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MIIA is a Membership Service of the Massachusetts

Pharmacy Cost Management: What's Being Done to Control Costs

Published in News on by Christopher Bailey, MIIA Health Trust Manager

The cost of healthcare in America continues to increase each year, and the price of pharmaceuticals along with it. According to a recent article in AARP titled “Why Our Drugs Cost So Much,” the cost of prescription drug prices in America are among the highest in the world, because drug companies are able to charge whatever rate the market will bear.

So, what kinds of strategies are in place to improve costs for insured individuals and families and to reduce costs for the employer? Most health insurance companies utilize similar cost saving strategies that involve partnering with a Pharmacy Benefit Management (PBM) company that acts as the intermediary between the insurance company and the pharmaceutical companies with the goal of obtaining lower prices for prescription drugs for plan sponsors and individuals. They achieve this through:

  • Price discounts through retail pharmacies
  • Rebates from pharmaceutical manufacturers
  • Efficiencies of mail-service pharmacies

At Blue Cross Blue Shield (BCBS) of Massachusetts, MIIA’s insurance partner, they routinely go out to bid for their PBM services in order to ensure they are getting the best costs. BCBS currently works with Express Scripts Inc., which is the largest PBM company in the United States. Express Scripts provides BCBS members with an integrated retail and mail-service prescription drug program that helps reduce pharmacy claim costs and gives members access to a nationwide pharmacy network of approximately 68,000 participating pharmacies, including all major chains. BCBS collaborates with Express Scripts to develop innovative clinical and operational programs, as well as long-term strategic plans.

“With Express Scripts,” says Thomas Kowalski, director, clinical pharmacy at BCBS, “we offer the efficiencies and advantages of online, real-time electronic processing and utilization controls.”

The BCBS pharmacy management business model is focused is on driving to the lowest net cost and optimizing rather than maximizing prescription utilization. According toKowalski, “We do this by promoting clinically appropriate utilization, negotiating highly competitive discounts, and using the most cost-effective delivery channel whenever possible.”

According to a July 2017 article in Workforce Magazine, titled, Contracting a Cure for Prescription Drug Costs, “PBMs do a lot to help employers manage pharmacy costs, said Brian Marcotte, CEO of the National Business Group on Health. They perform prior authorizations on medications to ensure medical necessity; manage quality limits to ensure proper dosage; and make sure people take generics first before moving up to expensive alternatives — in medical terms, step therapy.”

BCBS works within the following best practices to constantly address rising pharmaceutical costs:

  • Generics-Focused Formulary – The company utilizes generic pharmaceuticals whenever possible as they’ve determined that every 1% change in generic fill rate produces 2.5% reduction in gross spend.
  • Home Delivery Programs – it offers a cost-effective way to manage maintenance medications, prescriptions that our required indefinitely, where clinically appropriate.
  • Networks and Channel Management – Custom retail and specialty networks as well as customized mail service programs that help to optimize the lowest cost channel
  • Clinical Management – They implement strong clinical management programs that involves quality care dosing to ensure that the quantity and dose of medications members receive comply with the Food and Drug Administration (FDA) recommendations, prior authorization to ensure that doctors have determined that the medication being prescribed is necessary for treatment, Step Therapy that allows BCBS to help doctors provide the member with an appropriate and affordable drug treatment.
  • Medical Pharmacy Benefit Transition (MPBT) – to require a self-injectable medication and certain infused medications to be billed via the retail specialty pharmacy benefit only. Providers cannot “buy and bill” these medications under the medical benefit.

Regardless of what company provides your health insurance, you should consider sitting down with your account representative and talk about the strategies your provider and its PBM company are using to lower prescription drugs costs. Your bottom line, employees and tax-payers will be happier for it.    

Sidebar of Notable Statistics (from AARP article)                                               


18,130 - The number of approved prescription drugs available in the U.S.


49% - Americans using at least one drug in the past 30 days


19% - Those on prescription drugs who say they have skipped taking a drug or cut it in half to reduce cost


$457 Billion – The amount Americans spent on prescription drugs in 2015, up by 8% over the previous year


208% - The rise in prices for the most popular brand-name drugs from 2008 to 2016




AARP, May 2017, Why Our Drugs Cost So Much 

Workforce, July 1, 2017, Contracting a Cure for Prescription Drug Costs

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