The Rebate Debate
How employers and plan sponsors support pharmacy care for their beneficiaries involves a complicated equation that considers everything from the unique make-up of their beneficiary population to planning for unexpected, catastrophic health events. While one plan could have a younger, healthier population, another could have an older population with a greater prevalence of chronic illness. In many group health plans, a minority of beneficiaries could incur a majority of the costs.
As the cost of some prescription drugs increases, so has the challenge for employers when it comes to offering affordable and accessible care. To keep the benefit more affordable, plans are shifting to plan designs, such as high-deductible plans, that increase cost sharing for members. Unfortunately, this confluence of factors has had an unintended consequence for some patients, who may find themselves paying more at the pharmacy counter. As a result, some patients are abandoning prescriptions or skipping doses, neither of which is a positive outcome for the patient or the plan.
Impact of High-Deductible Plans
For some patients, the cost burden in the deductible puts medicine out of reach. However, a sub-analysis of our 2016 Drug Trend Report shows that employers and plan sponsors are shielding their beneficiaries from the high cost of prescription medications.
Nearly 98% of Express Scripts’ plan sponsors with a high-deductible health plan (HDHP) design leveraged Health Savings Accounts (HSAs) and/or Health Reimbursement Accounts (HRAs) in 2016 to help their beneficiaries with the cost of care:
- 82% of employers offered an HSA in 2016;67% included employer funding
- 8.5% offer an HRA;100% included employer funding
- Some plans offer both an HSA and an HRA
Contribution amounts vary plan. A survey of health benefit advisors in 2014 showed that employers contributed an average of $515 per person to HSA accounts.
Just 20% of commercially-insured members with a pharmacy benefit managed by Express Scripts are in a HDHP; nearly a quarter of these members did not have a pharmacy claim in 2016. Of the people in a high-deductible plan administered by Express Scripts who did have a pharmacy claim in 2016, 76% had total out-of-pocket expenses less than $250 for prescription medications in 2016; 93% had total out-of-pocket expenses less than $1000.
The Rebate Debate
For some prescription drugs, rebates provide a discount to employers and plan sponsors who allow easier access to a medication that has marketplace competition. Rebates do not raise drug prices, drug makers raise drug prices, and they alone can lower them.
Consider the cost of Humalog® (insulin lispro): over the past seven years, the list price for this medication has increased dramatically, yet the net cost has remained relatively constant. Without PBMs, and specifically without Express Scripts, plan sponsors would have paid exponentially more for their prescription drugs.
Not all prescription drugs are rebated, however. Drug makers typically do not offer rebates for generic medications or drugs without market competition.
For example, list prices for oral oncology medications, which are not rebated or discounted to any significant extent, have doubled between 2011 and 2016, from $20 per unit to $40 per unit. Looking at the 39 medications that were on the market in 2010, six had 100-200% inflation between 2010 and 2016; one had inflation greater than 300%, and one had inflation greater than 800%.
The majority of rebates Express Scripts receives from drug makers (nearly 90%) are paid by Express Scripts to employers and plan sponsors who pay for the pharmacy benefit. These employers and plan sponsors negotiate whether they will keep the whole rebate or allow Express Scripts to retain a small portion of the rebates.
Employers and plan sponsors also decide how to use the discounts provided by rebates. Some plans find it most valuable to use the discounts they receive from rebates to keep premiums, copays and deductibles from increasing. However, in this changing plan design environment, some plan sponsors determine that sharing the value of the rebate with the member, at the point-of-sale, is the best way to help members afford their medication when in the deductible.
Whatever our clients decide is best, we are ready to deliver.
Providing discounts from rebates directly to patients at the point of sale is not new; however, Express Scripts recently developed an enhanced solution called SmartShare Rx, which offers employers and plan sponsors greater flexibility in how they use rebates savings to keep the benefit as affordable as possible for their members and improve their experience.
With SmartShare Rx, an estimated rebate value is applied to rebate-eligible medications being filled in the deductible phase of pharmacy benefit. This estimated rebate value reduces the patient’s out-of-pocket cost at the point of sale, further alleviating their exposure to high costs in the deductible phase.
The plan sponsor is billed the amount of the rebate that was applied at the point-of-sale and then once the rebate is received from the drug maker, that amount is allocated back to the plan sponsor.
As an independent PBM, we have the flexibility and innovation to create new solutions as benefits evolve. We are keenly focused on the experience our members have with their benefit and have created SmartShare Rx as an option for our clients wanting to offer their pharmacy benefit in ways that are best for them and their member population.