Prioritizing pharmacy care costs in today’s economy
Rising drug prices are creating challenges, but a whole-person, integrated and collaborative approach can save money and bolster better health outcomes.
It’s a safe bet that, in 2023, employers and employees will spend even more money on prescription drugs than they have in the past due to the current economy. In fact, drugmakers started the year by raising the prices of 450 products, with the expectation that more price hikes are to come.1
But this has been the case for years. Total drug spending increased 7.7%, to $576.9B in 2021, and a further rise of around 5% was the projection for last year.2 What has driven the upward trend? Mainly higher usage rates combined with ongoing price increases.
One federal study found that drugmakers raised the list prices of more than 1,200 treatments well beyond the rate of inflation between 2021 and 2022, with an average cost increase of 31.6%.3 Yet the Institute for Clinical and Economic Review declared many of the price jumps were not clinically justified.4
The steep and steady rise in drug prices poses unique challenges in the U.S., says Matthew Vesledahl, chief affordability officer within UnitedHealthcare Employer & Individual. “The cost of increases in drugs is greater than any other service or market; the only thing even close is college education,” he says, noting that prices have risen between 5% and 15% annually during the last 2 decades, causing many employers to have to make difficult decisions.
“Drug prices are so extraordinarily high and contribute so much to the cost of health care that employers are now in a position where they have to make more difficult choices about how to spend their money.”
Some of those decisions could include shifting costs to employees, raising deductibles or even ending coverage entirely for certain drugs. But thoughtful cost-management strategies can help provide crucial relief for both employers and their employees.
Applying a multi-faceted approach to managing pharmacy costs
The good news for employers and employees alike is that lowering pharmacy costs is possible with a multi-pronged strategy.
At UnitedHealthcare, the right approach involves integrating medical and pharmacy benefits, collaborating across the health system and launching new initiatives that have the potential to save money and improve health outcomes while delivering a better experience.
The starting point is a whole-person approach that keeps the patient at the center. That means considering all options for treating a condition, and knowing which may create the best outcomes from both a health and cost perspective. “It’s critical to understand which options create the most value and then drive coverage to those options,” UnitedHealthcare Employer & Individual Chief Pharmacy Officer Susan Maddux says.
“Drugs may be the most economical way to take care of various conditions or to prevent conditions from even happening.”
Integrating pharmacy and medical benefits
Less-than-optimal treatment decisions are more likely when a patient does not have integrated medical and pharmacy benefits. Vesledahl offers an example involving 2 different HIV prevention medications, each offering the same protection from HIV:
- $20,000 per year shot a health care provider administers every other month in the office
- $2,000 per year generic daily pill picked up at the pharmacy
Someone with separate medical and pharmacy benefit carriers may end up receiving the $20,000 shot, because their carrier and pharmacy benefit manager (PBM) are not synced up on how to manage treatments that have options under both benefits.
“If you buy your medical and pharmacy benefits together, you are more likely to end up with a better cost outcome than if you didn’t otherwise,” Vesledahl says. “If you don’t manage holistically across your benefits, you risk higher costs.”
Value-vetting is at the core of integrated benefits. Any specialty drug that comes to market is screened to ensure that it’s safe, effective and delivers tangible value in line with the price charged by its manufacturer.
“Every drug first goes through a rigorous clinical review process led by our pharmacy and therapeutics committee,” Maddux says. “After clinical review, we also ask, ‘is there a less expensive drug available for treating the same condition with similar outcomes?’ Those are the kind of cost benefits we weigh.”
Collaborating across the health system
As the variety and complexity of possible treatments grow, the potential for collaboration across the health system to reduce costs and expand access grows. For instance, carriers are working to embed patient and prescription cost information into providers’ workflows, so they are able to make more informed decisions for their patients at the point of care.
The Cancer Guidance Program (CGP) is an evidence-based treatment management and analytics service used by UnitedHealthcare to help ensure quality care and reduce costs.5 How it works: CGP directs oncologists to prescribe the highest-quality, most cost-efficient treatment regimen option, while also helping them quickly obtain authorizations.
“The Cancer Guidance Program improves the physician experience because it’s an easier path for physicians to get approvals for the entire cancer regimen, but it also improves the member experience because someone could potentially start the therapies earlier,” Maddux says.
Another example is UnitedHealthcare PreCheck MyScript® in which prescribers get prompted when there is a lower-cost drug alternative, saving employers an average of $285 per switch and employees an average of $111 per fill when a lower-cost alternative is selected.7
Optum Rx, the pharmacy care services company within Optum — an affiliate company of UnitedHealthcare — introduced a new tool this year that takes it a step further, empowering employees themselves to compare prices for traditional generic drugs based on their insurance coverage. These collaborations are becoming increasingly common and are necessary to change the trajectory of pharmacy care costs.
Launching groundbreaking initiatives
If people can’t easily afford the medications they need, they’re less likely to take them, which contributes to poor health outcomes.8
As part of its commitment to affordability, access, equity and innovation, UnitedHealthcare was the first in the industry to eliminate all out-of-pocket costs for 5 vital medications for eligible members: insulin to treat diabetes, epinephrine to treat allergic reactions, glucagon to treat hypoglycemia, naloxone to treat opioid overdoses and albuterol to treat acute asthma attacks.9
“These are life-saving drugs,” says Kelley Nolan-Maccione, chief product officer within UnitedHealthcare Employer & Individual. “Without these medications, the outcome of an event can be fatal. You don’t want to be in a situation where you are rationing them or taking a chance, because it truly can come down to life or death.” She knows from personal experience how vital those drugs are: Both she and her son have severe allergies, which have necessitated the use of epinephrine to prevent acute anaphylaxis.
Some of the emergency-use drugs covered by the new $0 out-of-pocket policy — which applies to about 8.3M members — might otherwise cost hundreds of dollars, Nolan-Maccione notes.10 “Parents shouldn’t have to choose between keeping a medication at school or at home due to cost barriers,” she says.
Prescription Drug Lists (PDL) and utilization management programs, including prior authorizations, are also helping manage the costs of some of these drugs. UnitedHealthcare PDLs, for instance, are built to incentivize employees to use covered, clinically appropriate and cost-effective medications.
Waiting for a prior authorization to get approved can be frustrating for employees. So, for certain drugs, the company has streamlined the process, such as automatically approving or removing prior authorizations altogether for certain drugs based on an employee’s pharmacy and medical claims data and diagnosis information.
The rise in pharmacy care costs on top of today’s economy will continue to challenge the entire health system to collaborate and innovate in ways they haven’t before to achieve better health outcomes, a simpler experience and lower costs.
Contact your broker, consultant or UnitedHealthcare representative to learn more.