Considering med prescriptions through a financial lens may help manage health plan expenses
A recent opinion piece from Morneau Shepell suggests that in order to limit pressure on health plans caused by increased drug prices, plan administrators may need the services of a pharmacoeconomics (PE) specialist.
According to the commentary, problems arise for health plans when low-value drugs with a high cost enter the market. Doctors are typically unaware of the financial impact of the prescriptions they write, and pharmacists are usually unable to change a doctor’s prescription.
“The role of the PE specialist is to create a formulary—or list of eligible drugs—for a health plan, by delisting drugs that fail to meet the economic-value criteria or by limiting the use of certain drugs to specific stages of a disease or after the failure of an alternative treatment,” the statement explains.
The PE specialist can judge economic value based on several factors, including prescribed number of doses per day, cost per month, and projected increases in life expectancy. For example, patients are more likely to follow a regimen for a $100/month drug that must be taken only once a day, compared to one that costs $40/month but has to be taken three times daily.
Increased compliance could lead to quicker recovery, which in turn can result in minimized health plan claims. A PE specialist would consider this and other factors, and may end up recommending the addition of the higher-price drug to the approved health plan formulary. They may also limit its use to specific stages of a disease, or after a lower-cost alternative proves ineffective.
“Sponsors that opt for a formulary must inform insureds of their intention to make changes to their plan coverage,” the commentary continued. “Among other things, they should consider the addition of a grandparenting clause to allow insureds to continue taking a drug no longer included on the list. Insureds should also be aware of drugs included on the formulary when consulting with their doctor so the latter knows which drugs are covered and, as such, can be prescribed.”
While sponsors can choose to apply an existing formulary created by their health insurance carrier, potentially achieving significant savings, they are likely to encounter issues when they switch to a new carrier who may not administer the same formulary. “Therefore, sponsors may want to consider contracting the services of a PE specialist to create their own formularies based on their unique objectives and budgetary constraints,” the piece said.
Related stories:
Health minister vows to fix ‘unfair’ drug price situation, save Canada billions annually
Excess med spending in Canada is pouring billions down the drain
According to the commentary, problems arise for health plans when low-value drugs with a high cost enter the market. Doctors are typically unaware of the financial impact of the prescriptions they write, and pharmacists are usually unable to change a doctor’s prescription.
“The role of the PE specialist is to create a formulary—or list of eligible drugs—for a health plan, by delisting drugs that fail to meet the economic-value criteria or by limiting the use of certain drugs to specific stages of a disease or after the failure of an alternative treatment,” the statement explains.
The PE specialist can judge economic value based on several factors, including prescribed number of doses per day, cost per month, and projected increases in life expectancy. For example, patients are more likely to follow a regimen for a $100/month drug that must be taken only once a day, compared to one that costs $40/month but has to be taken three times daily.
Increased compliance could lead to quicker recovery, which in turn can result in minimized health plan claims. A PE specialist would consider this and other factors, and may end up recommending the addition of the higher-price drug to the approved health plan formulary. They may also limit its use to specific stages of a disease, or after a lower-cost alternative proves ineffective.
“Sponsors that opt for a formulary must inform insureds of their intention to make changes to their plan coverage,” the commentary continued. “Among other things, they should consider the addition of a grandparenting clause to allow insureds to continue taking a drug no longer included on the list. Insureds should also be aware of drugs included on the formulary when consulting with their doctor so the latter knows which drugs are covered and, as such, can be prescribed.”
While sponsors can choose to apply an existing formulary created by their health insurance carrier, potentially achieving significant savings, they are likely to encounter issues when they switch to a new carrier who may not administer the same formulary. “Therefore, sponsors may want to consider contracting the services of a PE specialist to create their own formularies based on their unique objectives and budgetary constraints,” the piece said.
Related stories:
Health minister vows to fix ‘unfair’ drug price situation, save Canada billions annually
Excess med spending in Canada is pouring billions down the drain
