The Stephens Insurance Employee Benefits team creates customized strategies designed to bring transparency to the pharmacy market.
This space can be quite opaque for employers without proper guidance. Yet many of them take a “do-nothing” approach with their Pharmacy Benefits Manager (PBM), which puts the employer at risk of incurring increases in out-of-pocket prescription costs that exceed 7% per year.
By working with self-funded health plans, the Stephens Pharmacy Intervention approach can lower a client’s plan paid prescription spend by anywhere from 10% to over 55%, depending on the scope of services that clients request.
In 2021, we helped a global corporation exit an outdated and expensive contract with its old PBM, with which the client had a long-term relationship. After Stephens put the client into an optimized contract with a new PBM and applied our formulary, the client started seeing significant savings on a monthly and quarterly basis. By year-end, the client saved more than 25% on paid prescription spend, inclusive of PBM administrative fees applied across thousands of participants on its self-funded health plan.
In 2022, Stephens is implementing our specialty carve-out strategy and health plan design changes for the client. These include ways to help health plan participants understand the distinctions between preferred, non-preferred, and specialty medications. The nature of our pharmacy savings are independent of COVID-19 pandemic related disruptions. Therefore, with careful monitoring and adjustments as needed, Stephens is poised to help the client achieve the same or greater savings as in 2021.
In 2021, our pharmacy team helped four 340B hospitals in Arkansas expand the prescription drug discounts that such hospitals typically access for patients. These medical facilities treat underserved populations, including certain rural areas, in accordance with guidelines set forth by the Public Health Service Act. The hospitals often partner with pharmacies to obtain medications. However, the hospitals had found themselves in suboptimal PBM contracts, paying exorbitant PBM administrative fees, with inefficient rebates and formularies.
Stephens addressed those problems, as well as customized the network by which hospital employees purchase discounted prescriptions — including specialty medications — to fully leverage the 340B status of our clients. Our process has helped the hospitals save as much as 99% off the standard price of some prescriptions for thousands of hospital employees, as well as participants on their employees’ health plans, when receiving treatment from affiliated providers. We also are working with the hospitals to improve patient prescription costs.
PHARMACY INTERVENTION 101
In traditional pharmacy contracts it is common practice for some PBMs to charge an employer’s health plan a much higher amount per claim than the PBM bills to the pharmacy, allowing the PBM to retain the spread. This spread can amount to as much as $130 per claim.
By contrast, when our pharmacists guide employers through the RFP process to hire a PBM, we work to help each client pay the same to their PBM per claim as their PBM bills to the pharmacy, for the cost of a flat administrative fee to the PBM per prescription. This “pass-through” pricing structure often is many times lower than the PBM spread of traditional contracts.
We focus on contract terms that involve rebates, generic prescription drugs, and an evidence-based approach to formulary management. The latter entails consistently analyzing FDA-approved prescription drugs to determine those which clients should cover, as well as why specific medications ought to be covered. Our pharmacists are experts at identifying low-cost alternatives with high efficacy rates, by reviewing clinical literature each quarter, on a drug-by-drug basis.
For rebates, we work with a curated list of PBM partners to streamline the process by which a drug manufacturer pays a portion of a prescription’s cost back to the PBM, or back to the client’s health plan. This enables certain medications to meet the cost requirements of the formulary that we structure for clients. Rebates — which tend to pay out 180 days after the end of the quarter — are an often overlooked way to lower costs for employers. Their savings typically outpace inflationary pressures and even result in deflation on prescription drugs.
In addition, our specialty carve-out strategy addresses situations when insurance providers do not cover specialty medications for employers. Although specialty meds can account for as much as 50% of the spend for an employer, they may account for only 1% of the number of actual prescriptions for which employers receive claims. We access grants and patient assistance programs, so patients can receive specialty medications at low- to no-cost to them and the health plan.
Client-specific factors also may impact health plan design. These may encompass state-by-state regulations relevant to employers that operate nationwide, types of work that employees perform, common health conditions among the plan population, and the variety of pharmacies that are available in the areas where plan participants live.