- Nearly two-thirds of large employers still contract with a dedicated pharmacy benefit management firm to handle their drug costs.
- However, a new survey finds that many employers have lost faith in the PBM rebate model.
- Three in 4 employers told researchers they don’t believe rebates drive down drug costs, while 90 percent say they would welcome an alternative approach to rebates.
Large employers are still dependent on pharmacy benefit management firms, but they are unhappy with the complex rebate system the drug supply middlemen use to manage drug costs and are looking to shake things up.
"The problem you have is that you have a supply chain model ... [that] hasn't kept up with today's reality," said Brian Marcotte, CEO of the National Business Group on Health. He said the rebate system was designed for low-deductible plans.
"You fast-forward to today, when many companies offer high-deductible plans … and rebates are not helping the consumer at the point of sale," he said. As a result, workers are left with high out-of-pocket costs for branded drugs.
While nearly two-thirds of large employers still contract with a dedicated pharmacy benefit management firm to handle their drug costs, they've lost faith with the PBM rebate model, according to a new NBGH survey of large employers who collectively provide coverage for 19 million people.
Three in 4 employers told researchers they don't believe rebates drive down drug costs, while 90 percent say they would welcome an alternative approach to rebates.
The price discounts pharmacy benefit managers negotiate with drugmakers to lower costs have come under fire. Health officials in the Trump administration have decried the lack of transparency surrounding those discounts, arguing that the practice prompts drugmakers and the middlemen alike to game the system, which results in higher prices.
For years, most employer plans have opted to use the rebates to lower overall premiums. For the 2019 plan year, more than quarter of employers surveyed by NBGH say they will now pass on drug rebates to their workers to help reduce out-of-pocket costs at the point of sale. Thirty-one percent are considering shifting to worker rebate programs over the next two years.
At the same time, more employers say they will adopt another PBM strategy of restricting the number of brand-name pharmaceuticals on their drug formulary as a means to get steeper discounts; 59 percent plan to use limitations on the list of drugs covered under their pharmacy benefit plans next year, up from 50 percent in 2017.
NBGH also noted a big jump in employers placing limits on initial pharmacy prescriptions next year, with 81 percent of firms limiting the initial supply of opioid prescriptions, in particular.
"Employers are also expanding resources to help employees access mental and behavioral health services. We've seen a big jump in the number of companies who will conduct anti-stigma campaigns in 2019 to break down barriers to accessing mental and behavioral health services," Marcotte said, adding "we are also seeing an increase in the number of companies offering onsite behavioral health counseling beyond what is typically offered through their employee assistance plan."
One way employers plan to expand access to mental health services and coaching for managing diseases such as diabetes is through the use of more digital services. More than half plan to offer self-directed online resources, while nearly 40 percent will also offer flex-time to allow workers to access care during business hours.
Large employers have almost universally embraced some form of telehealth services over the last three years; 97 percent saying they'll offer access to services next year, up from 70 percent in 2016.
But so far, employees have not been not nearly as enthusiastic about actually using the services. According to the NBGH survey, nearly half of employers reported less than 8 percent telehealth utilization last year; on average they reported just 2.1 percent of employees used the services.
NBGH employers are supportive, yet skeptical of the proposed PBM-insurer mergers. While employer groups were generally opposed to the horizontal mergers proposed by insurers in 2015, they have not been as vocal in their opposition of Cigna's $54 billion deal to buy pharmacy benefits firm Express Scripts and CVS' $69 billion deal to acquire health insurer Aetna.
"The vertical integration of insurers and pharmacy benefit managers has the potential to provide a more holistic approach in how health care is being managed and delivered, but given the track record of consolidation in the industry, most employers are skeptical that they will see improvements from these mergers," said Marcotte.
What do they think will work? The vast majority of employers — 70 percent of those surveyed — say it will take outsiders like Amazon and new entrants from Silicon Valley to truly disrupt the health-care market.