By Steve Hettrick, Benefits Practice Leader, Brown & Brown of Detroit
Prescription Drug Costs Are On the Rise…Again
Prescription drug costs are expected to rise 11.6% in 2017, up from the previous year’s increase. By comparison, wages are expected to rise just 2.5% in the same time period (per Segal Consulting). In fact, prescription drug increases of nearly 10% or more have hit Americans for three years in a row. Much of the cost increase is being driven by new, very expensive drugs coming into the market, some of which carry price tags over $100,000.
Increased Pharmacy Spend Creates a Burden on Group Health Plans
Employers and employees alike are feeling the pressure of increased prescription drugs costs. Employers face the dilemma of how much of the burden to shoulder, and how much can be passed on to the participants in their plan. Businesses need to ensure that they are paying the lowest price possible for their employees’ drug coverage in order to maintain the viability of their entire benefits offering.
How Can We Lower Prescription Drug Expenses?
This is where a Brown & Brown pharmacy coalition comes into play. Our pharmacy coalitions bring together a large group of self-funded Brown & Brown clients who band together to purchase pharmacy benefits. Member groups can collectively leverage the purchasing power of a much larger group, while still maintaining independent control of their own plan.
Many employers self-fund their benefit plans, which can be a great way to control costs for groups of about 75 or more covered lives. Fully-insured groups may also benefit from carving their prescription coverage out of their insured plan and self-funding it. Self-funding is not a new strategy, however, sometimes it is challenging for small to medium sized employers to secure the most competitive drug pricing due to their size.
Coalition pricing typically beats the pharmacy contracts that many groups can source on their own. The Brown & Brown pharmacy coalitions provide improved discounts, guarantees, and rebates that have historically only been available to very large employers.
Additionally, as the coalition grows, pricing improves, benefiting the entire group of companies in the coalition.
Our coalitions also bring industry experts who offer pharmacy program and contract oversight, access to annual prescription reporting summaries on pricing trends, comparative summaries, audits, and advocacy to routinely challenge and improve the pharmacy benefit management agreement and ensure that every possible dollar is being squeezed out of the pricing.
Contact a Brown & Brown of Detroit advisor at 586.977.6300 to find out how joining our pharmacy coalition could improve the price your company pays for its prescription drug program.