Addressing Pharmacy Challenges and Opportunities Head On

When it comes to pharmacy benefits, employers, PBMs, drug manufacturers and others need to consider how they can promote transparency, trust and cost reductions.


May 21, 2024

Pharmacy benefits and associated costs have increasingly been a space ripe for disruption. In recent years, there has been greater scrutiny on contracting and potentially misaligned incentives among stakeholders involved in prescription drug purchasing and distribution. Recent cost increases, driven in part, by new gene therapies and expanded use of GLP-1s to treat obesity, have exacerbated affordability concerns for patients and employers alike. These challenges are amplifying calls for greater transparency of cost and contracting arrangements. At this year’s annual conference, speakers challenged employers, PBMs (pharmacy benefit managers), drug manufacturers and others to consider their role in the pharmacy supply chain and how their organizations can help promote transparency, trust and cost reductions. Read on for actionable ideas.

How Employers Are Addressing Pharmacy Challenges

  • Thinking beyond specific drug spend: As employers have seen their spending associated with GLP-1s increase, some are pursuing comprehensive strategies to manage the affordability of obesity medications while also improving employee health. Several employers are looking to invest in evidence-based lifestyle interventions, alongside medication coverage, to improve health and control costs over the long term.
  • Exploring innovation in the market: Some employers are challenging conventional approaches and accepting some level of disruption to manage costs more effectively. This may involve adopting the lowest net cost formularies, driving the adoption of biosimilars or engaging with multiple partners to manage the pharmacy benefit.
  • Focusing on prevention: Employers have noted that for some high-cost conditions like cancer, the associated drug costs can best be addressed via prevention and early detection. Prevention strategies are being customized based on the unique needs of each employee population. Programs that connect employees to the highest quality providers at the appropriate care site may not reduce pharmaceutical spending in the short term, but it increases the likelihood of better outcomes and better health, which is the ultimate goal.

Disruption in the Marketplace

Conference Keynote Mark Cuban has made a career of disrupting industries and has set his sights on the pharmaceutical supply chain. In his conversation with Business Group on Health CEO, Ellen Kelsay, he called upon employers to challenge their vendors on their willingness to publish contracts and audit rebates, and not squeeze "savings" out of community pharmacies.

Strategies Employers Can Use to Address Pharmacy Challenges

  • Evaluate your pharmacy benefit plan to find ways to drive better results: Determine the level of change needed in your pharmacy benefit plan, considering the risk tolerance for disruption and impact on employee experience, budget and cost. Offset any disruptions with clear communication, cost transparency tools, simplified access and effective change management.
  • Seek transparency of cost and contracting arrangements: While employers should consider providing tools for members to enhance medication cost transparency and facilitate utilization of new programs, they also need to challenge their partners for more transparent financial agreements, holistic audit rights, rebate disclosure and measurement of savings.
  • Consider a comprehensive treatment strategy: For conditions like obesity and cancer, ensure that your strategies take a comprehensive approach, including but not limited to medication cost and utilization management. Wraparound support and services can be helpful for improving health and experience.

Relevant Resources

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2024 Annual Conference Insights: Addressing Pharmacy Challenges and Opportunities Head On

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