5 Strategies for Employers to Take Charge of Prescription Spending

Have you looked closely at what your business is spending on prescriptions? If not, you should. Spoiler alert: It won’t be good news. For the last four years, companies that self-fund their insurance have experienced a 10% year-over-year increase. The price tag has gotten so big that prescription spending now accounts for 25% of benefits spending.

Those are just a few findings from Nomi Health’s most recent Trends in Spend Tracker. Our subsidiary, Artemis, a leading benefits analytics platform, analyzed $23 billion in prescription drug claims from 11.5 million employees between 2022 and 2023. All the insights point to a disturbing future that, if left unchanged, could threaten employers’ financial stability and the quality of their employee benefits. You can see the findings here.

While many aspects of this cost crisis may seem insurmountable and beyond your control, your hands aren’t tied. There are achievable solutions you can implement now that can cut your prescription spending in half while ensuring your employees receive the treatments they need.

To control your prescription costs, here are five strategies Nomi Health suggests self-funded plan holders consider:

1. Change the place of service: Consider the site of care for medication services. The price of a specialty drug injection can vary significantly based on whether it's administered at home, in an office, in an inpatient hospital or in an emergency room. Companies can achieve significant savings by encouraging employees to seek these services in more cost-effective settings.
2. Explore international sourcing: While not legal in every state, consider sourcing generic medications internationally to take advantage of competitive pricing. (KFF FAQs on international sourcing: https://www.kff.org/health-costs/issue-brief/faqs-on-prescription-drug-importation/)
3. Engage with pharmacy optimization programs and direct manufacturer contracts: By collaborating with pharmacy optimization programs, you can access discounted rates and rebates, potentially reducing your prescription costs. Similarly, negotiating direct contracts with manufacturers can lead to more favorable pricing.
4. Be an educated employer with educated employees: Ask your broker or plan administrator for information on cost-effective prescribing, promote using generics and over-the-counter equivalents and raise awareness of how adjusted dispensing practices can lead to better cost management.
5. Don’t just collect your data, leverage it: Dive into your organization's data and analytics to uncover opportunities for cost savings and optimize your benefit offerings. By using predictive analytics, you can identify potential areas of overspending and take proactive measures to control costs effectively.

Our analysis highlights the urgent need for cost-management solutions amid escalating healthcare expenses. To make informed decisions about managing prescription spending and optimizing your healthcare strategies, we urge employers to stay engaged with the latest industry trends and solutions. This could involve encouraging discussions among your peers, seeking insights from trusted resources, and implementing the strategies we've outlined. These proactive steps today can lead to significant savings and improved health outcomes tomorrow.