Drug Firms Resist Price Disclosure

Drug CostsWhile the Department of Health and Human Services has asked drug manufacturers to disclose list prices for most drugs they feature in television commercials, the industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), has countered with an offer to include content directing consumers to a new website where pricing information could be found.

The Administration’s request requires that list prices be featured in text on the screen in television ads for drugs covered by Medicare and Medicaid costing more than $35 per month. A great deal of debate has developed, with PhRMA arguing that featuring list prices would confuse consumers by making them think they have to pay more than they actually would. HHS is still accepting comments on the proposal.


UnitedHealth will begin passing drug discounts to plan participants

This article was published on March 13, 2019 on BenefitsPro written by Max Nisen.

The health-care policy environment is shifting in a dangerous way for insurance giants. A seemingly small change in how drugs are paid for could be the beginning of a response.

UnitedHealth Group Inc., the largest U.S. health insurer, announced Tuesday that its pharmacy-benefit management arm OptumRX will mandate that all new employer health-plan clients pass the drug discounts it obtains for them directly to plan participants. That’s a big shift from the current system, under which OptumRX and other PBMs negotiate prices with drugmakers and hand the resulting rebate checks to clients to use as they wish. PBMs profit from this arrangement, and have an incentive to favor heavily rebated drugs. That pushes drugmakers to hike prices, and patients are exposed to artificially inflated costs.

UnitedHealth’s new policy means lower drug costs for more people. But it has broader implications. It smartly preempts Trump administration efforts to reform rebates, and shows that the industry can make needed changes ahead of pushes for an even bigger government-led overhaul of the way they do business.


Increasing costs and unhappiness with the status quo are motivating the administration’s regulatory effort to end rebates in Medicare. It is also thinking about forcing insurers to reveal the hidden prices they negotiate with hospitals, which would wreak havoc on their ability to negotiate. Consumer dissatisfaction also behind broader reform efforts championed by Democrats, such as Medicare for All. Such plans are distant threats, but they are present and existential enough to weigh on shares.

Making the switch to so-called point-of-sale rebates for new clients is a big and unique step for UnitedHealth, and it builds on its January transition of a different subset of its business. While the impact will be small at first as existing clients can stick to the old system, the new model could eventually impact as many as 18 million Americans, according to a research note from Royal Bank of Canada analyst Frank Morgan.

UnitedHealth says people already on its point-of-sale plans save an average of $130 per eligible prescription and that medication adherence is up by as much as 16 percent. People are happier and healthier when they can afford to take their medicine, and are more likely to avoid larger medical costs down the line.

If the administration’s efforts on rebates succeed, UnitedHealth will face less disruption and have more experience in making a new business model work. Slower rivals such as CVS Health Inc. and Cigna Inc’s Express Scripts – which offer point-of-sale rebates as an option but don’t mandate it – may suffer. Already in February, CVS attributed part of its weak 2019 guidance to the impact of shifting drug-pricing trends on its PBM as drugmakers held back on price hikes under political scrutiny.

Plans that offer point-of-sale rebates have a chance to focus more on reducing overall costs for both patients and payers, especially when integrated with an insurance plan. This isn’t going to make insurers and PBMs beloved overnight, or produce instant systemic cost-savings. But UnitedHealth is taking a needed and bigger step toward a better and more patient-friendly system.


Drug Cost Information Bills

dgb_drugcostsIn late Fall, the President signed two bills that should make it easier for pharmacists to help customers find the lowest cost, appropriate medications. The “Know the Lowest Price Act of 2018” and “Patient Right to Know Drug Prices Act” bills are designed to crack down on “gag clauses” that prevent pharmacists from telling patients about more affordable options for prescription drugs. Having developed a “drug pricing blueprint” to promote greater price transparency, the President praised these bills as representing significant steps in that direction.


5 ways to keep benefit costs down in 2018

The article below was published on December 20, 2017 by BenefitsPRO, written by David Hines.

Photo Source: BenefitsPRO

As we head into 2018, large employers are bracing for a 5 percent rise in the cost of providing employee health care benefits, according to the latest National Business Group on Health survey.  In a world where health care costs seem to only go in one direction, that may not be a surprise. Yet, new data and insights related to employee health are enabling employers to craft novel strategies to bend, or at least stay on top of, the cost trend. Here are five things we learned in 2017 that can help employers turn the cost challenge into an opportunity to better manage expenses in 2018 and beyond.

1. High-cost claimants are the key

In late 2016, the American Health Policy Institute analyzed claims data from 26 large employers and found that the average high-cost claim has a price tag of $122,382 per year, or 29.3 times as much as the average member claim. Though they represent just 1.2 percent of all members, high-cost claimants make up 31 percent of total health care spending for the surveyed employers. Cancer treatments, heart disease, live birth/perinatal conditions, and blood infections are among the costliest claims, the report says, adding that 53 percent of those costs represent chronic conditions, while 47 percent cover acute conditions.

Recognizing this reality, savvy employers are developing new and improved strategies to better manage the care of these costly claimants. For instance, some are taking a closer look at how to manage the big C word – cancer.

For example, one large manufacturing employer has just begun some groundbreaking work to help identify and assist cancer patients earlier in their diagnosis, which is improving outcomes and reducing costs. We’re excited to see more about those results soon.

2. Stay ahead of high-cost, high-variation surgeries

While there may be some overlap with high-cost claimants, another area of high spend is employees who have surgeries for preference-sensitive conditions, e.g., joint replacement surgery (knees and hips), back surgery, hysterectomy or bariatric surgery.

These are called preference-sensitive because in most cases the employee has alternative treatment options.

In 2017, ConsumerMedical reviewed Truven’s Marketscan data and learned that, on average, an employer with 10,000 employees has approximately 258 individuals contemplating surgery for one of the five conditions noted above. The average cost-per-episode for these surgeries is a staggering $29,700. That means employers spend around $90 billion annually on these procedures and their related costs.

Many of these patients might actually choose a lower-cost option with a better health outcome if they were fully aware of their choices. This represents an enormous opportunity for employers to save money and improve health outcomes. One way to help guide employees is by offering a medical decision support program. A study of one large employer that leveraged predictive modeling and financial penalties to spur decision support engagement realized savings of $4.7 million from just 206 employees.

Guiding these surgery candidates toward high-quality providers is an equally powerful strategy for avoiding costs, including the costs of misdiagnosis and unnecessary drugs. The National Business Group on Health (NBGH) reported 88 percent of employers expect to use COEs in 2018 for certain procedures such as orthopedic surgery, in an effort to contain costs and improve the value of care.

3. Keep experimenting with new ways to manage the cost of drugs

The rising cost of specialty drugs is a major reason why health care expenses are continuing to rise. As Mike Thompson, President and CEO of the National Alliance of Healthcare Purchaser Coalitions recently said, “If you’re in the kitchen and one of these new specialty drugs rolls under the refrigerator, you’ll throw out your fridge, because the pill costs more.”

According to PwC, in 2018, employers will explore new technologies, such as artificial intelligence, to match people with the best treatments, along with traditional strategies, such as requiring prior authorizations for costly specialty drugs and instituting step therapies. In addition, employers are paying closer attention to treatment environments, looking for opportunities to shift the delivery of care to lower-cost settings.

4. Employees need more support with behavioral health

With more employees experiencing a behavioral health issue,employers are recognizing the need to provide greater employee support in this critical area as well.  A 2017 survey conducted by ConsumerMedical found that almost half of U.S. employees had dealt with a mental health issue on behalf of themselves or a loved one in the last year―and most reported that this was a distraction for them while at work.

The reality is that healthcare expenses, such as medical and pharmacy claims, are only the tip of the cost iceberg for employers; they are compounded by the productivity, absenteeism and related expenses that result from employees with behavioral health concerns.

Unfortunately, the traditional support platforms offered by employers may not be enough. For example, studies show that only about 5 percent of employees take advantage of their company’s Employee Assistance Program (EAP). Employers are learning they need to do more.

According to Willis Towers Watson survey of 314 mid- and large-sized companies, employers’ top health care priorities over the next three years include: locating more timely and effective behavioral health care, integrating behavioral health with medical and disability case management, providing better support for complex conditions, and expanding access to care.

5. Consumerism is no longer the panacea

While most large employers continue to lean on consumer-directed health care as a strategy, we are entering a new era, and that is good news for consumers. According to PwC, after shifting healthcare costs to employees for years, employers are starting to ease off.

Employers are beginning to recognize that cost sharing has its limits. In 2017, research showed us―yet again―that cost sharing may cause employees to skip needed care.

Today, employers are realizing that health benefits need to place a greater focus on the employee experience.

NBGH President and CEO Brian Marcotte says, “One of the most interesting findings from the (NBGH) survey is that employers are focused on enhancing the employee experience….For example, there is a big increase in the number of employers offering decision support, concierge services and tools to help employees navigate the health care system. The complexity of the system and proliferation of new entrants has made it difficult for employees to fully understand their benefit programs, treatment options and where to go for care.”

As we head into 2018, we will face another year of rising health care costs. But thanks to research, surveys and some trial and error, employers are learning more about the drivers of costs and the strategies designed to control them―while improving employees’ health outcomes. It is a constant struggle to stay ahead of the cost curve and meet employees’ needs, but that is the goal we are all committed to pursuing as benefits leaders and professionals.


Fighting Specialty Drug Costs

drug-bottlesTo help control rising specialty drug costs, the National Business Group on Health has issued a lengthy report including 5 public policy recommendations they hope will educate the marketplace and encourage effective, strategic partnerships.

According to NBGH officials, plan design is the key to managing the use of specialty prescriptions as well as the costs. The report details progress resulting from the aggressive use of utilization review, case management and prior authorization for specialty drugs. Other measures yielding positive results are the design of a specialty tier into the benefits plan and taking measures to administer specialty prescriptions in a facility separate from the hospital. Prescriptions authorized by a hospital or billed under the medical benefit are harder to track and often more costly.

Drugs Drive Rising Costs

medicalWhile all treatment costs have risen consistently in the past 2 decades, the pharmaceutical sector has put up some amazing numbers. In 2011 alone, Americans spent an average of $985 per person, approximately twice the amount spent in other developed countries for the same benefit. In 2015, aggregate prescription drug sales in the U.S. totaled $374 billion – $190 billion more than other industrialized countries would have spent for a similar population.