Drug Mix – Saving You $300

You can go and buy the AIS audio conference on drug mix for $300, or I will give you my executive summary of what you likely would hear.  (Note: I did not listen but used to do these presentations.)

Here is what they say they will address:

  • How an optimal drug mix can result in significant savings
    • Brand drug = $100 less network discount plus dispensing fee less copay less rebates…let’s call it$60.
    • Generic drug = $40 less network discount plus dispensing fee less copay…let’s call $5.
    • You save $55 for each prescription you move to a generic.
    • Each 1% improvement in generic fill rate = 0.75% – 1.00% reduction in pharmacy spend.
    • 14 Rxs PMPY * $50 average cost per Rx = $700 PMPY
    • 1% of $700 = $7 PMPY for a 1% improvement in generic fill rate
    • 100,000 member plan saves $700K per year
    • And, inflation on generics is much less than inflation on brands year-over-year
  • How drug mix has become a  factor in selecting a pharmacy benefit manager
    • First, I have to say that this is great positioning.  For years, we tried to convince clients and consultants to weigh this in proposals with limited luck.  So, change it to imply that it is what’s done.
    • You would much prefer a PBM that guaranteed you that it would improve your generic fill rate by X points that simply getting a slightly better discount.
  • What PBMs and plans must do — and NOT do — to develop the best drug mix
    • Make sure you have at least a $15 difference between your generic copay and brand copay
    • Lower your generic copay to less than $10
    • Have a mandatory generic plan in place (i.e., the patient pays the difference if they want the chemically equivalent brand…unless they can prove they have a rare allergy to the dye)
    • Use a 3-tier formulary
    • Reach out to patients and tell them when they should discuss generic alternatives within the class with their physician
    • Offer to waive the patient’s copay if they switch to the generic (Don’t just drop your generic copays to $0…you’re just wasting money.)
    • Consider implementing a step therapy program which requires generics as first line agents
    • Drive web utilization of tools that show patients how they can save money
  • What types of member incentives are most effective in driving optimal drug mix
    • You’re saving $50 times all their refills…share some of it – points, coupons, copay waivers, gift certificates
  • How plan sponsors can evaluate drug mix
    • Not easy.  There are no apples to apples.
  • How contractual mechanisms can ensure accountability for achieving drug-mix goals
    • Look for a trend guarantee or a GFR guarantee tied to beating the overall market
    • Or look for an average price per Rx guarantee holding your copays constant
  • How other factors, including drug pricing and discounts, must be evaluated by plans and PBMs at the same time as drug mix
    • Discounts are important
    • Rebate share is important…at this point you should be getting 100% of rebates
    • Understand how your PBM makes money

I am not in the business anymore so I don’t have all my traditional back-up slides to cover it, but there are some simple tools that will really drive your savings.  Set-up the right plan design and then communicate and promote the lowest cost solution to your patients in a convincing way that they take action.

One Response to “Drug Mix – Saving You $300”

  1. It’d also be interesting to see exactly at what point Part D can save you money. The gap rules are pretty complex.

    By the way, state to state medical privacy laws is what I was specifically referring to with Wal-Clinics popping up in every state. Here’s an article that talks about portal/PHR sites getting in trouble for the same reason: http://www.ihealthbeat.org/articles/2008/2/20/Report-Warns-Patients-Against-Posting-PHRs-on-Outside-Web-Sites.aspx?topicID=52

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