The Pharmacy Corner
Mar 9, 2010
I often hear of the life changing advantages of the new group of drugs commonly referred to as Biologic. Biologic Medicines are the fastest-growing class of medications. Money continues to pour into the exciting research of these drugs as their positive results are shared nationally. Those positive options can potentially be used along side of or in lieu now instead of radiation and chemotherapy with excellent results, yet the cost is expensive, to say the least. However, if you relate this to quality of life, the cost one can argue is worth it. Who is going to pay the cost? This needs be answered as this will affect all of us potentially at one time or another.
Carriers traditionally exclude specialty drugs from coverage from their retail plans and cover most under the medical. The financial impact to not carve out the Biologic drugs in a retail plan can be staggering when not properly underwritten. I recently reviewed claims data on 29 companies ranging from a low of 2,200 lives to a high of 17,200 lives. This involved 235,000 lives at 6 months worth of Rx claims producing 1,073,267 scripts during that time. The average cost of the specialty drug in this block was $2,186.55 before discount. The member share was $45.46. More importantly the highest PMPM for one employer plan 8400 lives was $302.00 PMPM, so much for averages. These 29 corporations will spend in excess of $16.2 million on specialty drugs in a 12 month period. While the PBMs have pushed to get this growing segment under their management, the stakes have never been higher for clients to consider their options. None of the drugs found in our analysis were infusion therapy drugs, such as Fabrazyme with a client cost of approximately $38,000 every two weeks, or drugs such as Avastin which can cost up to $100,000 a year. Many treatments are substantially more and could devastate a plan as we have seen many times. Congress is moving to allow generic alternatives to expensive biologic drugs used to treat chronic diseases such as cancer and arthritis. At issue: How long until the drugs go generic and just what will the pricing be?
Who is going to pay for this in the coming years? More importantly what skill levels will be necessary to manage this complex area to control cost and protect the financial integrity of carriers and employer carved out pharmacy plans? While much can be said of these drugs as being considered miracles, the right balance needs to be found in managing current plans in order to incorporate these Biologic drugs without excessive cost to the employer yet still providing what the employees and their families need.
As the Broker or Consultant of record, your client relies on your understanding of the pharmacy plan options available. There are over a 100 plan design options we provide our clients for the limited benefit market alone and the list is growing, yet it need not be complex. An in depth understanding of a few plans can make the difference between a successful sale and a missed opportunity. Access to an affordable level premium for both generic and brand name drugs in a plan is the key element. Today there is a generic equivalent/alternative available in approximately 94% of the top one hundred brand name drugs. It is important to offer plan designs that provide access to both generics and brand name drugs as well. The Formulary for the plan selected needs to be reasonable; balancing & meeting the needs of your client and the family’s need for appropriate therapy.
Support can be provided in this area by obtaining an electronic data dump and learning in advance just what impact your new plan design is going to have on disruption. Many times in a full take-over there are key drugs being used by the client and their management team, whose support you will need to keep your plan in place at renewal. I have seen case after case where this data not only helped retain the client, it also allowed the broker to upgrade the benefits, and related commissions. In instances where a client wants the medical plan but doesn’t like the Rx plan provided, plans can be tailored accordingly, and many times for less premium than they are currently paying. The utilization pattern at the employer’s level and those of the members is something that should always be addressed when an employer is scaling down to a limited benefit plan. It’s important to obtain a signed Business Associate Agreement and the electronic data in a HIPAA Compliant Format excluding any and all patient identifiers.
Questionnaires as well as Data formats can always be obtained from your Underwriter.
Rates are always of primary concern and one has to be especially careful with how this process is handled. Know who your underwriter is and what experience the firm has in negotiating PBM rates needed to be built into the premium. There is a real difference in cost when the PBM/PBA is using a MAC that is not competitive to what is available in the market place. More importantly confirm whether the PBM is really a PBM or just a PBA with a processor behind their name. The PBA acts as a middleman, often touting pass through passing yet he can add as much as, or more than 27% plus to the cost of the premium rates when underwriting a generic only plan, many times more than the carriers entire retention. While commissions are always a factor especially under a GA model it is important to understand when added to the carriers target profit and retention, it all adds up. The key is making sure that included plan costs meet the coverage needs of your Client.
Building your new employers plan design can be easier than one might think, especially if you work closely with your underwriter to address what the employer really needs, while meeting his budget. A standard $10.00 generic only plan design can be upgraded with a Patients Pharmacy Assistance Plan (PPAP’s) at little or no charge to obtain brand name drugs, with no deductibles, copays or coinsurance when no coverage for brand is currently in place or available. There are a host of plan design options to provide access to brand name drugs for a fraction of the cost of traditional pharmacy coverage. Understanding these options will set you apart. Talk to your underwriter up front, involve him in the process. He wants to see you successful.
Plan designs can always be enhanced to meet certain needs and many employers are willing to consider the modest cost of doing so to make their employees comfortable when reducing medical benefits. Your ability to understand the options will make all of the difference in your success in placing new business. I encourage you to consider the options available to your client; as opposed to rack programs, it can set you apart and distinguish you as someone who can make a difference to your client and their needs.
David P. Wilson is the Founder and CEO of Professional Risk & Asset Management Insurance Services, Inc. DBA: PRAM Insurance Services, Inc. The PRAM organization, operating nationally out of Chicago IL and Orange County CA was founded in 1989, as a risk management firm specializing in underwriting insured pharmacy plans, pharmacy consulting & administrative services, as well as group health and ancillary programs on behalf of insurance carriers to Brokers and Consultants nationally to support their clients from Main Street to Wall Street. Inquires to Mr. Wilson or his partner can be directed to dwilson@pram.com at 1-800-262-7726 ext 12 or Mr. Scott Intravia President can be reached at sintravia@pram.com at 1-708-647-0586.
