Report: PBM Drove Costs Down in 2016

Increased generic drug utilization found to drive down savings.

Although drug costs rose significantly in 2016, pharmacy benefit manager (PBM) Prime Therapeutics reported that its nearly 20 million members only experienced a 2.5% increase in costs.

Despite specialty drug costs growing 13.7%, spending on traditional drugs decreased 1.7%, according to a press release. Overall, Prime patients saw savings of more than $2.2 billion.

“With prescription drug prices increasing at unsustainable levels, Prime is pleased that it has played an active role in controlling drug costs for our clients,” said Jim DuCharme, president and CEO of Prime. “We are relentless in helping our members find the right drugs for their condition, assuring their continued adherence to that regimen, and finding a most affordable cost. Every day we will aggressively negotiate the best price for our plan sponsors and members. We are thrilled to be able to report an annual drug cost in 2016 that is industry-leading and represents a responsible level of increase.”

The PBM’s low drug trend indicates how it has effectively managed costs, and made drugs more affordable for patients, according to the release. Despite an increase of 4.8% in pharmaceutical prices and a 2% increase in drug utilization, Prime kept costs low for patients.

The use of PBM programs were among the factors that contributed to keeping costs low, according to Prime. Since drug prices increase, patients are more willing to partake in certain approaches to increase the use of preferred products, such as Prime’s disease-specific Best in Care drug management programs, according to the release.

An increase in generic utilization also continued to drive cost savings. In 2016, generic utilization grew from 83.1% to 84.7%, Prime reported. Generic drugs are typically much less costly compared with branded products, and represent a significant way patients can reduce out-of-pocket costs.

Prime’s continuous negotiations to lower rates and dispensing fees with pharmacies, and negotiations for rebates with manufacturers, also decreased costs in 2016, according to the release. Additionally, Prime’s alliance with Walgreens will also lead to lower costs for patients.

Disease management strategies also lead to low spending increases, and were largely driven by diabetes treatments and biologic anti-inflammatory drugs.

In 2016, diabetes costs increased 18% due to higher utilization and price increases. Through the use of the Best in Care diabetes platform, a 7.5% net trend was seen, which was a reduction of more than 60% from 2015, Prime reported.

In the specialty space, biologic treatments for rheumatoid arthritis and other autoimmune disorders accounted for 40% of spending. Although these drugs contributed significant costs for payers, Prime achieved $104 million in client savings due to their management strategy.

Specialty drugs present a challenge for plan sponsors because spending typically takes place through the medical benefit. Unfortunately, the costs are not always accessible for PBMs, and can add up.

In 2015, Prime discovered that biologic anti-inflammatory drugs made up $1 out of every $10 of medical and pharmacy benefit costs. In 2016, 22% of autoimmune drug costs were paid on the medical benefit, according to Prime. Overall, medical benefit spending on specialty drugs has grown more than 50%.

Since Prime has integrated with certain health plans, the PBM is able to determine the total costs across medical and pharmacy benefits. Through their Best in Care programs and other strategies, Prime is able to help their patients manage complex diseases and treatments, according to the press release.

“Prime helps manage more than just pharmacy costs,” said David Lassen, Prime’s chief clinical officer. “Our focus is on helping our clients manage total costs of care. This is especially important as we continue to see drug spend shifting from traditional to specialty drugs. Many rapidly rising conditions — such as autoimmune disorders, multiple sclerosis and cancer – are treated with specialty medications. This is why Prime’s total cost view is critical, as are our tools to aid clients in managing medical-side drug spending.”