Last year, The American Academy of Actuaries reported that health care spending in the United States totaled more than $3.337 trillion in 2016 – 17.9 percent of the nation’s gross domestic product (GDP). Of that total, $329 billion was spent on prescription drugs. The Centers for Medicare & Medicaid Services (CMS) says health care spending grew in 2017 by nearly four percent – topping $3.5 trillion. Retail prescription drug spending rose about one-half percent to $333.4 billion. Although year-end 2018 figures are not yet available, analysts are expecting both health care and pharmaceutical costs to continue to climb.
The Kaiser Family Foundation’s monthly Tracking Poll found in 2018 that half of the public (52 percent) say passing legislation to help bring down the price of prescriptions should be a “top priority” for President Trump and Congress.
Since employees use prescription drug benefits roughly three times as often as their medical benefits (according to health insurer Anthem), you might be wondering what can you do as an employee benefits broker to help your clients and their employees control their Rx costs? Below are five ideas.
1. Education About Generics
You can help your clients and their employees better-manage their pharmacy benefits through education. When you educate employees and their insured dependents on pharmacy costs, it can help them make better choices. It’s proven that generic medications can be just as effective as nationally known branded drugs. In fact, the FDA says “A generic medicine works in the same way and provides the same clinical benefit as its brand-name version. This standard applies to all FDA-approved generic medicines. A generic medicine is the same as a brand-name medicine in dosage, safety, effectiveness, strength, stability, and quality, as well as in the way it is taken and should be used.”
Benefits Pro suggests brokers can help educate their groups’ members that not only do generic medications offer a cost-savings (for both employers and insureds), but they deliver it without sacrificing quality. Generic cost savings can be up to 85 percent, as compared to brand-name drugs.
2. Therapeutic Replacement
In situations where a generic drug may not yet be available, a chemically different drug that delivers similar effectiveness can replace some brand-name prescription drugs, often at a lower cost.
3. Plan Design Alternatives
The Society for Human Resource Management (SHRM) notes that many benefits administrators – at both large and small companies – have already redesigned their prescription drug plans to create incentives for employees to choose the least-expensive products. Many offer different levels of coverage, with one tier providing “full benefits” for a generic prescription or drugs for chronic conditions, while a different level of support is available for specialty drugs and biologics. Other tiers may have varying copays or coinsurance amounts based on a drug’s proven effectiveness. Another alternative plan design can include incentives for participation in wellness programs and the adoption of healthier behaviors (like smoking cessation classes or adherence to prescriptions in a specified drug formulary). Kaiser Permanente, for example, works with larger employers to encourage members to take part in its chronic disease management program.
4. Mail Order
Most health plans offer members the opportunity to have their prescription drugs – especially maintenance medications – filled by mail. It is convenient, allows individuals to get a 90-day supply, and offers substantial savings as compared to filling a prescription at a nearby Walgreens, CVS, or other pharmacy.
5. Discount Rx Cards
Prescription drug discount programs are a great way for individuals to lower costs on their prescriptions. Word & Brown offers brokers and your customers two prescription drug discount cards. The California Rx Card and Nevada Drug Card offer savings of up to 75 percent at more than 68,000 pharmacies nationwide, including CVS, Rite Aid, Walgreens, and Walmart locations as well as drug stores inside Albertsons, Raley’s, Ralphs, Safeway, Smith’s, and Vons supermarkets in California and Nevada.
States Making Moves, Too
The New York Times reported in August 2018 that some states are taking steps to clamp down on drug companies. For the first time, there are discussions about regulating Pharmacy Benefit Managers (PBMs) that act as middlemen in administering drug programs for employers regionally and nationwide.
The National Academy for State Health Policy says more than two dozen states last year passed bills aimed at curbing prescription drug price increases. More legislatures are considering new bills this year.
CVS Health, the new parent of insurer Aetna, announced its own program last year to fight back against the high cost of prescription drugs. CVS launched a robust set of initiatives, including the CVS Pharmacy Rx Savings Finder, which gives its retail pharmacists the ability to evaluate individual prescription savings opportunities with a customer quickly and seamlessly – while at the pharmacy counter. The pharmacist can review a patient’s prescription regimen, medication history, and insurance plan information to determine the best way to save money on out-of-pocket costs to help the patient find the lowest-cost alternative under his or her prescription drug benefits plan.
We hope having all of this information will help you better answer questions from employers and their employees about ways they can save on prescription drug costs. Watch our blog for other tips in the weeks and months ahead about how you can improve your service to clients. If you have questions, don’t hesitate to contact your Word & Brown representative or your nearest Word & Brown regional office. We’re here to help!
Health Insurance Broker
2019 Salary Guide
For a sneak peek at what you can expect to earn as an insurance agent, get a copy of our “Insurance Broker Salary Guide.”