February 16, 2017
Prime Therapeutics held drug spending to just 2.5 percent in 2016, saving clients more than $2.2 billion
Prime’s low drug trend is an indication of how effective its efforts were over the past year to manage costs and make medicines more affordable.
St. Paul, Minn. – Prime Therapeutics LLC (Prime), a leading pharmacy benefit manager (PBM) representing nearly 20 million members nationally, reports its clients saw a mere 2.5 percent increase in overall drug costs in 2016. While specialty drug expenditures grew 13.7 percent, these increases were offset by a 1.7 percent decrease in spending on traditional drugs. As a result of Prime’s various management tools, the total financial savings to clients exceeded $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, Prime’s president and CEO. “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. ”
Prime’s low drug trend is an indication of how effective its efforts were over the past year to manage costs and make medicines more affordable. While pharmaceutical prices increased 4.8 percent – more than twice the general inflation rate — and drug utilization grew nearly 2 percent, Prime’s efforts were vital in keeping costs in check for pharmacy members last year.
Several factors contributed to the lower increase in spending in 2016:
Smart use of PBM programs: Pharmacy benefit tools can be extremely effective in reducing costs while maintaining access to needed drugs. As drug spending pressures have increased, clients have been more willing to adopt proven approaches to drive the use of preferred products, such as Prime’s disease-specific Best in CareTM drug management programs. These programs improved health outcomes and contributed to lower net costs.
Capitalizing on generics: By taking advantage of Prime’s programs to maximize generic use, clients increased generic utilization from 83.1 to 84.7 percent in 2016. This is significant as generics are considerably less expensive than brand-name drugs and are also one of the best ways members can save money. Additionally, Prime optimized generic pricing, which resulted in a 5 percent reduction in the average cost per generic prescription.
Industry alignment and innovative partnerships: Prime’s ongoing efforts to negotiate lower rates and dispensing fees with pharmacies as well as discounts and rebates with manufacturers contributed to decreased trend. A ground-breaking alliance with Walgreens announced in August 2016 promises to deliver additional cost savings for Prime’s members and clients.
Prime’s management strategies achieved one of the lowest spending increases in recent years. The increase was largely driven by two categories:
Diabetes drug treatments: Diabetes is the number one non-specialty drug category, comprising 13 percent of total pharmacy benefit spend. Diabetes costs grew 18 percent in 2016, driven by a 6 percent increase in utilization and average price increases of 10 percent on drugs in this category. However, Prime’s Best in Care diabetes program helped to drive 7.5 percent net trend, a reduction of more than 60 percent from the prior year.
Biologic anti-inflammatory drugs: Treatments for rheumatoid arthritis and other autoimmune disorders dominated the specialty pharmacy benefit. These specialty drugs accounted for 40 percent of specialty expenditures and 12 percent of total expenditures on the pharmacy benefit. While these drugs added significant costs for payers, Prime’s management strategy helped alleviate some of that pressure, achieving $104 million in incremental client savings and driving a 24 percent reduction in net trend from 2015 to 2016.
Specialty drugs offer an additional challenge for plan sponsors, in that spending often takes place through the medical benefit. These costs are not always visible through a typical standalone pharmacy benefit manager, yet the hidden medical drug costs can add up to significant amounts.
For example, a Prime 2015 study found biologic anti-inflammatory drugs accounted for nearly 1 in every 10 dollars of combined drug expense through the medical and pharmacy benefit. Current analysis reveals that 22 percent of total autoimmune drug costs were paid on the medical benefit in 2016. All told, medical-side spending increases the total cost burden for specialty drugs by more than 50 percent.
Because of its integration with health plans, Prime is able to look at the total health of members and total costs across the medical and pharmacy benefit. Through Best in Care programs and integrated strategies, Prime is able to aid clients in the comprehensive management of complex conditions and the high-cost drugs that treat them.
“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.”
Prime partnered with clients to hold medical-side spending in check, achieving a gross medical drug trend of just 6 percent year over year (3Q 2016). Prime helped clients avoid more than $200 million in medical costs by sending alerts through its Guided Health® program to improve drug adherence and close gaps in care. Additionally, the company realized $64 million in incremental medical-side savings through medical drug reviews, which drive appropriate utilization of drugs through the medical benefit, and Reimbursement SolutionsTM, a program designed to guide clients in setting appropriate reimbursement for drugs on the medical benefit.
About Prime Therapeutics
Prime Therapeutics LLC (Prime) helps people get the medicine they need to feel better and live well. Prime manages pharmacy benefits for health plans, employers, and government programs including Medicare and Medicaid. The company processes claims and delivers medicine to members, offering clinical services for people with complex medical conditions. Prime serves nearly 20 million people. It is collectively owned by 14 Blue Cross and Blue Shield Plans, subsidiaries or affiliates of those plans.
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Director, Corporate Communications