As the health care landscape continues to shift, the cost of prescription drugs continues to be an issue for employers.
“At $985 per person in 2011, the U.S. had the world’s highest drug spend by far, more than double what other developed countries pay on average ($483) for approximately the same benefit,” writes Brian Klepper for Employee Benefit Adviser. “In 2015, the U.S. had aggregate prescription drug sales of $374 billion. In other words, we spent about $190 billion more on drugs last year than other industrialized countries would have for the same population.”
And while new specialty drugs can cost thousands of dollars per dose, generic drug prices are also on the rise, further pinching employers’ budgets. “The Department of Health and Human Services called drug growth in 2013 ‘subdued,’ but said 2014’s increase was ‘remarkable’ and that it remained elevated during 2015 based on preliminary estimates,” writes Jayne O’Donnell for USA Today. “HHS estimated prescription drug spending in the U.S. was about $457 billion in 2015, or 16.7 percent of overall personal health care services.”
Employers are responding by placing new limits on prescriptions. “According to a December 2015 report by Willis Towers Watson, 53 percent of employers have added new coverage and usage restrictions for specialty prescription drugs, including prior authorization or limiting quantities based on clinical evidence,” writes Rita Pyrillis for Workforce.com. “And another 32 percent are expected to add restrictions by 2018.”
Along with restrictions, employers are also looking into using freestanding specialty pharmacies and requiring what’s called step therapy, or having patients try cheaper medications before being approved for more expensive options, she writes.
Compound medications, which have pharmacists mixing drugs to customize them for individual patients, are also costing more. “Annual compound drug costs spiked by 128 percent in 2014,” Pyrillis writes. Employers will need to impose rules about authorization, step therapy (or requiring traditional medications), and quantity limits to control their costs.
But as drug costs continue to rise — and new oncology and specialty drugs continue to roll out, many with eye-popping price tags — employers and brokers will need to continue to work together to control costs while still providing reasonable coverage. “As these drugs come out, employers are trying to help employees,” Pyrillis writes, quoting National Business Group on Health Vice President Shari Davidson. “This is what’s keeping benefits managers up at night.”