In the next five years, global spending on medicines is projected to grow 32 percent according to a report released this month by the IMS Institute for Healthcare Informatics. Drug companies are expected to release 225 new drugs. As pharmacy contracts become increasingly complicated, employers face enormous challenges in understanding hidden costs. Ways employers can proactively manage spend:
To proactively manage costs, employers can focus on two key issues: understanding the pharmacy contract and managing specialty drug spending.
Pharmacy benefit managers—or PBMs—serve as third-party administrators of prescription drug programs. To increase profits, they structure contract language in their favor. A PBM knows that if a client is savvy about one aspect of pricing, higher charges can be hidden in another part of the contract.
“PBMs will give a little bit here to take a little bit there,” says Bryan Klazinga, Healthgram’s vice president of pharmacy benefits. “It’s a shell game, really.” Klazinga has spent more than 20 years negotiating pharmacy contracts. He’s an expert on locating hidden phrases that diminish savings.
He says to pay close attention to these six areas:
After negotiating fair terms for your pharmacy contract, your next challenge is to keep a check on specialty drug spending. Here are some common sense ways to steer clear of higher costs.
As drug prices climb in the coming years, pharmacy contracts will become increasingly complicated. If you know where to look for hidden costs, you’ll negotiate good employee benefits at fair terms for your company. In addition, by managing specialty drug spending, you’ll significantly control the costs incurred by high-priced pharmaceuticals.