Rising prescription drug prices have been at the forefront of national news for years. Consumers are more aware of high prices because of the increasing use of coinsurance and high deductible health plans. While employers are more aware largely due to the significant drug price tags seen in the market, it is likely this conversation will continue and expand in the future.
Despite the attention on the issue, costs across National CooperativeRx (per person per year) were lower in 2019 than 2016. This is the result of our impressive trend:
-1.6% trend in 2017
0% trend in 2018
-2.6% trend in 2019
While individual member results will vary based on utilization, these results prove the value of the cooperative purchasing model and the efforts of National CooperativeRx to remove waste from benefit plans.
Growth = Purchasing Power
The Cooperative was created to provide members more purchasing power and expertise when working with pharmacy benefit manager(s) (PBM). The Cooperative has continuously experienced strong years of growth, a 21% annual pace since 2016.
With this growth in purchasing power, staff have been able to negotiate additional value for members. In the 2018 market check, when members were already under contract, we were able to generate 5.9% additional savings. Our 2019 request for proposal yielded 8.4% savings over the 2018 contract year and called for additional enhancements in 2020 and 2021. In addition, the 2020 market check yielded an added 3.3% savings for members.
Contract Negotiations Yield More Than Pricing Gains
Contract negotiations with a PBM are much more than pricing. Definitions have always been of critical importance in the dynamic world of prescription drug pricing. Recent enhancements have been made in the area of specialty and rebates, both with significant impact on costs.
These contract definitions and pricing changes benefit patients as well. Several of the reforms being proposed and adopted in states and at the federal level were taken care of in the National CooperativeRx Master Contract years ago to protect plans and patients.
Clinical Initiatives Drive Savings
Enhancements to the Cooperative’s clinical initiatives are also driving savings, specifically in the area of fraud, waste and abuse. These enhancements have been made possible through additional staff, paid for by membership growth. Our clinical team is reviewing high-dollar claims to identify fraudulent claims, inaccurate quantities, unsafe drug interactions and high-cost products with lower cost alternatives. This process also allows the clinical team to identify the next wasteful trend before it significantly impacts plans.
Plan Design Changes Encourage Positive Consumer Behavior
I would be neglectful if I didn’t recognize membership’s contributions to trend management. The plan design changes they put in place encourage patients to be good consumers. Based on the recommendations of our clinical and account management team, each year members are implementing changes to encourage consumers to select high-value medications and be good stewards of the plan. For January 1, 2020 alone, there were 179 plan changes put in place for National CooperativeRx member groups, on top of 141 changes for the same period a year ago.
The Significant Role of Rebates
Rebates also play a significant role in managing trend. Although there are flaws, rebates are a vital tool for PBMs to negotiate with pharmaceutical companies. With National CooperativeRx members receiving 100% of all rebates (defined broadly) that the PBM receives, these dollars are flowing back to the plan to lower the patient’s cost share. They can also be shared with the patient at the point of sale if a plan elects that option.
Improvements and Enhancements Will Continue to Benefit Members
Although the focus has been on rising prescription drug costs, Cooperative members have enjoyed falling aggregated costs net of rebates over the last three years. We are fortunate to have our growth in membership feeding efforts to improve our contract and enhance the plan oversight role we provide. Thank you to new and long-time members for your trust in National CooperativeRx.
