Summer is winding down here in New England. The kids are back to school, the days are getting a little shorter and the commute to Boston is back to a familiar grind. At Lockton, we are working with clients; finalizing vendors, plan designs, rates, contributions, etc. In the build up to Open Enrollment and the 2020 plan year I thought a good post summer topic would be an ongoing challenge that all our clients are facing and how we might be able to help…Pharmacy Management.
The pharmacy market is changing rapidly and at times might be difficult to follow. In July, in conjunction with NEEBC (New England Employee Benefits Council) we co-presented on this topic with one of our partners, RxBenefits. Hopefully, we shed some light on what’s happening and what it means to employers and their people.
The impact of recent PBM/Carrier transactions will add even more complexity to an already complex market. As the PBM market consolidates (Cigna buying ExpressScripts, CVS buying Aetna, and United Health’s expansion of Optum Rx), disruption will occur as these companies convert clients, systems and deploy new solutions. Understanding and navigating these massive entities was already difficult prior to this consolidation. It will now require additional focus, scrutiny and oversight. They will also undoubtedly introduce new models which will require examination and due diligence as their value will only be proven out down the line.
Of all healthcare spend, pharmacy is the most volatile as it’s expanding to become the fastest growing components of healthcare. In 2008, pharmacy represented 10% of total health spending. In 2018, it has swelled to 19%. The average gross cost per Rx was $72 in 2008 and in 2018, was $126 (75% increase) and Rx costs per member per month (PMPM) also increased by 75% from $66 PMPM in 2008 to $116 PMPM in 2018.