Good strategy to grow your book of business
BY RICK SUTHERAND
Rising prescription drug costs are a significant concern for employers, many of whom are struggling to reign in dramatically increasing pharmacy benefit spend while protecting the health of their members. Over 60% of employers say their prescription drug and medical spend is costly and unsustainable, and specialty drug spending is forecast to continue increasing 15% year over year. Many HR leaders are seeking creative ways to reduce costs while continuing to provide a rich benefit as part of their talent acquisition and retention strategy.
In an increasingly competitive hiring environment like we are currently seeing, helping your clients develop a pharmacy benefits program that is attractive to both current and future employees and reduces overall prescription drug costs can not only help employers attract and retain talent – it can solidify your relationship as a trusted advisor with clients and prospects.
As you help your clients evaluate how to optimize their pharmacy benefits, taking a data-driven approach can set you apart – and set them up for success.
Pharmacy benefits is a black box
The pharmacy benefits industry is very opaque. The reality is most employers overpay an average of 14% per year for pharmacy benefits – while receiving suboptimal clinical management and customer service – simply due to misaligned pharmacy contract terms or a lack of a pharmacy contract altogether. In addition, clinical misalignment results in many employers overpaying by an incremental 5-10% per year.
Without data, pharmacy benefits is a black box. It’s essential for employers to have transparent contract terms as well as full visibility into the performance of their plans to improve the health of their employee population at the lowest net cost. Data analytics is critical to gaining this visibility.
Data analytics enables you to optimize pharmacy benefits
Data analytics brings much-needed transparency to the pharmacy benefits landscape.
Applying data analytics enables you to help your clients evaluate and compare pharmacy benefits options as well as gain insights into their plan’s performance and utilization so they are equipped to make better decisions. Advanced data analytics can uncover potential financial and clinical risks that would not otherwise be easily identifiable, and which can contribute to wasteful spending. Leveraging business Intelligence and data analytics can also help identify risk areas and trend drivers in a company’s claims data – such as chronic health conditions or other disease prevalence and high medication utilization – and forecast cost trajectory and program impact. The insights provided can uncover opportunities to introduce hyper-targeted clinical strategies to help the employer address any potential issues, such as by promoting medication appropriateness, dose optimization, and member safety and quality of life.
Data analytics can also be used to forecast the cost and potential employee impact of any decisions before they’re made, so employers are empowered to make the best decisions for their plan and their members and communicate them effectively.
By using data-driven pharmacy decision making, you can help your clients construct a pharmacy benefits plan that is attractive to both current and future employees, optimize their wellbeing, and reduce overall prescription drug costs. In fact, employers are often able to reduce their pharmacy spend by more than 25% on average the first year, as well as protect themselves against future drivers of increased spend, like the rising cost and utilization of specialty medications.
Getting started with data analytics
When applying data analytics to optimize a pharmacy benefits plan, an effective strategy begins with analyzing the employer’s prescription claims data. Gaining access to actionable pharmacy plan-specific data is the best way to understand your client’s employee population, predict future spending and healthcare needs, and make better decisions to improve the quality and affordability of the benefits plan without sacrificing service experience. Through the analysis of the claims data, you can help your client determine which drugs and drug classes are driving costs for their plan. One or two high-cost drugs can have a significant impact on the overall budget – and in many cases, specialty drug spend for a small number of members is a primary cause of rising pharmacy benefits costs. Understanding which medications members rely on is essential to customize a formulary that will minimize employee impact.
The reality is most employers overpay an average of 14% per year for pharmacy benefits – while receiving suboptimal clinical management and customer service – simply due to misaligned pharmacy contract terms or a lack of a pharmacy contract altogether.
It’s also important to combine analysis of pharmacy claims data with specialized clinical expertise – in other words, pharmacists who can address clinical risk areas and cost-savings opportunities. Employers do need to support their employees with chronic and rare conditions and ensure they have access to the treatment they need – but taking care of employees doesn’t necessitate the wasteful spending that is often seen when data analytics and clinical expertise is applied to pharmacy claims files. In order to effectively optimize a formulary, a pharmacy or clinical expert is needed. For example, independent clinical reviews can help prevent the off-label use of prescription medications or intercept prescriptions for high-cost, low-clinical value drugs. By combining data-driven insights with applied clinical expertise, you can help your clients strike the right balance between drug access and cost.
As a broker, you will be best positioned to serve your clients if you have an established relationship with a team of clinical experts you can trust to evaluate the medical necessity, appropriateness, and effectiveness of prescription medications. It’s important that your clinical partner is independently aligned with your clients’ goals and evaluates everything according to what is in the medical best interest of members and the best financial interest of the employer.
Additionally, it’s important to note that employers in self-funded, carved-out arrangements have the most opportunity to optimize their pharmacy benefits. Carved-in pharmacy arrangements rarely, if ever, provide the transparency needed to understand how a plan’s members utilize the benefit so you and your client can make informed plan decisions. Carved-out agreements, however, empower your client with data and provide more options to control both the formulary and pharmacy benefit costs.
Finally, at RxBenefits, we have found that the ideal way to highlight the impact of leveraging data analytics is by analyzing the employer’s pharmacy claims data at no cost and then forecasting the cost-savings and member impact of each pharmacy benefits strategy we recommend. We then provide that data to the broker, who is then more empowered to help the employer make the best, data-driven decision about their pharmacy benefits plan for them and their members. Often, when the employer sees how much more visibility, control, cost savings, and member benefit they can achieve by leveraging a data-driven approach, they are excited to move forward.
The future of data analytics for pharmacy benefits
When data analytics is applied to pharmacy benefits, you and your client gain visibility and control rather than accepting a black box of benefits. You can help your client better evaluate their options, obtain insights into their plan’s performance and utilization, uncover potential risks, and make better decisions about their benefits programs – including analyzing the cost and employee impact of any decisions before they’re made. Ultimately, optimizing pharmacy benefits with data analytics drives cost savings for your client and helps improve health outcomes for their members.
Moving forward, AI/machine learning and predictive analytics will also become more mainstream, enabling the analysis of a broader array of employer trends, patient demographics, prescription patterns, and more, so employers can make better decisions in real time.
With prescription drugs continuing to be the most expensive component of healthcare benefits, brokers have an opportunity to use data analytics to proactively help their clients identify and address pharmacy-related factors that are driving up their plan costs. By understanding the driving forces behind high-cost pharmacy claims and identifying strategies to optimize utilization, you can help your clients reduce costs while continuing to provide a comprehensive benefit – in turn, building strong client relationships and a book of business as a result.
RICK SUTHERLAND is Business Development Executive of RxBenefits, the nation’s first Pharmacy Benefits Optimizer. He supports brokers in the California and Hawaii regions, guiding them through the pharmacy benefit contracting process to help them evaluate their clients’ prescription drug plans for optimal savings, clinical management, and service.
Rick is also the current Board President for the Employee Benefit Planning Association of Southern California (EBPA). He can be reached at rsutherland@rxbenefits.com.