NEW YORK--(BUSINESS WIRE)--Seventy-seven percent of employers spend 16 percent or more of their total healthcare budget on pharmacy benefits for their employees, with nearly five percent of employers spending more than 30 percent on pharmacy, according to the fifth annual “Prescription Drug Benefit Survey” by Buck Consultants at Xerox.
These results are up from 71 percent and 2.3 percent respectively in 2013 and indicate how employers can look to spend their pharmacy dollars more effectively. For example, Buck recommends plan sponsors take advantage of current marketplace conditions, which make 2015 an excellent time to negotiate aggressive renewals.
Plan sponsors can also conduct a Pharmacy Benefit Manager competitive bidding to achieve optimal pricing terms and other contract provisions that influence a plan’s financials and service levels. For employers that provide coverage of Medicare-eligible retirees, Buck recommends plans consider a CMS 800 Series Employer Group Waiver Program instead of the Retiree Drug Subsidy, since it is no longer tax-exempt.
“With specialty drug costs showing no signs of decreasing, we could easily see the average percentage of total healthcare spend employers are paying for pharmacy increase from 15 to 20 percent,” said Paul Burns, principal, Buck Consultants at Xerox. “Developing a realistic strategy to cover medications is critical to meeting an employer’s budgetary needs. This requires a comprehensive review of all available options for plan design, coverage rules and clinical programs.”
The average cost of a month’s supply of a specialty drug exceeds $2,500, and the annual cost per course of treatment can be $75,000 or more. Despite these costs, 22 percent of respondents do not know the portion of overall drug spend attributed to specialty medications. However, 77 percent of responders use utilization management programs, like prior authorization, to manage specialty therapies. This illustrates that most plan sponsors understand the importance of using controls to help manage specialty drug costs.
“Considering the importance of managing specialty drug therapies now and in the future, the percentage of employers not knowing their costs is too high,” said Burns. “I recommend employers analyze specialty drug costs and utilization patterns under both the pharmacy and medical benefits to get a better pulse on this spend. The ability to identify spending under the medical benefit, where 50 percent of specialty drug utilization occurs, is critical to gaining a complete understanding of the impact these medications are having on costs.”
Other key findings in the survey include complying with the Affordable Care Act and coverage of Medicare-eligible participants.
The information and results found in the 2014 “Prescription Drug Benefit Survey” report can help plan sponsors understand the tools available to them in order to help manage pharmacy benefit programs costs.
The 170 organizations that participated in the survey come from a broad range of industries and represent approximately two million covered lives.
The survey is available at no cost to the media by contacting Steven Laird at Steven.Laird@xerox.com or +1-416-270-7073. It is available to other interested parties for $395 by visiting https://www.bucksurveys.com/BuckSurveys/.
Buck Consultants at Xerox offers strategic advice and innovative technology to help businesses effectively manage their HR programs while engaging employees in their health, wealth, and careers. By integrating our HR consulting know-how with the core Human Resources Services of Xerox, we offer a full portfolio of customized HR solutions to help organizations save money, improve HR compliance, and achieve their business goals. Learn more at www.xerox.com/hrconsulting.
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