prescription drug prices.
Prescriptions amount to 20% of the overall health spend in the US for employers, according to Milliman, with Wisconsin residents accounting for $1.3 billion in 2019 alone. Despite advancements in pharmaceutical science, supply chain management, and drug manufacturing processes, prices continue to soar.
Because The Alliance is a proud leader of cost transparency and disruption in the way employers purchase health care, we – and several of our members – were invited to speak at these meetings alongside National Cooperative Rx, drug manufacturers, insurers, pharmacy benefit managers, and health care providers throughout the state. Here’s what was talked about at the latest February 19 meeting:
Employers Are Invested
55% of all Americans obtain health coverage through their employer (2018), and of those, 61% are in self-funded plans, so there’s big money at stake in prescription drug prices. But this trend is about more than just money – there are lives at stake – and it’s causing unintended consequences like poor patient adherence in taking important medications. In fact, in 2018, one in four people reported having to skip doses, cut pills in half, or in some cases, go without a drug altogether.
Tena Hoag, CFO of Advanced Laser, expressed the same concerns: “Let’s remember today, that with all the numbers flying around, that they represent real working class families that are trying to make budget decisions like, ‘Do I pay for my medication or food for my kids?’”
She said her organization has made many attempts to reduce their overall health care costs to pay for their employee’s prescription medications, “We kept requoting our insurance package in hopes of finding some relief, and although it’s disruptive to our families, we even changed carriers a couple of times to take advantage of that typical ‘good first year’ pricing. We raised deductibles, coinsurances, and used incentives to try and convert our families to high-deductible plans.
Hoag noted that eventually, implementing a near-site clinic that practiced direct primary care was the key to producing lasting change in cost-savings. By self-funding with The Alliance, Advanced Laser controls their claims data, which they use to constantly assess their benefits plan and control costs. Additionally, The Alliance helps them find high-value, low-cost providers that utilize direct primary care.
“Direct primary care is the cornerstone piece of both good health and reduced cost. At first, I thought a clinic would be out of reach for us because we’re such a small business, with only about 80 families participating on our plan. However, by networking with other small employers in our area, we realized we did have the power.”
More Success With Self-Funding
Other companies striving for a new way to do business have found promising success by self-funding their prescription benefits plan. For example, Seats Inc. provides an onsite clinic to dispense medications to their employees; the clinic provides convenience and cost savings, which they pass onto their employees through their profit-sharing plan.
The company credits a roughly 75% discount on their top 10 medications to purchasing their drugs wholesale for their on-site clinic. Additionally, the rebates they receive from National CooperativeRx, a member-owned not-for-profit purchasing coalition, are better than with their prior, traditional pharmacy benefit manager. Again, these savings get routed to the employees through profit-sharing, or invested back into the company in other forms.
Jerry Ward, CEO of Seats Inc., says there are still challenges though:
“In 2018 we had one Hepatitis C individual that costed $76,000 in which we bore the burden. We need to, though, because that’s the commitment we made to our employees. We cannot function without having healthy people, so whatever we can save in health care dollars we can put back into people, equipment, and facilities, and just continue to offer affordable health care to our employees.”
Closing The Gap With Generics
“By and far the largest impact overall in our drug spend has been the rebates we’re getting through National Cooperative Rx,” said Dan Ludwig, Director of Benefits and Safety for Brakebush Brothers, Inc. “We’ve also saved money by utilizing an on-site clinic, which not only saves our employees money, but improves their medication compliance through convenience.”
Ludwig noted that despite their success in curbing total spend, there is a fear of the unkown regarding the future of rising drug costs. “We’ve had success in controlling our medical spend by using bundled payments and direct contracting, but unfortunately, our drug costs continue to increase. We have $2.3 million in gross drug costs and we cover $2 million of that for our employees.”
What’s Next with Rx?
Josh Bindl, CEO of National CooperativeRx, says that providing employers with tools to educate, explain, and navigate ways to manage total cost are central to lowering overall prescription costs. When combined with a rebate dynamic, employers can substantially reduce gross costs. Bindl states that all of their nearly 400 employers are paying for 90% of employee prescription costs: “In 2019 that was $1,158 per person.”
He ended his statement by reiterating the worry that employers have with continually rising prescription drug costs, “The fear is what’s coming,” he said. “Specialty prescriptions account for 1.4% of patients, but account for 48% of the cost. Self-insured employers are very fearful of what’s to come.”
Dan Ludwig perhaps expressed that employer viewpoint best in his closing remarks:
“I don’t want this group to think that all employers are passing drug costs onto their employees. We’re maintaining copays for medications and controlling our costs at the same time by using these innovative approaches not widely adopted in the health care insurance landscape.”