To Exclude or Not to Exclude?
Excluding drugs from your formulary can save you money, but so can not excluding drugs.
In working with Taft-Hartley Union Trust, employer groups, school districts and other corporate entities we have heard many times that warning from our clients that certain benefits, drugs, and individuals cannot be touched. It was almost taboo to thinking of changing a benefit that could save the plan and the member significant cost if the change was a perceived "take-away" or appeared to "lessen" the benefit levels.
What is a health plan, a PBM, a consultant, and employer to do?
Effects of Excluding Drugs From The Formulary
When planning your benefits renewal for your corporate benefits plan, without fail there is likely a drug that is planned on not being covered by the health plan and this list changes a few times a year. This can be due to the FDA removing drugs that are approved for use, the PBM negotiating favorable rebates for certain drugs if others are excluded (hopefully you receive this benefit if all of the rebates are passed to your organization), or the exclusion comes because their are comparable or superior alternatives that are clinically approved enabling the removal of drugs that are not as effective or costly.
When exclusions are utilized with transparency which explains why the exclusions are being recommended and the benefit to the plan and its member, this well-intentioned strategy can yield significant savings to the plan, its current, and future members.
However, if exclusions are off the table or not utilized properly with the right context, what is one to do?
No Exclusions = More Savings?
No exclusions equals more savings seems contradictory at first glance, but when programs, formularies and engagement is built to enable more choice and guided clinical protocol, then the savings for a plan can reach upwards of 30% annually.
Imagine if you had a new corporate benefit that said the company will pay for its members to lease a vehicle each year. Unless you exclude which cars the company would not pay for, undoubtedly people would turn up to work in a new BMW, Lexus, King Ranch F-150, Porsche with monthly leases ranging from $400 - 1,200 per month... you get the picture. You would not see so many budget-friendly cars of the Kia, and Honda ilk.
However, if the same corporate program added the simple caveat that it would cover the cost of the lease up to $150 per month, then this would mean the same choices of vehicles would result in the members having to pay an amount above the $150 per month cap or find a lease that is no more than $150 per month. You would see a lot more Kia, Honda, and Hyundai in the corporate parking lot, maybe even a Lyft subscription.
By implementing this concept in a healthcare setting significant shifts in consumer behavior, initiated by the consumer is the result. Reference-based or Consumer-driven healthcare can take make shapes and forms across all or some therapeutic categories, even for a specific drug or set of drugs. By removing exclusions and instead implementing shoppable limits and designs, members can have options they demand, while being held accountable for choices they want to make without compromising the quality or cost of care to live their healthiest life.
If you would like to learn more about consumer-driven prescription drug management reach out and learn more at email@example.com.
Be well. Be safe. Be smart.