What’s behind rising drug costs, and strategies to manage them

Stacked pills on top of cash near an open pill bottle. The prices of specialty drugs that treat complex or chronic conditions are one reason for rising drug costs.

It’s no secret that prescription drug prices have been on the rise. And this trend shows no signs of stopping.1 That leaves health plan sponsors looking for ways to manage costs while ensuring that employees can get the medicines they need.

Some factors behind rising drug costs

Prices of specialty drugs that treat complex or chronic conditions are one force behind higher and higher costs. Some of those drugs can cost up to $10,000 a month, or more.

Brand-name drug price increases from 2005-2016 - up 9% for oral medications and up 15% for injectable medications.

It’s not only new-to-market drugs that contribute to the upward cost spiral. A study from the University of Pittsburgh showed that existing brand-name drugs are also pushing up overall costs.3 In many cases, drug manufacturers have patent protection that gives them exclusivity and the leeway to set their prices.

Manufacturers use advertising to help drive demand, even for drugs that treat an end-stage disease. Kaiser Health News reported that since 2012, spending on drug commercials has increased by 62 percent, with over $6 billion spent in 2016 alone.2

A new federal rule attempts to increase transparency in drug pricing and address ballooning costs. The rule requires drug manufacturers include in television commercials the list price of drugs that are covered by Medicare or Medicaid and cost $35 or more per month or for a usual course of treatment

There’s no magic remedy for rising drug costs, but there are ways to keep them in check through management, education, and advocacy.

Key strategies to manage costs  

ConnectiCare works with Express Scripts, our pharmacy benefit manager (PBM), to help our members receive clinically effective, safe, and affordable prescription drugs. Here are some of the ways we do that:

Encourage use of generics and lower-cost alternatives.

Preauthorization requirements, step therapy, and quantity limits are some ways that health plans try to see that doctors (and patients) consider any lower-cost therapies first. In addition, pharmacists fill prescriptions with generic drugs when available and if appropriate, unless you or your doctor ask for the brand.

ConnectiCare encourages members to use preferred generic and brand-name drugs with lower cost shares. We also urge (and, if employers choose, can require) members to fill 90-day supplies of maintenance medicines to lower overall costs.

Monitor and manage medication adherence.

Not taking medicine – or “nonadherence” – contributes to higher health care costs through emergency room visits, hospitalizations, and complications.  ConnectiCare partners with Express Scripts to work with members who are having problems taking their medicines every day.   

If a member forgets to refill, for example, we may suggest using a pill, help a member sign up for 90-day refills, or suggest pharmacy pill packs to package each day’s medicine.

If cost is preventing members from taking their medicines, we may connect them with a benefit specialist who can recommend lower-price alternatives, lower-cost pharmacy options, or payment assistance programs.

Use alternative infusion sites.

Sometimes patients with complex illnesses need to be treated with drugs that are infused through a catheter into a vein. It used to be that infusion therapy was limited to hospitals. Today, it can often happen at home or in a free-standing infusion therapy center. These options are not only more convenient and comfortable for patients — they can also save money.

Give extra care and guidance to members taking specialty drugs.

Specially-trained pharmacists and nurses provide personalized care and guidance for members with chronic or complex conditions through our Specialty Rx management program, operated by Accredo. Conditions include diseases like hemophilia, multiple sclerosis, rheumatoid arthritis, and diabetes. The Accredo team helps see that members are monitored. It can also sometimes help members locate financial assistance programs.     

What’s next?

Prescription drug costs will likely continue to rise. It’s predicted that overall prescription drug spending could reach 15-20 percent of total employer-related health plan costs.7 Curious to know if we can help you manage prescription drug costs and keep your members healthy? Let’s talk.

See also: “A three-pronged approach to help control prescription drug costs.”

Citations and sources

About Jamie Reuter, PharmD, MBA, BCPS

Jamie Reuter, PharmD, MBA, BCPS, is vice president, enterprise pharmacy solutions. He is responsible for pharmacy services for members of EmblemHealth and ConnectiCare health plans. His experience spans practice in retail pharmacy, hospital, and critical care settings as well as teaching at the University of Maryland School of Pharmacy. Jamie received his Doctor of Pharmacy degree from the University of Toledo and a Master’s in Business Administration from the Carey School of Business at The Johns Hopkins University.