A PBMI RESEARCH REPORT
2017 Trends in Drug Benefit Design
Sponsored by Takeda Pharmaceuticals U.S.A., Inc.
SPONSOR LETTER
To Our Industry Colleagues — Takeda is pleased to sponsor the Trends in Drug Benefit Design report, 2017 Edition, for the seventeenth consecutive year. Since 1995, this report has provided insights into drug benefit management that industry stakeholders need and want. The report’s readership draws from a remarkable range of interests and experience and includes employers, health plans, benefit consultants financial analysts, pharmaceutical manufacturers, and pharmacy providers. We are proud to stand with the Pharmacy Benefit Management Institute (PBMI) to offer this resource, which is updated annually to reflect marketplace trends and reader interests. This year’s survey clearly shows that plan sponsors continue to manage the pharmacy benefit carefully and, more often than not, develop the pharmacy benefit in concert with the medical benefit. These two intertwined and valued benefits help protect the health of the primary asset of American companies — their employees and their families.
For example, this year’s report provides a deeper dive into programs used to help manage the number one cause of illness and disability worldwide — depression. We hope that you will find this report to be a key resource, helping you meet the goals and objectives you have set for your organization to improve the quality of care you deliver to your constituents. Takeda is also pleased to support a downloadable online version of the report, which is available at www.pbmi.com. Cordially,
Richard C. Ascroft, RPh, JD Vice President Managed Markets and Government Affairs Takeda Pharmaceuticals U.S.A., Inc.
Industry stakeholders will find valuable information on the latest trends in prescription benefit design, utilization management, rebate arrangements, pharmacy networks, and more. Trends in Drug Benefit Design
i
Preface
2017 Report Advisory Board
About PBMI
Questions
Adam J. Fein, PhD President Pembroke Consulting, Inc. Philadelphia, PA
The Pharmacy Benefit Management Institute (PBMI) provides research and education to help healthcare and benefits professionals work with pharmacy benefit managers to design drug benefit programs.
For questions relating to the report, please contact:
Paula Gazeley Daily, RPh Vice President, Client Management OptumRx Wynantskill, NY Christine Kosson Vice President and Practice Leader, Employer Segment Pharmaceutical Strategies Group Mendota Heights, MN David Marcus Director – Benefits National Railway Labor Conference Arlington, VA Lindsay Vondall, MA Senior Benefits Leader Target Corporation Minneapolis, MN
PBMI Research Staff Shelly Carey, MMR Research Director Sharon Glave Frazee, PhD, MPH Vice President of Research and Education Rebecca Sedjo, PhD, MSPH Research Director ii
2017 PBMI Research Report
PBMI provides a forum for purchasers to exchange ideas and drive marketplace changes that improve pharmacy benefits and control costs.
Jane Lutz Executive Director Phone: (480) 730-0814 Email:
[email protected] Pharmacy Benefit Management Institute 5360 Legacy Drive, Building 3, Suite 230 Plano, TX 75024
Acknowledgment
Creative Design
PBMI gratefully acknowledges the respondents who contributed their time and expertise to complete the Trends in Drug Benefit Design survey as well as our advisory board for their thoughtful review and comments during the development of the survey and this report. PBMI is also thankful for the sponsorship of Takeda for making this research possible. Final responsibility for the content of the report rests with PBMI.
Notion, LLC www.NotionPartners.com St. Louis, MO
Suggested Citation Pharmacy Benefit Management Institute. 2017. Trends in Drug Benefit Design. Plano, TX: PBMI. Available from http://www.pbmi.com/PBMI/ Research/Store/BDR.aspx.
Sponsor Takeda Pharmaceuticals U.S.A., Inc. One Takeda Parkway Deerfield, IL 60015 Phone: (877) 872-3700
table of contents
GETTING THE MOST OUT OF THE REPORT New New questions are denoted Q by the “New Q” triangle.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Executive Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Designing the Drug Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Contracting and Industry Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Cost Sharing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Clinical and Trend Management.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Clinical Spotlight: The Comorbidity Few Talk About – Managing Depression
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Trends in Specialty Drug Benefits Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Methodology & Respondent Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Additional Data Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Rev. Modified questions are denoted Q by the “Rev. Q” triangle.
The focus of this report is design and management of the overall drug benefit. Issues specific to specialty medications are explored in detail in a separate report — Trends in Specialty Drug Benefits — available from http://www.pbmi.com/PBMI/Research/ PBMI_Reports.aspx. For your convenience, a brief summary of key findings is shown in the Trends in Specialty Drug Benefits Summary located on page 48 of this report. Throughout the report, footnotes beginning with “Base” indicate the denominator group for the calculation of percentages and averages. Figure and table totals may not equal 100% due to rounding.
Trends in Drug Benefit Design
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Introduction
As a key part of the mission of the Pharmacy Benefit Management Institute (PBMI) to create meaningful conversations and provide education on the use of best practices and innovation in drug benefit management, we are pleased to present the 2017 research report, Trends in Drug Benefit Design. This annual report details employer-sponsored drug benefit design trends and strategies for the 2017 benefit year and provides insights into what strategies and benefit design changes employers are considering in upcoming years. This report, previous reports, as well as our other annual reports on drug benefit management-related topics, can be found at http://www.pbmi.com/PBMI/Research/ PBMI_Reports.aspx.
of existing specialty drugs, increased brand drug prices, and the incidence and prevalence of chronic disease among Americans all contribute to rising trend. Additionally, changes in treatment guidelines, which encourage aggressive early treatment, drive increased use of prescription drugs but may produce better long-term outcomes.
In the last decade, overall drug trend — the year-over-year change in spending — has dropped below the double-digit increases seen in the late 1990s and early 2000s. However, drug trend projections for 2017 through 2021 are estimated to increase to rates near 10% or higher1 compared to overall drug trend of 2.5% to 4.4% seen in 2016.2 The end of the generic wave, new and increased use
Strategies in drug benefit management go beyond just trend management and are moving toward a more value- or performance-based view of spend on prescription medications. Questions being asked include whether medications are helping employers achieve certain population-based goals and the value in terms of clinical outcomes relative to cost from one drug versus another.
Another important factor is a robust drug development pipeline, providing hope for many who live with chronic conditions. While much of the focus is on specialty drugs, the traditional drug pipeline is far from stagnant. New medications to treat diabetes, chronic pain, asthma, and depression, among others, are in Phase 3 development.3
These are critical questions but will likely bring more complexity to the management of drug benefits. For this reason, the need for meaningful conversations among all stakeholders — employers, pharmacy benefit managers (PBMs), health plans, pharmaceutical manufacturers, pharmacies, and consumers — are more important than ever. Our hope is that this research will contribute to those conversations and help ensure continued access to safe, effective, and affordable medications.
ROBUST DRUG PIPELINE While the focus is often on specialty drugs in development, the traditional drug pipeline is far from stagnant.
1. Segal Consulting. Double-Digit Rx Benefit Cost Trends Projected for 2017. Segal Consulting data: Practical Research for Multiemployer Plans. Fall 2016. Accessed February 3, 2017. 2. Fein A. Which PBM Best Managed Drug Spending in 2016: CVS Health, Express Scripts, MedImpact, or Prime? Drug Channels. Published March 21, 2017. Accessed March 21, 2017. 3. BioPharmCatalyst. FDA Calendar. Accessed April 3, 2017.
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Executive Summary Health and drug benefits are one of the most valued of all employee benefits, with 88% of workers reporting these as extremely or very important.4 The value associated with health and drug benefits come at a cost, however, particularly for prescription drugs, which are the most rapidly growing component of healthcare spending.5 Employers pay a significant portion of prescription drug costs and are disproportionately impacted when costs rise. For this reason, managing drug cost trend has been their primary goal for several years. This is not an easy endeavor as drug benefit management is highly complex. Employers rely on PBMs and health plans to help them minimize net drug cost through discounts, rebates, and formulary design and management. They also support the use of other tools that encourage better healthcare consumerism and provide clinical and educational support for members.
Executive Summary
Drug benefit management is complicated … Variety of employer offerings
95%
13%
PPO
EPO
32%
11%
Decisions, decisions ... funding, stop-loss insurance, carve-in/out, formulary, etc.
83%
57%
A majority of employers are self-insured with less being fully insured (14%)
More than half purchase stop-loss insurance for pharmacy and medical claims with less for only medical (20%)
73%
54%
Most use their PBM’s national/ preferred formulary with less creating a custom one (23%)
A little more than half of pharmacy benefits are carved-in with some movement on the horizon
HMO
POS
1 in 3 change the number of plans
18%
INCREASED number of plans offered
15%
DECREASED number of plans offered
Top goal of drug benefit management is — by far — managing drug cost trend
60
%
#1: Manage overall drug benefit trend
Sources from page 2: 4. Frostin P, Helman R. Views on the Value of Voluntary Workplace Benefits. Employee Benefit Research Institute Notes. 2015;36(11):2-12. 5. Gilrod C, Hart S, Weltz S. 2016 Milliman Medical Index. Milliman. May 24, 2016. Accessed June 4, 2016.
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9%
7%
Of those carved-in: 9% plan to carve-out in the next few years with 27% not sure
Of those carved-out: 7% plan to carve-in in the next few years with 16% not sure
Executive Summary
But you don’t have to go it alone ... Plan sponsors turn to trusted advisors in evaluating drug benefit design
30%
Consultant
%
76
use a benefit consultant for their drug benefit
14%
Broker
14%
PBM
10%
HR dept.
More often than not, the same consultant helps design both the medical and pharmacy benefit
9%
Employers also can join a coalition or group purchasing organization for PBM services to take advantage of greater buying power
Health plan
%
72
of them use the same consultant for their medical benefit
21% are members of a coalition or group purchasing organization
Benefit design changes on the rise to meet cost challenges The number and complexity of drug tiers has risen steadily with 41% having four or more tiers in 2017 deductibles that include pharmacy are becoming much more common More changes in the next few years are likely ... Preferential treatment saves money Preferred network use has increased 47% since last year
Members using nonpreferred pharmacies paid 36% more
38% Increasing deductible 1/3 of respondents are 38% Adding additional tiers also considering more cost- 31% Adding preferred network sharing changes, including: 22% Adding deductible 18% Adding limited network Trends in Drug Benefit Design
4
Executive Summary
Reimbursement, discounts, and rebates remain important tools in reducing plan spend on drugs Types of pharmacy reimbursement
Discounts for generics and brands
55% 59%
41%
Pass-through
Traditional or spread
More large employers receive traditional (non-specialty) drug rebates than smaller employers
Average retail 30 AWP discount for generics
18%
Average retail 30 AWP discount for brands
74%
68% Rebates are mainly used to reduce plan spend on drug costs
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2017 PBMI Research Report
Have guaranteed discounts for generics
55%
Have guaranteed discounts for brands
But other tools remain important Encouraging lower-cost place of service and cost-sharing transparency — more carrots than sticks Top Trend Tools Used
91%
72%
92% Prior authorization 92% Refill too soon/supply limits 91% Quantity limits 82% Step therapy 75% Formulary exclusions 75% Compound drug limits or exclusions
Top Clinical & Education Tools Used 83% Specialty care management 75% Disease management 69% Online tools/mobile app 58% Telehealth 57% Clinical support/counseling 53% Integrated pharmacy and medical data
Lower-cost Channel Strategies Used 1. Lower cost sharing 2. Member communications 3. Copay waivers 4. Higher cost after set number of fills
33%
Use cost-sharing transparency tools
Executive Summary
Critical Need — Managing Depression
#1
70% have at least one program in place to help manage the needs of members with depression
6%
30%
52%
But the problems related to depression are still many Not a problem at all
1
A very big problem
3.0
1
And the use of traditional utilization programs like step therapy for depression are only used by 56% of employers with more relying on preferred generics for depression
5
The cost of drug treatments for depression 3.1
Depression is the number one cause of illness and disability worldwide according to a recent World Health Organization (WHO) report. In the U.S., major depression is one of the most common mental health disorders, and it often accompanies other chronic health conditions such as diabetes, obesity, cancer, chronic pain, or heart disease.
Stand-alone program
Integrated in disease management program
Included in behavioral health program
The comorbidity few talk about
5
56%
Use step therapy for depression
78%
Use preferred generics for depression
Adherence to depression medications
1
2.9
Increased utilization of treatments
5
Most would like to see additional programs put in place if money were no object
Trends in Drug Benefit Design
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Designing the Drug Benefit Designing drug benefits is complex. Employers must consider many factors — budget, projected and past trend, the demographics and health status of their workforce, and corporate culture, among others. Drug costs are also rising faster than inflation, putting pressure on budgets and oftentimes confronting employers with difficult decisions. Should the forecasted trends in excess of 10%6,7 over the next few years come to fruition, this pressure will only intensify. With this in mind, employers must lean on their team of expert advisors and vendors, communicate with and engage their members, and be willing to try new approaches. The process must also be frequently revisited to ensure the alignment of controlled costs, member access to medications, and a drug benefit that promotes greater employee health and satisfaction. 7
DESIGNING THE DRUG BENEFIT
Drug benefit design typically starts with a team of human resources and benefits professionals who are responsible for developing and managing employee benefits that make their organization an employer of choice as well as one that provides for the health needs of its workforce. However, they must do this within a given budget and take into account corporate goals and objectives. Difficult choices often result. Armed with years of experience, a third have managed the drug benefit for over 10 years (Figure 1). They must juggle drug benefit design and management with their other job responsibilities. As shown in Figure 2, more than half of respondents reported that 25% or less of their job is focused on designing and managing the drug benefit. Fifteen percent of respondents are responsible for a drug benefit plan negotiated as part of a union or collective bargaining agreement.
FIGURE 1. Length of Time Managing Drug Benefit
Less than 1 year 3% More than 10 years
FIGURE 2.
Percentage of Job Focused on Drug Benefit
1 – 2 years
76% – 100% 51% – 75%
10%
7%
33% (n=318)
6 – 10 years
10%
3–5
25% years
26% – 50%
22%
(n=318)
29%
61% 1% – 25%
The process for designing and evaluating drug benefits is different for each employer and varies over time. However, some of the basic components include collaboration with key influencers/advisers, deciding how to fund benefits, and whether to purchase stop-loss insurance. 6. Segal Consulting. Double-Digit Rx Benefit Cost Trends Projected for 2017. Segal Consulting data: Practical Research for Multiemployer Plans. Fall 2016. Accessed February 3, 2017. 7. Express Scripts Lab. 2016 Express Scripts Drug Trend Report. Published February 14, 2017. Accessed February 15, 2017.
Trends in Drug Benefit Design
8
DESIGNING THE DRUG BENEFIT
Drug benefit decision makers have a variety of choices in helping them purchase and design the drug benefit. As shown in Figure 3, consultants were rated 30% of the time as being the most influential in evaluating drug benefit design, followed by PBMs and brokers (each 14%).
FIGURE 3.
Most Influential in Evaluating Drug Benefit Design*
= Significantly higher than comparison year.
36%
30%
Consultant
12%
9%
Health plan
16%
14%
Broker
4%
Most employers take a team approach to designing the drug benefit. They rely on expert advisors such as consultants, brokers, their PBM, and health plan.
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14%
PBM
8%
Senior management 2016 (n=337)
EXPERT ADVISORS
19%
3%
7%
10%
HR/benefits department
6%
Employee benefits committee 2017 (n=318)
*Results do not equal 100%. Remaining respondents indicated “Other” as most influential.
2%
3%
Finance
DESIGNING THE DRUG BENEFIT
More than three-quarters (76%) of employers use a consultant to help them evaluate and design their drug benefit. Of those using a consultant, 72% use the same person to evaluate and design the medical benefit (Figure 4). The majority of employers reported that the drug benefit and medical benefit are designed in concert (71%; Figure 5). Designing the drug and medical benefit together does not imply that the drug benefit is carved into the medical benefit plan. Rather, the design on both benefits are taken as a whole but may ultimately fall under separate contracts, and perhaps, through different vendors.
FIGURE 4.
New Q
Use of Benefit Consultant
Base: Respondents who work directly for the employer.
Not same person but same firm Yes, the same person
76%
Do you use the same consultant for medical benefit?
(n=238)
Yes, use a consultant for drug benefit
FIGURE 5.
How Benefits Are Designed
Base: Respondents who work directly for the employer. (n=238)
29%
13% 72%
12% (n=181)
A different firm
Don’t use a consultant for medical benefit 3%
New Q
71%
Drug and medical benefit designed separately Drug and medical benefit designed together
Trends in Drug Benefit Design
10
DESIGNING THE DRUG BENEFIT
Employers reported that their organization managed a variety of plan types offering both pharmacy and medical benefits (Figure 6). Preferred Provider Organization (PPO) plans are the most common with 95% of respondents reporting that their organization offers at least one plan of this type. PPOs are popular because they are flexible and do not require members to have a referral from their primary care physician to see a specialist, but cost sharing is higher for members who go outside the PPO network. On average, employers report that their organization manages three different plans offering both pharmacy and medical benefits. More than 60% report that the number of plans offered has stayed the same in the past few years (67%; Figure 7).
FIGURE 6.
Base: Respondents who work directly for the employer. Multiple responses allowed. (n=238)
95%
32%
13%
11%
PPO (Preferred Provider Organization)
HMO (Health Maintenance Organization)
EPO (Exclusive Provider Organization)
POS (Point of Service Plan)
FIGURE 7.
Change in Number of Plans Offered
Base: Respondents who work directly for the employer. (n=238)
18%
15%
Yes, the number has increased No, the number has stayed the same
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New Q
Types of Plans Offered
New Q
67% Yes, the number has decreased
DESIGNING THE DRUG BENEFIT
Employers must also decide how to fund medical and pharmacy benefits. The vast majority of employers self-insure both pharmacy and medical benefits (83%; Figure 8). Self-insured plans take on more financial risk but may have lower overall costs when they manage benefits effectively. Risk is an important consideration in this era of rising specialty drug cost trend. One way to mitigate risk against financial loss due to one or more cases of catastrophic illness or unexpected large medical or drug claims costs is through stop-loss insurance. Stop-loss insurance for both pharmacy and medical claims was purchased by 57% of employers who self-insure, while 20% reported stoploss insurance for medical only, and 1% for pharmacy claims only, with no stop loss for either pharmacy or medical claims reported by 22% of respondents (Figure 9).
FIGURE 8.
How Benefits Are Funded
Base: Respondents who work directly for the employer.
FIGURE 9.
Purchase of Stop-Loss Insurance
Base: Respondents who work directly for the employer.
3% 1%
22% 14%
1%
(n=238)
(n=225)
20%
57%
83% Yes, for both pharmacy and medical claims Both are self-insured
Yes, for medical but not pharmacy claims
Both are fully-insured
Yes, for pharmacy but not medical claims
The pharmacy benefit is self-insured; the medical benefit is fully-insured
No
The pharmacy benefit is fully-insured; the medical benefit is self-insured
Trends in Drug Benefit Design
12
DESIGNING THE DRUG BENEFIT
An important aspect of deciding how to set up drug benefit services is respondent views on whether a PBM or health plan is better equipped to handle various drug benefit management functions. Respondents were asked to state their opinion on which drug benefit functions were better handled by the PBM or by someone other than the PBM. As shown in Table 1, medical-focused functions (medical management, disease/ care management, and coordination of care) were more often reported as better handled separate from the PBM. Conversely, drugfocused functions, such as pharmacy network management and discounts, mail order pharmacy services, rebates, drug utilization review, prior authorization, reducing drug trend, and utilization management were felt to be better managed by the PBM. Armed with input from key advisors, often with the assistance of consultants, knowledge of the number of plans, how insurance is funded and risk mitigated, and a set of beliefs on who best manages certain drug benefit functions, employers are able to start making decisions on network contract and channel strategies for the drug benefit.
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TABLE 1.
View on PBM Management of Benefit Functions
(n=318)
Separate from the PBM is better
Handled by the PBM is better
No difference
Medical management
62%
24%
14%
Disease/care management
57%
25%
18%
Coordination of care
49%
34%
18%
Utilization management
29%
57%
14%
Reduced drug cost trend
28%
55%
17%
Formulary management
23%
67%
10%
Prior authorization
19%
65%
15%
Drug utilization review
19%
68%
13%
Pharmaceutical manufacturer rebates
18%
70%
11%
Pharmacy network management and discounts
13%
75%
12%
Mail order pharmacy services
12%
74%
14%
Contracting and Industry Relations The area of contracting and industry relations is probably the most complex part of drug benefit design and management but also one of the most crucial building blocks. Employers have options in several critical areas. These options ultimately drive where members can fill prescriptions. Additionally, other options impact discounts and rebates on drug prices. Employers and other plan sponsors either alone, or in concert with others such as in a group purchasing arrangement, leverage the PBM contracting process to achieve various goals such as cost savings, program management, member access, and level of coordination with the medical benefit. 14
Contracting and Industry Relations
Drug Benefit Contracting One of the basic building blocks of drug benefit design is deciding whether, and how, to integrate drug benefits with the medical benefit. As shown in Figure 10, 46% carve-out the drug benefit. That is, the management of the drug benefit is separate from the management of the medical benefit, using two different entities or two separate contracts to administer the benefit. There has been little rigorous study of the advantages of carvingout versus carving-in drug benefits,8 although research in this area would be welcomed FIGURE 10.
by the marketplace as there is considerable interest by employers.
benefits, and easier coordination with stoploss insurance.9
When the drug benefit is carved-in, the employer contracts directly with their health plan for both medical and drug benefit management and administration. The drug benefit may be administered directly by the health plan-owned PBM, or the health plan contracts with a PBM to handle the drug benefit administration. The most frequently noted advantages of carve-in are simplified administration, potential for better coordination between medical and pharmacy
Conversely, when the drug benefit is carvedout, the employer contracts with the PBM to administer the drug benefit, either directly or via their health plan, but under a separate contract. Noted advantages of carve-out include more program flexibility and PBM contract offerings not always available from a health plan such as access to pharmacy claims data, audit rights, market check provisions, and pharmacy-specific financial and performance guarantees.
Relationship with Medical Benefit
Base: Respondents who work directly for the employer.
Yes Not sure
9%
16%
27% (n=129)
Is your drug benefit carved-out? (n=238)
Do you plan to carve-out in the next few years?
64% No
54%
Do you plan to carve-in in the next few years?
46%
No
Yes
8. Gleason PP, Qiu Y, Bowen K, Starner CI, Johnson SV, Yoder D. Economic and Event Outcomes of Members with Carve-In Versus Carve-Out Pharmacy Benefits: A 2-Year Cohort Study. Academy of Managed Care Pharmacy: Boston, MA, Oct 2014. Published Abstract: J Manag Care Pharm. 2014;20(10a):S10-11. 9. Anderson BN, Reed A. Pharmacy benefits carve-in versus carve-out. Milliman White Paper. December 2016. Accessed January 3, 2017.
2017 PBMI Research Report
(n=109)
77%
Base: Respondents whose pharmacy benefit is carved-in with the medical benefit.
15
7% Yes
Not sure
No
Base: Respondents whose pharmacy benefit is carved-out from the medical benefit.
Contracting and Industry Relations
Irrespective of whether employers chose a carved-in or a carved-out drug benefit, one thing is clear — the majority of respondents had no plans to change their carve-in or carve-out status. As already mentioned, employers have the option to contract directly with a PBM or through a health plan, third-party provider, or administrator. As shown in Figure 11, employers responding to this year’s survey most often reported contracting through a drug benefit administrator (51%).
FIGURE 11.
Relationship with PBM
Base: Respondents who work directly for the employer. (n=238)
43% With PBM directly
Through administrator
New
FIGURE 12.
Use of Coalition/Group Q Purchasing Organization for PBM Services
Base: Respondents who work directly for the employer.
Other
FIGURE 13.
Covered Dispensing Channels
Multiple responses allowed. (n=318)
100%
100%
95% 88%
Yes
New for this year, we also asked about whether respondents purchased PBM services through a coalition or other group purchasing organization. As shown in Figure 12, 21% reported that they purchase their PBM services via one of these organizations. Another basic building block of drug benefit design is the decision of which dispensing channels to include. Plans may allow the dispensing of drug through a variety of channels. As shown in Figure 13, all respondents cover 30-day fills at retail pharmacies, 95% permit fills at mail order pharmacies, 88% cover specialty pharmacy fills, 66% allow 90-day fills at retail pharmacies, and 19% at an on-site or in-house pharmacies. Note that these channels are not mutually exclusive for a type of drug. For example, both retail
51% 5%
90%
21%
80% 70%
66%
60%
(n=238)
50% 40%
79%
30%
No
19%
20% 10%
30-day fills and specialty pharmacy fills may be allowed for specialty drugs. Similarly, the plan might allow non-specialty drugs to be filled via retail 30-day, retail 90-day, mail order, and on-site/in-house pharmacy where those options are included in the plan.
0%
Retail 30-day fills Mail order fills
Retail 90-day fills Specialty pharmacy fills
On-site/in-house pharmacy fills
Trends in Drug Benefit Design
16
Contracting and Industry Relations
Once employers decide which dispensing channels are best for their members, they work with their PBM (directly or through their health plan) on pharmacy network design. PBMs contract with retail pharmacies on behalf of the clients that they serve and base contracts on two main components — design and discounts. Network design determines where members can fill prescriptions and at what level of cost sharing. Deeper discounts from the retail pharmacies included in network design are possible from preferred or limited network arrangements. The three primary types of pharmacy networks, in order of least to most restrictive, are open, preferred, and limited. Open networks typically include all major chain pharmacies and most independent pharmacies, placing almost no limits on where members can fill prescriptions using their drug benefit. In a preferred network arrangement, members are encouraged, typically through lower cost sharing, to use a subset of participating pharmacies who are willing to reduce their reimbursement in exchange for the possibility of higher prescription volume. In preferred networks, members are usually not restricted to certain pharmacies but may pay more to use a nonpreferred pharmacy. The most restricted are limited networks, which
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require members who want their prescription costs covered by the plan to use specific participating pharmacies. Although there is no single numeric definition of a limited network, one industry benchmark is a two-thirds size reduction (i.e., about 20,000 pharmacies nationwide). To apply a single definition for survey purposes, PBMI defined this arrangement as a network from which at least one major pharmacy chain is eliminated.
FIGURE 14.
Retail Network Usage
= Significantly higher than comparison group.
2016 (n=337)
55%
53%
50% 45% 40%
36%
As shown in Figure 14, the use of both preferred and limited networks has increased in the past year, with 53% reporting use of a preferred network and 21% of a limited network, compared to 36% and 14% respectively last year. On average, members who used a nonpreferred network pharmacy paid 36% more than they would have had they used a preferred pharmacy.10 The primary goal of preferred and limited pharmacy networks is to provide savings to plan sponsors by encouraging or mandating members to use pharmacies that offer deeper discounts on prescription drugs and dispensing fees in exchange for increased volume of business at their stores.11,12
2017 (n=318)
35% 30%
21% 14%
25% 20% 15% 10% 5%
Preferred network
Limited network
0%
10. The reported median member out-of-pocket costs for nonpreferred pharmacies was 25% in 2017. Both the mean and median are the same as 2016. 11. Fein AJ. The Big Squeeze. Pharmaceutical Executive, Pharmacy Benefit Networks, May 2013. Accessed April 15, 2015. 12. Fein AJ. Yes, Commercial Payers are Adopting Narrow Retail Pharmacy Networks. Drug Channels. Published January 11, 2017. Accessed January 11, 2017.
Contracting and Industry Relations
Rather than relying on their PBM to negotiate rebates and network discounts, employers may choose to contract directly with manufacturers and/or retail pharmacies. As shown in Figure 15, this is fairly uncommon with 16% of employers contracting directly with retail pharmacies and 5% with pharmaceutical manufacturers. Employers who have an on-site/in-house pharmacy are significantly more likely to report contracting directly with retail pharmacies and pharmaceutical manufacturers than those who do not have an on-site pharmacy.
Pharmacy Reimbursement Pharmacy reimbursement has two core elements — drug ingredient cost and a dispensing fee. In exchange for the volume of prescriptions associated with group drug plans, PBMs negotiate discounted prescription drug prices and/or reduced dispensing fees with pharmacies, and the PBMs in turn pass along some (traditional/spread) or all (pass through) of the savings to plan sponsors. As shown in Figure 16, 41% of respondents with knowledge of pharmacy reimbursement indicated that they receive traditional/spread reimbursement, and 59% reported passthrough reimbursement.
FIGURE 15.
Direct Contracting
Base: Respondents who work directly for the employer. 20%
16%
15% 10%
5%
With retail pharmacies (n=220)
FIGURE 16.
5%
With pharmaceutical manufacturers
0%
(n=212)
Type of Pharmacy Reimbursement
(n=271)
41% Traditional or spread pricing
Rev. Q
59%
Pass-through pricing
Trends in Drug Benefit Design
18
Contracting and Industry Relations
Based on feedback from our readers, this year we brought back questions asked in 2015 on guaranteed discounts and the percentage off Average Wholesale Price (AWP) for brand and generic drugs.13 AWP, created in the 1960s, is a list price benchmark for many drug transactions.14 There is no formal definition of AWP and, despite its name, AWP does not represent the actual amount paid.15 Nonetheless, AWP is commonly used by PBMs and plan sponsors. Based on the rate that the plan pays the PBM, 72% report a guaranteed discount applied to all generic medications, and 55% report a guaranteed discount applied to all brand medications (Figure 17). Guaranteed discounts are those that the PBM is contractually obligated to provide to the plan. Other discounts may also be offered but are not guaranteed. Average AWP generic and brand discounts are shown in Table 2 for those respondents who reported a guaranteed discount for each type of drug.
The average discount off AWP for generic drugs varied by channel, employer size, and employer versus health plan status with a low of 22% off AWP for on-site pharmacies used by smaller employers16 to a high of 69% for health plans for mail order and on-site pharmacies. Brand drug AWP discounts were considerably less in most cases with less variability by channel and respondent type than generic drug discounts. Large employers generally received slightly deeper discounts but not by a significant margin.
FIGURE 17.
Have Guaranteed Discounts
80%
72%
70%
55%
40% 30% 20% 10%
Generic discount
Brand discount
(n=264)
0%
(n=233)
New Q Base: Respondents with a guaranteed discount for the drug type. N varies by dispersing channel and drug type. N/A = not applicable. TABLE 2.
Average AWP Discount
Retail 30
Retail 90
Mail Order
Specialty
On-site
Generics
55%
59%
62%
N/A
49%
Brands
18%
21%
25%
19%
22%
14. Berndt ER and Newhouse JP. Pricing and Reimbursement in U.S. Pharmaceutical Markets. National Bureau of Economic Research, Working Paper 16297. September 2010. Accessed February 2011. 15. Fein AJ. The 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute. 2017. 16. Please note the sample size for smaller employers with an on-site pharmacy was very small (n=9). Extreme caution is advised in generalizing this data point.
2017 PBMI Research Report
60% 50%
13. Pharmacy Benefit Management Institute. 2015-2015 Prescription Drug Benefit Cost and Plan Design Report. 2015. Plano, TX: PBMI. Available from http://www.pbmi.com/PBMI/Research/Store/BDR.aspx.
19
New Q
Contracting and Industry Relations
Another pricing metric is the Maximum Allowable Cost (MAC) price. MAC prices represent the maximum payment amounts for generic medications. Because they provide consistent pricing for generic medications of the same strength and dosage made by multiple manufacturers (e.g., multi-source generics), MAC prices offer an important source of discounts for plan sponsors. PBMs generally consider their MAC lists to be proprietary, and it is common for PBMs to use different MAC lists within their book of business. Similar to AWP, there is no standard definition for MAC.17 As shown in Figure 18, respondents most often reported the use of MAC pricing for retail 30 generics (71%), followed by mail order generics (61%), and retail 90 generics (49%).
based on the predicted volume of drugs dispensed. Additionally, price reductions (discounts) may be negotiated for including a single manufacturer’s drug on the PBM’s formulary and excluding competing drugs or by putting the drug on a lower cost sharing tier. These arrangements essentially trade volume for price. FIGURE 18.
Use of MAC Pricing
(n=318)
Retail 30 generics
71%
DISCOUNTS, REBATES, AND FEES
Retail 90 generics
49% Mail order generics
Rebates Rebates are typically negotiated by PBMs or health plans as part of their formulary contracting agreements and, depending on the contract, sometimes a portion or all of the savings is passed on to the employer. Rebates and/or other negotiated price concessions from manufacturers are typically
New Q
61%
The actual cost paid for any given dispensed drug involves many factors including negotiated discounts, rebates, and dispensing fees.
On-site/in-house generics
10% None of these
21%
17. Fein AJ. The 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute. 2017.
Trends in Drug Benefit Design
20
Contracting and Industry Relations
with a minimum guarantee (27%) or with no guarantee (22%). As shown in Figure 20, rebate arrangements are more common for large employers, with 91% reporting receiving rebates versus 74% of smaller employers. Differences by employer size are also seen when looking at receipt of 100% of rebates. Slightly more than half of large employers receive 100% of rebates, either with or without a minimum guarantee (53%), while only 42% of smaller employers receive 100% of rebates.
Rebate terms for employers vary based on client contracts. PBM contracts may guarantee a flat dollar amount or a percentage share of rebates (with or without minimum guarantees), on a “per prescription,” “per rebatable drug,” or brand and generic utilization basis. Over eighty percent of respondents with knowledge of rebate arrangements reported that they receive rebates on traditional (non-specialty) drugs (Figure 19). The most frequent arrangement was 100% of rebates being passed through to the employer, either
FIGURE 20.
Receipt of Traditional (Non-Specialty) Drug Rebates = Significantly higher than comparison year.
2016 (n=307)
86% 14% 2017 (n=290)
84% Yes
16%
No
Receipt of Traditional (Non-Specialty) Drug Rebates by Employer Size
Base: Respondents who receive rebates.
74%
= Significantly higher than comparison year.
Smaller employers
35% (n=84)
12% Yes, we receive rebates 100% of rebates, minimum guarantee
17%
27%
17%
(n=136)
16%
100% of rebates, no guarantee
Percentage share of rebates, minimum guarantee
2017 PBMI Research Report
14%
15%
29%
(n=128)
21
FIGURE 19.
Large employers
91% (n=162)
18%
Yes, we receive rebates
Percentage share of rebates, no guarantee
Flat dollar guaranteed amount
Contracting and Industry Relations
New for this year, we asked how rebates are used by plan sponsors. As shown in Figure 21, the most common response was to reduce plan spend on drug costs. Only 4% reported that rebates are used to reduce member out-of-pocket costs at the point of sale. The concept of sharing rebates at the point of sale has been the topic of public debate in recent months,18,19 but the practical application of point-of-sale rebates is both uncommon and a challenge to execute. Rebates are calculated well after the member has left the pharmacy so any point-of-sale reductions are based on estimates only. It should be noted that most plan sponsors consider rebates important to keeping drug costs low which in turn, keep premiums affordable for their members — in essence sharing the savings but on a more global level.
FIGURE 21.
New Q
How Rebates Are Used
Base: Respondents who receive rebates. (n=236)
68%
15%
11% 4% 1%
Reduce plan spend on drug costs Offset member premiums
Combination of plan and member savings
Reduce member out-of-pocket costs at point of sale
Other
18. PhRMA. Commercially-insured Patients Pay Undiscounted List Prices for One in Five Brand Prescriptions, Accounting for Half of Out-of-Pocket Spending on Brand Medicines. PhRMA Report. Accessed March 30, 2017. 19. Snyder Bulik B. PhRMA and PCMA fire up another tit-for-tat spat over new drug pricing ad campaign. FiercePharma. April 10, 2017.
Trends in Drug Benefit Design
22
Contracting and Industry Relations
Price Protection Price protection provisions are sometimes included in PBM contracts. This is a ceiling or cap put on the amount manufacturers can increase the cost of a medication during the life of the rebate contract with the PBM. Price protection provisions can provide some stability in terms of cost for plan sponsors. Of respondents who were knowledgeable about whether their organizations’ PBM contract included price protection, 23% indicated that their contract had this arrangement in place, significantly less than reported in 2016 (35%; Figure 22). The vast majority (93%) reported that revenue from price protection is passed back to the plan.
FIGURE 22.
This year we asked a follow-up question to assess whether respondents thought price protection benefits their plan. The 78% who reported that price protection benefits their plan were asked to describe the ways in which the plan benefits from price protection provisions. Common responses included: “Buffer against large yearly brand inflation increases.” “Guarantees such as price protection incentivize the PBM’s fiduciary approach to my dollars.” “It helps avoid the effects of skyrocketing increases in relatively older medications as well as generally making the pricing provisions much more transparent.”
For those who did not feel price protection benefited their plan, responses included: “Lack of definition behind price protection and lack of transparency.” “The PBM does not supply full disclosure of amounts. They provided ‘bundled’ information that may or may not be accurate.” “In contract, but have not seen the amounts detailed in refunds/rebates. Has not been quantified.”
78% of respondents believe the plan benefits from price protection provisions
Price Protection Provisions in PBM Contract
= Significantly higher than comparison year.
7% No
No 5%
Yes
35% (n=220)
No
Yes
Does this revenue get passed back to the plan?
2016 (n=66)
2017 (n=46)
95%
Yes
93%
Base: Respondents whose contract includes price protection. 23
2017 PBMI Research Report
Does this revenue get passed back to the plan?
23% (n=217)
No
Contracting and Industry Relations
Formulary Formulary decisions are another important aspect of drug benefit management, from both a contracting perspective (i.e., rebates may influence or be influenced by formulary placement) and for member cost sharing (which will be discussed in the next chapter). This year we added a series of questions on formulary decisions made by plan sponsors. Plan sponsors can choose to use the PBM’s national/preferred formulary, develop a custom formulary, or use some other formulary such as that developed by their health plan.
FIGURE 23.
Type of Formulary Used
New Q
Other 4%
As shown in Figure 23, 73% use the PBM’s national/preferred formulary while 23% have a custom formulary. A small percentage (4%) use formularies developed by their health plan or medical third-party administrator. To provide some insight into why plan sponsors choose the PBM’s national formulary or use a custom formulary, follow-up questions were asked. Of those who chose the PBM’s national formulary, common responses as to why centered on better pricing/lower costs, ease of administration/management, and that it met the needs of their members. For the 23% who use a custom formulary, reasons centered on flexibility and having more control. FIGURE 24.
We also asked respondents how important they thought the role of formulary was on managing drug cost trend. Using a scale of 1 to 5 where 1 meant formulary has no impact on managing traditional drug cost trend and 5 meant formulary plays a critical role in managing traditional drug cost trend, the average value was 3.9 as shown in Figure 24. The largest percentage of respondents rated it a 4 out of a possible 5 in terms of importance.
New Q
Role of Formulary on Managing Drug Cost Trend
Base: Respondents who know what type of formulary the plan uses. (n=310) No impact on managing traditional drug cost trend
Custom formulary
Critical tool for managing traditional drug cost trend
1
5
23% 1%
(n=310)
5%
31%
33%
30%
73% PBM’s national/preferred formulary
Trends in Drug Benefit Design
24
Contracting and Industry Relations
Formulary exclusions are a tool frequently used to manage drug costs, provide leverage for price concessions or higher rebates, and support clinical decisions. In the traditional drug space, nearly all common medical conditions have multiple clinical options available.
FIGURE 25.
More than seventy percent of respondents knowledgeable about formulary exclusions reported that their plan included formulary exclusions (Figure 25). The therapeutic areas most often reported as having formulary exclusions were diabetes (49%), dermatological/skin conditions (49%), and GERD/ulcer disease (43%). New Q
Use of Formulary Exclusions
Base: Respondents with formulary exclusions. (n=201)
Diabetes
Asthma
49% Dermatological/skin conditions
49% No
28%
(n=279)
72% Yes
GERD/ulcer disease
43% High blood cholesterol
39% Pain/inflammation
37%
25
2017 PBMI Research Report
30% Attention disorders
29% Depression
27% Ear/nose/throat (ENT)
16% Other
21%
Contracting and Industry Relations
Like many management strategies, formulary exclusions can create challenges. As shown in Figure 26, the number one challenge most often cited was member dissatisfaction (69%).
FIGURE 26.
Number One Challenge Associated with Formulary Exclusions
New Q
Base: Respondents with formulary exclusions. (n=201)
Member dissatisfaction
69% Appeals
10% Clinical disruption
9% Physician complaints
4% Adherence
3% Implementation issues
2% Other
1%
Trends in Drug Benefit Design
26
Cost Sharing From a member perspective, cost sharing is the most visible part of the drug benefit. Member cost share, defined as out-of-pocket costs in addition to the amount members spend on their monthly premium, can come in a variety of forms — primarily copayments, coinsurance, deductibles, or some combination of these. Employer-sponsored insurance plans typically require some form of cost sharing when members use their drug benefit. Cost sharing serves a number of purposes including defraying some of the costs for plan sponsors, keeping premiums affordable, reducing the use and costs of unnecessary drugs, and providing a financial incentive to choose lower-cost drugs when available. 27
Cost Sharing
Cost-sharing decisions are often challenging as plan sponsors strive to balance providing access to clinically necessary medications with fiduciary responsibilities. Tied to the formulary decisions discussed in the previous chapter, cost sharing is commonly based on the tier placement of a particular drug. Copayments are set dollar amounts for drugs based on their tier placement, while coinsurance requires the member to pay a percentage of the actual cost of the drug. Coinsurance amounts can exist with or without minimum and/or maximum out-of-pocket amounts per prescription. Additionally, some plans require members to meet a deductible amount prior to the plan covering any portion of medication costs. As shown in Figure 27, the use of four or more tiers has grown steadily over the last six years. In 2012, only 26% of employers reported four or more tiers for their plan compared to 41% in 2017 — a 58% increase.
FIGURE 27.
Number of Tiers for Drugs Covered by the Plan
2012 (n=424)
9%
63%
22% 3% 1%
3%
2013 (n=478)
64%
22% 4% 1%
2% 6%
2014 (n=353)
7%
55%
29%
4%
3% 2%
2015 (n=302)
58%
29%
3% 5%
3% 1%
2016 (n=337)
54%
31% 5% 2%
2% 5%
2017 (n=318)
49%
31% 7% 3%
4% 5%
One tier
Two tiers
Three tiers
Four tiers
Five tiers
Six or more
Trends in Drug Benefit Design
28
Cost Sharing
Additionally, the makeup of each tier has become more complex. The standard threetier design, of generics/preferred brands/ nonpreferred brands is still the most common three-tier design and the most common four-tier design is generics/preferred brands/ nonpreferred brands/all specialty drugs. As more drug choices enter the market, formulary and cost-sharing designs will likely continue to be modified to encourage the use of drugs with a lower net cost and/or those drugs that have clearly demonstrated better clinical outcomes than alternatives.
Deductibles are very common under the medical benefit with over 80% of employees having an annual deductible.20 In the pharmacy benefit, however, deductibles were rarely seen until recent years. As shown in Figure 28, in 2017 39% of plans had a deductible that included pharmacy, similar to the 38% reported in 2016. Plans are moving to a combined medical and pharmacy deductible (26%) rather than separate deductibles for medical and pharmacy benefits (11%) or deductibles for pharmacy only (2%). In plans with a deductible
The use of deductibles in the drug benefit has become much more common in the last several years.
FIGURE 28.
that either includes or is specific to pharmacy only, the plan begins payment of their portion of drugs after the member has met the deductible amount. For the minority of plans with a separate pharmacy deductible (reporting either “deductible under pharmacy benefit only” or “separate pharmacy or medical deductibles”), deductible amounts averaged $395 for single coverage and $1,068 for a family.
Use of Deductibles
= Significantly higher than comparison year.
2016 (n=337)
49%
13%
21%
4%
2017 (n=318)
44%
16%
26%
2%
No deductible
Deductible under pharmacy benefit only
Deductible under medical benefit only
Shared pharmacy and medical deductible
Separate pharmacy and medical deductibles
20. Long M, Rae M, Claxton G. A Comparison of the Availability and Cost of Coverage for Workers in Small Firms and Large Firms: Update from the 2015 Employer Health Benefits Survey. The Henry J. Kaiser Family Foundation Issue Brief. February 2016. Accessed May 30, 2016.
29
2017 PBMI Research Report
13%
11%
Cost Sharing
Maximum out-of-pocket (MOOP) limits protect members from very high out-of-pocket costs by placing a cap on the amount of cost sharing that a member is responsible for in a plan year. The use of MOOP limits for prescription drugs significantly decreased in 2017 with 38% of employers reporting the use of this protection (Figure 29). This decline may be due to plans no longer feeling the need for additional member cost-sharing protection as there are already caps in place mandated by the Affordable Care Act (ACA). However, it is too early to tell if this is an actual trend or simply a single-year data anomaly. The MOOP limits averaged $2,635 and $5,399 for single and family coverage respectively — considerably less than the 2017 out-of-pocket maximum of $7,150 for an individual and $14,300 for a family mandated by the ACA provision for non-grandfathered self-insured and large group health plans.21,22 Neither MOOP amount rose significantly from the 2016 averages of $2,597 and $5,234 respectively. Additional details on pharmacy deductible and MOOP amounts can be found in the Appendix.
The majority of plan sponsors currently without a pharmacy deductible are not considering adding one in the coming years. As shown in Figure 30, only 17% of those without a pharmacy-specific or combined deductible responded affirmatively that they were considering a pharmacy deductible. This is the same percentage as last year.
FIGURE 29.
Use of Annual Out-of-Pocket Limits
= Significantly higher than comparison year. 50%
46% 38%
40% 30% 20% 10%
2016
(n=324)
FIGURE 30.
2017
0%
(n=303)
Considering Adding a Pharmacy Deductible
Base: Respondents without a pharmacy deductible.
2016 (n=161)
17%
83%
2017 (n=160)
17% Yes
83%
No
21. Healthcare.gov. Out-of-pocket maximum/limit. Accessed April 13, 2017. 22. Note that a dwindling number of grandfathered plans are exempt from this requirement. For more information see: The Henry J. Kaiser Family Foundation. Grandfathered Health Plans. September 14, 2016. Accessed April 14, 2017.
Trends in Drug Benefit Design
30
Cost Sharing
Pharmacy Cost Sharing by Channel As shown in Figure 31, cost-sharing structures are essentially the same irrespective of pharmacy channel with more than half having a flat dollar amount, followed by percentage share without minimum and/or maximum amounts for every channel except on-site pharmacies. On-site pharmacies were more likely to have cost-sharing structures that vary by tier (shown as other).
FIGURE 31.
Cost-sharing Structures for ...
Base: Respondents who cover the dispensing channel.
Retail 30-day fills (n=318)
62%
14%
11% 3% 4%
5%
Retail 90-day fills (n=211)
60%
16%
6%
9%
8%
2%
Mail order fills (n=302)
59%
12%
6%
10%
11%
3%
On-site pharmacy fills (n=62)
65%
8%
8%
18%
2%
Flat dollar amount
Percentage share without min or max
Percentage share with max only
31
2017 PBMI Research Report
Percentage share with min only
Percentage share with min and max
Other
Cost Sharing
Pharmacy Cost Sharing by Tier and Channel Average copay, coinsurance, minimum, and maximum cost sharing amounts vary by tier and where prescriptions are filled. Data for three-tier designs are in Table 3 as this is the most common plan design. Details on four-tier and five-tier designs are shown in the Appendix as well as minimum and maximum amounts where applicable. In three-tier designs, average tier 1 flat dollar copays for a 30-day retail prescription are $11.55, up slightly from the average of $10.30 reported in 2016. Tier 3 copay amounts averaged $59.14, also up slightly from 2016 ($58.21).
TABLE 3.
Average Cost Sharing for Three-Tier Copay and Coinsurance Designs Flat Dollar Copay Designs n
Tier 1
Tier 2
Tier 3
Retail 30
97
$11.55
$31.41
$59.14
Retail 90
58
$22.60
$61.10
$112.36
Mail
91
$20.56
$57.35
$105.79
On-site
16
$8.86
$23.43
$45.00
Coinsurance Designs Retail 30
53
14%
24%
33%
Retail 90
34
14%
24%
31%
Mail
47
15%
24%
32%
On-site
n size too small to report
For employers who reported having three-tier coinsurance designs, the percentage paid by the member is similar across all channels. The average coinsurance for tier 1 is approximately 14%, with coinsurance rising to a range of 31% to 33% for tier 3 depending on channel. For plans with minimums and/or maximums for coinsurance, minimum/maximum costs ranged from $7.15/$21.96 (tier 1, retail 30) to $79.32/$313.20 (tier 3, retail 90). These data and those for four-tier designs can be found in the Appendix.
Trends in Drug Benefit Design
32
Cost Sharing
Pharmacy Channel Restrictions and Incentives Certain channels often have restrictions on where prescriptions can be filled (in the case of retail 90) or if use of that channel is mandatory. These are used in addition to network contracting to reduce overall costs by advantaging channels that offer lower drug costs and/or dispensing fees. As shown in Figure 32, 61% of employers with a retail 90 benefit allow prescriptions to be filled in all retail network pharmacies while 39% restrict these fills to a limited or restricted network. The use of limited networks, those where only one or two major pharmacy chains are included, has risen slightly from last year. New this year, we asked which types of fills are covered by in-house/on-site pharmacies. As shown in Figure 33, both 30- and 90-day fills are most frequently covered (76%).
FIGURE 32.
Pharmacy Network Options for Retail 90-Day Fills
Base: Respondents who cover retail 90 fills.
2016 (n=191)
64% 2017 (n=211)
61% All pharmacies
Limited network
FIGURE 33.
Type of Fills Covered at On-Site Pharmacy
New Q
Base: Respondents who have an on-site pharmacy. (n=62)
76%
80% 70% 60% 50% 40% 30%
23%
20% 10%
2%
30-day fills only
33
2017 PBMI Research Report
36%
90-day fills only
Both 30- and 90-day fills
0%
39%
Cost Sharing
Members whose plan design includes retail 90, mail order, or on-site pharmacy channels may be required to use these for some or all medications. As shown in Figure 34, the use of these channels is usually voluntary. Three-quarters of respondents whose plans offered retail 90, mail order, and/or on-site pharmacy channels reported the use of at least one strategy to increase utilization of these channels (Figure 35). Lower cost sharing was the most frequently noted strategy, followed by member communications.
FIGURE 34.
Pharmacy Network Options for ...
Base: Respondents who cover that dispensing channel.
Retail 90-day fills (n=211)
77%
17%
7%
Mail order fills (n=302)
72%
17%
11%
On-site pharmacy fills (n=62)
73%
23% 5%
Voluntary
FIGURE 35.
Mandatory for some medications
Mandatory for all maintenance medications
Strategies Used to Increase Utilization
Base: Respondents with voluntary design in that dispensing channel. Multiple responses allowed.
48%
60%
53% 42%
39%
50%
42% 42%
40%
10% 12% Lower cost sharing
9%
12%
18%
25% 25% 24%
30% 20%
9%
10%
Retail 90-day (n=162) Mail order (n=216) On-site pharmacy (n=45)
0%
Member communications
Higher cost elsewhere after a set number of fills
Copay waivers
None of these
Trends in Drug Benefit Design
34
Cost Sharing
Another way to help members choose lower-cost pharmacies and drugs is through the promotion of member cost-sharing transparency tools such as GoodRx and Blink Health. These consumer-focused tools provide cost information to consumers and may help them better manage their out-ofpocket expenses. As shown in Figure 36, one-third of respondents indicated that they promote the use of these types of tools.
Considering the Future: Cost-Sharing Changes
Use of Cost-Sharing Transparency Tools
Deciding whether or not to make changes to cost sharing is often part of the drug benefit design review process. As shown in Figure 37, when asked whether they were considering changes to cost sharing in the next two to three year, 33% of respondents indicated that they were, while 40% were not sure yet. Only 28% were not considering making changes.
33% (n=278)
No
FIGURE 37.
Not sure yet
Increasing deductible
Adding additional tiers
38% Adding preferred network
(n=318)
33%
Yes
31% Adding deductible
28% No
22% Adding limited network
18% 2017 PBMI Research Report
Adding on-site/in-house pharmacy
38%
40%
35
67%
Cost-Sharing Changes
Base: Respondents considering changes to cost sharing. Multiple responses allowed. (n=104)
New Q
FIGURE 36.
9% Decreasing the number of tiers
7% Decreasing deductible
3% Eliminating preferred network
2% Eliminating limited network
1%
Yes
Cost Sharing
Among those who indicated that they were considering changes, the most frequent responses were increasing the deductible and adding additional tiers (each 38%), adding a preferred network (31%), and adding a deductible (22%). When asked who/what influences how they make cost sharing decisions, employers most frequently cited claims history (55%), closely followed by PBM or health plan recommendations (53%), and consultant or broker recommendations (51%; Figure 38).
FIGURE 38.
Rev. Q
Influences for Cost-Sharing Decisions
Multiple responses allowed. (n=318)
Claims history
Industry-specific benchmarks
55% PBM or health plan recommendations
41% Member cost-sharing targets
53% Consultant or broker recommendations
38% Corporate benefits philosophy
51%
37%
Corporate budgets
Other
44%
3%
Corporate benefits objectives
41%
Trends in Drug Benefit Design
36
Clinical and Trend Management Along with cost sharing, discussed in the last section, plan sponsors implement utilization management strategies that focus on ensuring that clinically appropriate guidelines are followed, as well as programs that aim to maximize the benefits of medications while managing drug trend. Trend management strategies focus on ensuring that drug utilization and mix maximize savings for plan sponsors. Common trend management tools include step therapy, prior authorization (PA), and quantity limits. Clinical management and educational strategies focus more on improving overall health and ensuring the safe and effective use of drugs by members. Common programs include wellness programs, therapy adherence, and online tools and mobile applications that help members make informed benefit-related decisions. 37
Clinical and Trend Management
Clinical and trend management strategies are driven by the primary goals for managing the drug benefit. As shown in Figure 39, the number one goal of respondents was to manage overall drug cost trend (60%). Trailing far behind in terms of the percentage of respondents indicating that it is their number one goal is integrating medical and pharmacy for better coordination of care, improving member adherence and persistency, and reducing inappropriate utilization (each at 9%), improving member consumerism (8%), and improving member satisfaction (3%). These other less frequently cited goals are often quite important to employers but pale in the face of managing rapidly rising costs.
FIGURE 39.
Number One Goal for Management of Drug Benefit
Rev. Q
(n=318)
Manage overall drug benefit trend
60% Integrating medical and pharmacy for better coordination of care
9% Improve member adherence and persistency
9% Reduce inappropriate utilization
9% Improve member consumerism
8% Improve member satisfaction
3%
TREND MANAGEMENT Managing drug benefit trend remains the top goal for employers.
Trends in Drug Benefit Design
38
Clinical and Trend Management
Trend management tools, such as those shown in Figure 40, focus on cost savings by managing the utilization of medications and promoting the use of lower-cost drugs where available and appropriate.
FIGURE 40.
More than 90% of employers currently use prior authorization (92%), refill too soon/ supply limits (92%), and quantity limits (91%). The least frequently used tool is predictive modeling/member segmentation, which is used by only 22% of respondents but is under consideration by 34%.
Use of Trend Management Tools
(n=318) 4% 4%
3% 5% 92%
92%
5% 4%
5% 13% 91%
10% 15%
82% 75%
14%
13%
12%
19%
18% 42%
55% 44%
100% 90% 80%
24%
75%
70%
68% 58%
Not used or under consideration
60% 34%
50% 40%
Under consideration for use in the future
30%
Currently used
22%
20% 10%
Prior authorization
Refill too soon/supply limits
OTC = over the counter
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2017 PBMI Research Report
Quantity limits
Step therapy
Formulary exclusions
Compound drug limits or exclusions
Exclusion of classes with OTC versions
Mandatory generic program
Predictive modeling/member segmentation
0%
Clinical and Trend Management
Clinical and educational programs typically focus primarily on health and safety, with cost containment derived primarily from preventing potential negative health outcomes or events (such as nonadherence-related hospitalizations). Although clinical and educational programs are used less often
FIGURE 41.
than trend management tools, more than 50% of respondents reported the use of 8 of the 9 programs they were asked about (Figure 41). Use of specialty care management was reported by 83% with an additional 12% reporting that they were considering adding this service.
Use of Clinical and Educational Tools
(n=318) 5%
9%
12%
15%
83%
12%
18%
16%
15%
25%
19%
36%
90%
19% 25%
27%
32%
75%
80%
31% 22%
69%
70% 34%
58%
57%
53%
52%
Not used or under consideration
51%
20%
40% 30%
30% 20%
Currently used
Disease management
60% 50%
Under consideration for use in the future
Specialty care management
100%
10% Online tools/ mobile app
Telehealth
0% Clinical support/ counseling
Integrated pharmacy and medical data
Retrospective DUR (drug utilization review)
Therapy adherence promotion
Prescriber profiling
Trends in Drug Benefit Design
40
Clinical and Trend Management
Last year the 2016 Trends in Drug Benefit Design report included a Clinical Spotlight focusing on managing controlled substances. The increase in abuse and addiction to prescription drugs is one of the most pressing problems in the U.S. over the last two decades.23,24 Problems related to the increase in prescription drug misuse were reported to have a direct impact on the workplace by 70% of U.S. employers in a recent survey commissioned by the National Safety Council.25 The importance of this issue is reflected in the increase in the use of controlled substance programs by employers. As shown in Figure 42, 76% of respondents reported the use of a controlled substance program in 2017 compared to only 71% in 2016.
FIGURE 42.
Use of Controlled Substance Programs
= Significantly higher than comparison year.
No
No
24%
29%
2017 (n=274)
2016 (n=293)
71%
Yes
76%
Yes
23. National Institute on Drug Abuse. What is the scope of prescription drug misuse? Last updated August 2016. Accessed April 22, 2017. 24. Center for Behavioral Health Statistics and Quality. Behavioral Health Trends in the United States: Results form the 2015 National Survey on Drug Use and Health. HHS Publication No. SMA 15-14-4927, NSDUH Series H-50. 2015. 25. Insurance Journal. 70% of Employers Say Prescription Drug Abuse Affects Workplace. March 10, 2017.
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2017 PBMI Research Report
Clinical and Trend Management
Although the use of trend and utilization programs such as prior authorization, refill too soon, step therapy, and formulary exclusions are quite high, barriers still exist. As shown in Figure 43, the most frequently cited barrier was member acceptance (46%), followed by ability to demonstrate return on investment (ROI; 30%), and cost (25%). However, member acceptance and ability to demonstrate ROI both declined significantly compared to 2016.
FIGURE 43.
Barriers to Trend and Utilization Programs
= Significantly higher than comparison year. Multiple responses allowed.
2016 (n=337) Member acceptance
2017 (n=318) Member acceptance
50% Ability to demonstrate ROI
46% Ability to demonstrate ROI
35% Cost
30% Cost
26% Not timely enough
13% Too cumbersome
14%
25% Not timely enough
17% Too cumbersome
11%
Other
Other
3%
3%
Nothing
Nothing
22%
19%
Trends in Drug Benefit Design
42
CLINICAL SPOTLIGHT: THE COMORBIDITY FEW TALK ABOUT — MANAGING DEPRESSION
Clinical Spotlight: The Comorbidity Few Talk About — Managing Depression Depression is the number one cause of illness and disability worldwide according to a recent World Health Organization (WHO) report.26 In the U.S., major depression is one of the most common mental health disorders, and it often accompanies other chronic health conditions such as diabetes, obesity, cancer, chronic pain, or heart disease.27 Sixteen million American adults suffered from depression in 2015, or about 7% of adults; however, lifetime rates are much higher.28 Because many of these people are undiagnosed, the U.S. Preventive Services Task Force in 2016 began recommending routine depression screening in the adult general population followed by appropriate follow-up services for those diagnosed.29
However, screening in primary care is still rarely performed — only 4.2% of the time according to a recent national study.30 The use of pharmacists and retail pharmacies to screen members for depression is being piloted in some areas and holds promise.27 Ideally, once a person is diagnosed, clinical management of their depression is initiated to include an appropriate treatment plan that may include pharmacotherapy and psychotherapy.31 However, access to appropriate, comprehensive treatment can be difficult for the 95 million Americans who live in communities with a shortage of mental health providers.27 Only about one-quarter of Americans diagnosed with depression receive any type of treatment.32
26. World Health Organization. “Depression: let’s talk” says WHO, as depression tops list of causes of ill health. March 30, 2017. Accessed April 3, 2017. 27. Sederstrom J. Your New Role in the Battle against Depression. Drug Topics. March 15, 2017. Accessed March 22, 2017. 28. National Institute of Mental Health. Major Depression Among Adults. Accessed March 1, 2017. 29. Siu Al, Bibbins-Domingo K, Grossman DC, et al. Screening for depression in adults: US Preventive Services Task Force recommendation statement. JAMA. 2016;315(4):380-387. 30. Akincigil A, Matthews EB. National Rates and Patterns of Depression Screening in Primary Care: Results from 2012 and 2013. Psychiatric Services. 2017; Published online ahead of print February 15, 2017. Accessed February 27, 2017. 31. APA Work Group on Psychiatric Evaluation. Practice guideline for the treatment of patients with major depressive disorder, 3rd Edition. American Psychiatric Association. 2016. 32 Olfson M, Blanco C, Marcus SC. Treatment of adult depression in the United States. JAMA Internal Med. 2016;176 (10):1482-1491.
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2017 PBMI Research Report
CLINICAL SPOTLIGHT: THE COMORBIDITY FEW TALK ABOUT — MANAGING DEPRESSION
Patients with depression experience a wide range of debilitating effects. The effects can range from mild disruptions in daily functioning to the inability to function in society and can even lead to premature death.33 It is thus not surprising that depression also has a significant impact on employee productivity.34 One study found that lost productivity costs averaged one-third of the annual salary for employees with major depressive disorder.35 In this study, employees who received 8 weeks of outpatient treatment with antidepressants showed significant improvement in job performance. Other studies have also shown that depression treatment has a positive impact on work productivity.36 Depression also has a substantial impact on physical health and related healthcare costs. Patients with depression have worse health outcomes than those who are not depressed.33
For example, patients with heart failure and depressive symptoms have double the risk of dying or being readmitted to the hospital than those patients without depression.37 Not only does depression affect health outcomes but also corresponding healthcare costs. For every dollar spent on depressionrelated medical and pharmacy costs, $4.70 is spent on comorbidity-related costs.38 Nonadherence to medications used to treat depression is a primary cause of poor outcomes among depressed patients. Patients with depression are 76% more likely to be nonadherent to their medications than patients without depression.39 Poor medication adherence not only has implications on management of depression but also can influence their management of other chronic conditions.
DEPRESSION IMPACTS PRODUCTIVITY Costs from reduced productivity for employees with untreated depression are estimated to average 1/3 of their annual salary. Treatment can significantly mitigate these losses.
33 Reeves WC, Strine TW, Pratt LA, et al. Mental illness surveillance among adults in the United States. MMWR. 2011;60(3):1-32. 34. Jain G, Roy A, Harikrishnan V, Yu S, Dabbous O, Lawrence C. Patient-reported depression severity measured by PHQ-0 and impact on work productivity; results from a survey of full-time employees in the United States. JOEM. 2013;55(3):252-258. 35. Woo JM, Kim W, Hwang TY, et al. Impact of depression on work productivity and its improvement after outpatient treatment with antidepressants. Value in Health. 2011; 14(4):475-482. 36. For example see: Beck A, Carin LA, Solber LI, et al. The effect of depression treatment on work productivity. Am J Manag Care. 2014;20(8):e294-301. Trivedi MH, Morris DW, Wisniewski SR, et al. Increase in work productivity of depressed individuals with improvement in depressive symptom severity. Am J Psychiatry. 2013;170(6):633-641. 37. Moser DK, Arslanian-Engoren C, Biddle MJ, et al. Psychological aspects of heart failure. Curr Cardiol Rep. 2016;18: 119-128. 38. Greenberg PE, Fournier AA, Sisitsky T, Pike CT, Kessler RC. The economic burden of adults with major depressive disorder in the United States (2005 and 2010). J Clin Psychiatry. 2015 Feb;76(2):155-62. doi: 10.4088/JCP.14m09298. 39. Grenard JL, Munjas BA, Adams JL, et al. Depression and medication adherence in the treatment of chronic diseases in the United States: a meta-analysis. Am J Geriatr Pharmacother. 2011 Feb;9(1):11-23. doi: 10.1016/j.amjopharm.2011.02.004.
Trends in Drug Benefit Design
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CLINICAL SPOTLIGHT: THE COMORBIDITY FEW TALK ABOUT — MANAGING DEPRESSION
There are a vast array of drugs available for the treatment of depression. The most commonly prescribed medications include serotonin reuptake inhibitors (SSRIs), serotonin norepinephrine reuptake inhibitors (SNRIs), norepinephrine and dopamine reuptake inhibitors (NDRIs), atypical antidepressants, tricyclic antidepressants, and monoamine oxidase inhibitors (MAOIs). Most drugs in these classes are generics, making drug costs at a population level relatively low when compared to other conditions. With both the prevalence of depression, the productivity cost to employers, and the availability of safe and effective treatments, respondents answered a series of questions aimed at identifying programs they had in place, the challenges they faced, and the use of clinical management tools for drugs used to treat depression. We asked respondents whether they had any programs in place, to address depression and/ or behavioral health. As shown in Figure 44, 30% currently have no program in place. Of the 70% of employers with a program in place it is more often included in behavioral health programs (52%) and/or integrated into disease management programs (30%). Only 6% have a stand-alone depression program.
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2017 PBMI Research Report
Respondents were asked to rate how big a problem potential drug benefit-related issues around depression were using a 5-point scale where 1 meant not a problem at all and 5 meant a very big problem. As shown in Figure 45, all five areas queried were considered at least somewhat problematic with all scoring 2.7 or higher. Adherence to depression medications (3.1) and the cost of treatments for depression (3.0) were considered the biggest problems.
FIGURE 44.
Management of Depression
Multiple responses allowed. (n=318)
New Q 60%
52%
50% 40%
30%
30%
30% 20%
6%
10%
0%
Included in behavioral health program Integrated in disease management program No program in place Stand-alone program FIGURE 45.
New Q
Problems Related to Depression
Scale is 1 (“not a problem at all”) to 5 (“a very big problem”). (n=318)
3.1
3.5
3.0
2.9
2.7
2.7
3.0 2.5 2.0 1.5 1.0
Adherence to antidepressant drugs
The cost of drug treatments for depression
Increased utilization of treatments for depression
Off-label use of antidepressant drugs
Safety concerns
CLINICAL SPOTLIGHT: THE COMORBIDITY FEW TALK ABOUT — MANAGING DEPRESSION
Although cost and increased utilization rated fairly high in terms of being a problem, only 56% of respondents had step therapy programs in place for depression (Figure 46). However, as shown in Figure 47, 78% indicated that their formulary had preferred generics for treating depression. Preferred generics typically have a lower copay or coinsurance amount and thus, might encourage the use of lower-cost drugs via member cost sharing. We also asked respondents to provide some detail on what pharmacy management programs and services they would like to see in the area of depression if money were not an obstacle. Comments most often centered on adherence, case/disease management, coordination of care, and member counseling and education. However, other comments focused more on choosing the right drug, the need for proof of outcomes, use of mobile apps, and improved access for members. Examples of comments include:
FIGURE 46.
Use of Step Therapy for Depression
New Q
FIGURE 47.
Use of Preferred Generics for Depression
New Q
No
22% No 44%
(n=242)
56% Yes
(n=258)
78% Yes
“Biweekly follow up for anyone on prescription drugs for depression, to watch for problems and concerns on side effects. Suicidal thoughts, anxiety, increased agitation, etc., can all be side effects, and simply monitoring and/or switching doses or medications can help. The doctor may not see the member for 6 weeks at a time.”
“Pharmacist provided utilization review for adherence before and after each fill.”
“Coordination with our medical plan provider and our EAP vendor.”
“The ability to treat the patient with the most effective medication the first time. I believe there is much waste due to failed drug trials — depression is so hard to treat.”
“Greater accessibility and program discounts to help defer the cost to members.”
“Joint venture between medical and pharmacy to address with member holistically; shared data between systems; subject matter expert advocates focusing on the disease state.” “Interactive mobile app with reporting of daily status providing a feedback loop to prescriber.”
“Education on use of medication in depression and self-advocacy.”
Trends in Drug Benefit Design
46
Conclusions
CONCLUSIONS Findings from the 2017 Trends in Drug Benefit Design report reflect the complexity of drug benefit management. Employers must consider many factors when designing the drug benefit, especially when they are challenged with drug cost trend outpacing inflation. They frequently turn to external experts to help them with the process with 76% using a benefit consultant. Employers also depend on brokers, PBMs, and health plans for advice. In recognition that drug and health benefits are intertwined, 71% report drug and medical benefits are designed in concert. When they use a consultant, employers typically use the same person to help them design the medical benefit. In the past year the use of preferred and limited pharmacy networks has increased as has the use of four or more drug tiers. The use of deductibles increased slightly this year as well, with 39% of employers reporting a plan with a deductible that included pharmacy. These changes are made with the primary goal in mind — managing drug benefit costs to ensure a sustainable drug benefit.
Respondents also use tools and programs to improve healthcare consumerism among their members. These include lower cost sharing for use of a lower cost place of service to obtain prescriptions, encouraging the use of transparency tools, and putting utilization management programs in place such as prior authorization that require additional steps to ensure that the drug is optimal for that patient and that there is not a lower-cost drug that would provide the same benefit. Most plan sponsors also have programs in place to help manage and support members living with depression — the number one cause of illness and disability worldwide.40 Even with programs in place, depression remains an area with many challenges to face and a tremendous cost to employers in terms of lost productivity and additional related healthcare costs when not treated properly. The management of drug benefits is more challenging than ever, but at the same time, the opportunity to improve health and balance costs has never been better.
40. World Health Organization. “Depression: let’s talk” says WHO, as depression tops list of causes of ill health. March 30, 2017. Accessed April 3, 2017.
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2017 PBMI Research Report
OPPORTUNITIES & CHALLENGES The management of drug benefits is more challenging then ever, but opportunities to manage costs and improve health abound.
Trends in Specialty Drug Benefits Summary
Highlights from the PBMI 2017 Trends in Specialty Drug Benefits report More than 6 years ago, in recognition of the growing interest in, and the unique challenges of, managing specialty drug benefits, PBMI began publishing a separate annual report that focused solely on this topic. Here we only present a few key findings from the 2017 Trends in Specialty Drug Benefits report. We hope you will download or request a print copy of the report itself to learn more.
Want to learn more? Download your FREE copy at: http://www.pbmi.com/PBMI/Research/PBMI_Reports.aspx Trends in Drug Benefit Design
48
Trends in Specialty Drug Benefits Summary
Employers and Members in Alignment Top goals for management of specialty drugs
51%
13%
Management of specialty drug cost trend was the number one goal of respondents
Reduction of inappropriate utilization was the second most important goal
Alignment with member goals and views
HIV
63% of Americans
hepatitis
rated “government action to lower prescription drug prices” as a top healthcare priority.41
mental illness cancer According to an October 2016 Kaiser Health Tracking poll, making sure that high-cost drugs for chronic conditions such as HIV, hepatitis, mental illness, and cancer are affordable to those that need them is the top healthcare priority of the American public.46
>60%
of employers favor or strongly favor government controls on manufacturer pricing of specialty drugs.
53% of employers rated member
dissatisfaction as the number one challenge when dealing with formulary exclusions.
41. The Henry J. Kaiser Family Foundation. Kaiser Health Tracking Poll: October 2016. October 27, 2016. Accessed October 27, 2016.
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2017 PBMI Research Report
But even those who favor government controls have some concerns about the government controlling free market systems: “Government controls rarely work.” (Somewhat oppose) “I don’t like government interfering with capitalism, but I support setting pricing controls that still provide a reasonable amount of profit.” (Somewhat favor) “It is in the public’s interest to have cost controls that are similar (or better than) Medicare/Medicaid.” (Strongly favor) “Not a fan of price controls in any industry. Free markets should drive.” (Strongly oppose)
Trends in Specialty Drug Benefits Summary
However, Employers Face Challenges from Many Fronts Top problems related to specialty drugs Not a problem at all
4.65 |
1
5
The cost of new specialty drug treatments 4.29 |
1
27%
90%
A very big problem
More than one-quarter of employers responding indicated that their specialty drug benefits were part of a high deductible plan.
Direct-to-consumer advertising increases pressure on physicians to prescribe specific drugs.
5
Changes in manufacturer prices for existing specialty medications
And plan design changes reflect that 55% 49% 43%
48%
49%
48%
43%
2012
2013
2014
2015
2016
49% 44%
51%
50%
48%
55% 50% 45%
Because drug benefits tend to be used much more frequently than medical benefits, the first place many members have to meet their deductible is at the retail or specialty pharmacy.
40% 2011
% of employers with coinsurance
% of employers with copayment
The use of coinsurance with or without minimums/maximums has grown. The percentage of employers with coinsurance cost-sharing designs now exceed the percentage with copayments (51% coinsurance versus 43% copayments) for the first time since PBMI started reporting on drug benefit cost-sharing design.
Coinsurance for expensive specialty drugs can be more than the average consumer can afford.
Trends in Drug Benefit Design
50
Trends in Specialty Drug Benefits Summary
Employers Must Make Hard Decisions
$83
Average patient pharmacy copayments benefit
$80
medical benefit
Cost-Sharing for Specialty Drugs Implications for members — high-deductible plans and coinsurance cost-sharing help keep insurance premiums lower but can have a disproportionate impact on members using specialty medications.
Formulary Exclusions for Specialty Drugs
54%
38%
More than half of employers had formulary exclusions for specialty drugs.
More than one-third were considering implementing or increasing the use of them.
Growth deficiency
38%
Average pharmacy coinsurance benefit
37%
medical benefit
The primary sources of information on new specialty drugs coming to market:
PBM account team
Cholesterol Benefits consultant/broker
The most commonly reported specialty drug classes with formulary exclusions Fertility 51
2017 PBMI Research Report
Hepatitis C
Inflammatory conditions
Health plan
Trends in Specialty Drug Benefits Summary
Hepatitis C — Effective Medications, High Costs View on the future of hepatitis C cost trend is mixed
93%
About half of respondents believed costs would increase greatly or somewhat in the next 2 to 3 years, 19% indicated they thought it would remain stable, and the remainder believed costs would decrease.
29%
decrease greatly or somewhat Nearly all employers cover specialty medications used to treat hepatitis C.
52%
increase greatly or somewhat
19%
no change
Programs in place to actively manage hepatitis C � Member education � Prior authorization based on disease severity
� Prior authorization based on genotype
� Step therapy
� Partial fill for the first month
� Medication adherence
� Copay assistance
Trends in Drug Benefit Design
52
Methodology & Respondent Profile The Pharmacy Benefit Management Institute (PBMI), an independent education and research organization, has conducted research on drug benefit design for nearly 25 years. Recognizing the challenges faced by plan sponsors in designing the drug benefit, we have sought to provide an in-depth look at trends and best practices in our annual Trends in Drug Benefit Design report. The aim of this work is to collect information on management priorities and strategies, cost sharing, clinical and trend management programs, and other strategies, as well as opinions about current and future developments affecting the ability of plan sponsors to manage drug benefits. PBMI conducted its drug benefit survey of U.S. employers in February and March 2017. The survey sample included 318 benefit leaders representing employers of an estimated 24.7 million covered lives. We are grateful for the participation of drug benefit leaders who provided not only question responses but also comments regarding the questions themselves. 53
Methodology and Respondent Profile
Questionnaire Development
New Q Rev. Q
The development and analysis of surveys is both a science and an art. As emphasized in Stanley Payne’s seminal work on survey question design, The Art of Asking Questions (Princeton: Princeton University Press, 1951), survey questions must be guided by the evidence of rigorous experiment, as well as by a combination of intuition and experience. Design of the drug benefit has become more complex since the first Trends in Drug Benefit Design Report in 1995. Questions are added and modified each year to reflect current drug benefit management practices, opportunities, and concerns. New questions are denoted by the “New Q” triangle shown here while modified questions are denoted by the “Rev. Q” triangle. The 2017 survey was developed, tested, and fielded by PBMI research staff and will continue to be monitored and adjusted to account for new developments. The comprehensive survey instrument collected information on drug benefit plan design for prescription drugs dispensed through retail, mail order, specialty, and on-site pharmacy distribution channels.
Clinical and trend management strategies and tools
As in previous years, strategies specific to specialty medications were not explored in detail in this report. PBMI conducts the research and publishes a separate annual specialty drug management report, Trends in Specialty Drug Benefits. For the convenience of our readers, a brief summary of the findings from the 2017 Trends in Specialty Drug Benefits report is shown in the preceding section.
Specific strategies used to manage depression
Research Sample
Respondents answered questions about: Drug benefit design decision-making, goals, and challenges Networks, contracts, and reimbursement strategies Member cost sharing
Future plans in drug benefit design To minimize the possibility of biasing respondents’ answers, many questions used item randomization. For example, although “manage overall drug benefit trend” is the first item shown in the discussion of respondent goals because respondents mentioned it most often, it was not the first item (goal) asked of every respondent. Instead, all goals were presented in a randomized order that was varied each time a respondent initiated the survey. This is important because studies have shown that respondents tend to favor responses at the beginning or middle of a list, leading to possible bias.
The survey respondents encompassed 318 employers or the person designated to provide responses on their behalf, such as their health plan representative,42 that offer prescription drug benefits from PBMI’s proprietary database. To qualify for the survey, respondents had to report being responsible for the organization’s prescription drug benefit. Respondents reporting retiree only, workers’ compensation, and publicly covered groups (i.e., Medicare, Medicaid) were excluded from this survey. Analysis was conducted on the full sample and with the sample split by employer size and industry. We defined smaller employers as having 5,000 or fewer lives and large employers as having more than 5,000 lives.
42. Of the 318 respondents, 63 (20%) were representatives directly employed by their health plan. Sensitivity analysis was conducted to compare responses by employers directly and health plan representatives. Where differences appear they are either discussed directly or the base is limited to employers.
Trends in Drug Benefit Design
54
Methodology and Respondent Profile
Because some respondents may be responsible for more than one plan, the survey asked respondents to answer questions about the largest plan, based on number of covered lives, that offered both medical and pharmacy benefits. Thus, the drug benefit design information included in this report represents the benefit plan for which the survey was completed, not necessarily all drug benefits covered by the employer for all plans offered. As in prior years, respondents were offered a small incentive (gift card and drawing for a slightly larger prize) for completing the survey as an expression of our appreciation for their time.
Data Collection and Analysis Data were collected into a secure, password protected database and reviewed for quality and out-of-range responses. Respondents are included in the results for any question where they provided a valid response. Throughout the report, footnotes beginning with “Base” indicate the denominator group for the calculation of percentages and averages (e.g., respondents for whom a particular question is applicable). Typically means are reported but when appropriate or significantly different, medians may be reported in addition to, or in lieu of, means. 55
2017 PBMI Research Report
PBMI employed descriptive and inferential statistical analyses to derive the findings presented in this report. These include z-tests (to calculate statistical differences between proportions) and t-tests (to calculate statistical differences between means). Anything referred to as statistically significant indicates a P value <0.05. Not applicable (NA) is notated in table cells where there are no or insufficient data to report. Figure and table totals may not equal 100% due to rounding. Percentages shown in the text and tables have been rounded to the nearest whole number and nearest first decimal, respectively (e.g., 62.47% appears as 62.5% in the table and 62% in the text). Descriptive and inferential statistical analyses were conducted using SPSS version 22 (IBM Corp. Released 2013. IBM SPSS Statistics for Windows, Version 22.0. Armonk, NY: IBM Corp.), Stata version 14 (Stata Corporation, LLC., Stata/IC, Version 14. College Station, TX: Stata Corporation, LLC), and the analysis tool embedded in the online survey platform (Qualtrics, Provo, UT).
Report Sponsorship and Editorial Independence PBMI gratefully acknowledges the support of Takeda Pharmaceuticals U.S.A., Inc. (TPUSA)
for their sponsorship to cover costs incurred in the production of this report. Neither TPUSA, nor any other third party, has access to the sampling frame information (names, email addresses, etc.), individual responses, or raw data gathered. Additionally, TPUSA provided no input into the conclusions drawn from our analysis and presented in this final report. This policy protects the confidentiality of the survey respondents and ensures the independence and objectivity of this report.
Respondent Profile All 318 respondents of this year’s Trends in Drug Benefit Design survey stated that they were responsible for managing the drug benefit for their organization. This group of primarily human resources (HR) professionals manage the challenging job of working through both the strategic considerations and budget implications of an ever-changing drug benefit landscape. Survey respondents were diverse and are representative of key decision makers of employer drug benefits. Three-quarters (75%) reported they worked directly for the employer who sponsored the drug benefit. The remaining 25% were employed by the employer’s health plan or by a union, union health fund, broker, coalition or group purchasing organization, consulting
Methodology and Respondent Profile
company, or third-party administrator (TPA). These respondents have primary day-to-day responsibility for managing the drug benefit for the employer being represented. As noted, some respondents may be responsible for more than one plan. When this was the case, the survey asked respondents to answer questions about the largest plan, based on number of covered lives, that offered both medical and pharmacy benefits. Of the plans represented in the survey, 61% covered active employees and their dependents only, and the remaining 39% covered both active employees and retirees. Fifteen percent of respondents reported that their drug benefit plan was negotiated as part of a union or collective bargaining agreement. The specific industries represented ranged from education and health services (23%) to information technology (1%) as shown in Figure 48. Geographically, respondents represented employers across the U.S. (Figure 49), with the largest percentage from the Midwest (36%), followed by the South (25%), the Northeast (22%), and the West (18%).
FIGURE 48.
Industry Type of Survey Respondents
(n=318)
23%
21%
10%
8%
6%
5%
Education and health services
Manufacturing
Service providing industries
Professional and business services
Financial activities
Public administration
3%
2%
1%
1%
19%
Leisure and hospitality
Construction
Natural resources and mining
Information
Other
FIGURE 49.
Geographic Location of Survey Respondents
(n=318)
36% Midwest
22% Northeast 18% West 25% South
Trends in Drug Benefit Design
56
Methodology and Respondent Profile
Respondent job titles were very similar to previous reports with the most frequent titles being Pharmacy/Benefits Director (22%), Pharmacy/Benefits Manager (20%), and Vice President (12%). In 2016 we added a question asking how long the respondent had been managing the drug benefit for their organization. This year, one-third (33%) had managed the drug benefit more than 10 years, and 29% had managed the drug benefit for 6 to 10 years (Figure 50). Respondents also tended to have job responsibilities that extended beyond managing the drug benefit, with 83% reporting that half or less of their job responsibilities focused on managing the drug benefit (Figure 51). As anticipated, those employed by companies with 5,000 or fewer members were more likely to spend 25% or less of their time managing the drug benefit when compared to large employers (81% vs. 43%).
FIGURE 50. Length of Time Managing Drug Benefit
Less than 1 year 3% More than 10 years
2017 PBMI Research Report
76% – 100%
1 – 2 years
51% – 75%
10% 33% (n=318)
6 – 10 years
10% 7%
3–5
25% years
26% – 50%
22%
(n=318)
61% 1% – 25%
29%
Acronym Glossary
ACA
Affordable Care Act
MOOP Maximum Out-of-Pocket
AWP
Average Wholesale Price
OTC
Over-the-Counter
DUR
Drug Utilization Review
PA
Prior Authorization
EAP
Employee Assistance Program
PBM
Pharmacy Benefit Manager
EPO
Exclusive Provider Organization
PBMI
Pharmacy Benefit Management Institute
HIV
Human Immunodeficiency Virus
POS
Point of Service
HMO Health Maintenance Organization
PPO
Preferred Provider Organization
HR
TPA
Third-Party Administer
WHO
World Health Organization
Human Resources
MAC Maximum Allowable Cost
57
FIGURE 51. Percentage of Job Focused on Drug Benefit
Additional Data Tables Cost sharing under the drug benefit continues to become more complex. Additional details on drug cost sharing for four-tier and five-tier designs are provided in this section.
Additional Data Tables
TABLE 4.
Rev. Q
Average Deductible and Out-of-Pocket Limit Amounts
Deductibles Annual Out-of-Pocket (OOP) Limits
Smaller Employers
Large Employers
Overall
Single
$447
$320
$395
Family
$979
$1,196
$1,068
Single
$2,441
$2,742
$2,635
Family
$5,166
$5,517
$5,399
Base for deductibles: Respondents with a separate pharmacy deductible. Base for OOP limits: Respondents with an annual OOP limit. Sample sizes vary by employer size and amount.
TABLE 5.
Range and Median Amounts for Deductibles and Out-of-Pocket Limits
Deductibles Annual Out-of-Pocket (OOP) Limits
Lowest
Median
Highest
Single (n=37)
$10
$100
$3,600
Family (n=34)
$40
$250
$10,300
Single (n=102)
$0
$2,125
$8,000
Family (n=101)
$0
$5,000
$16,000
Base for deductibles: Respondents with a separate pharmacy deductible. Base for OOP limits: Respondents with an annual OOP limit.
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2017 PBMI Research Report
Rev. Q
Additional Data Tables
TABLE 6.
Average Cost Sharing for Four-Tier Copay and Coinsurance Designs
Flat Dollar Copay Designs
Coinsurance Designs
TABLE 7.
n
Tier 1
Tier 2
Tier 3
Tier 4
Retail 30
67
$11.37
$30.56
$55.48
$116.98
Retail 90
45
$23.12
$65.68
$124.27
$245.77
Mail
58
$21.96
$63.14
$115.59
$188.24
On-site
13
$8.83
$22.58
$45.75
$103.55
Retail 30
25
14%
22%
33%
24%
Retail 90
16
15%
22%
31%
25%
Mail
22
17%
23%
32%
23%
On-site
n size too small to report
Average Cost Sharing for Five-Tier Copay Designs n
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
Retail 30
18
$6.47
$17.80
$46.15
$85.36
$117.73
Retail 90
14
$15.79
$47.50
$112.00
$147.78
$149.17
Mail
16
$11.88
$32.21
$78.68
$121.59
$162.00
On-site
9
$2.63
$13.44
$32.50
$45.00
$120.20
Trends in Drug Benefit Design
60
Additional Data Tables
TABLE 8.
Average Retail Cost Sharing for Coinsurance Designs Minimum Amount n
Tier 1
Tier 2
Tier 3
3-Tier Structure
26, 29
$7.15
$22.20
$40.20
4-Tier Structure
12, 12
$7.18
$21.00
$42.50
3-Tier Structure
13, 19
$13.05
$40.41
$79.32
4-Tier Structure
6, 7
$12.17
$49.67
$108.33
3-Tier Structure
18, 29
$11.81
$42.34
$77.66
4-Tier Structure
11, 11
$10.78
$32.30
$57.00
Maximum Amount Tier 4
Tier 1
Tier 2
Tier 3
$21.96
$72.88
$148.54
$39.09
$101.36
$135.00
$119.50
$179.03
$313.20
$37.57
$160.00
$214.67
$97.71
$181.06
$294.12
$101.00
$189.78
$212.88
Tier 4
Retail 30 $103.50
$178.50
Retail 90 $71.88
$168.75
Mail $45.28
On-Site 3-Tier Structure 4-Tier Structure
61
2017 PBMI Research Report
n sizes too small
n sizes too small
$195.94
Unraveling the Complexities of Pharmacy Benefit Management For more information, call us at 480-730-0814 ext. 1 or visit us at www.pbmi.com
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