There’s little to debate about the steadily increasing price of prescription drugs. Approximately 1 in 5 U.S. adults can’t afford their medications External Link. Sky-high price tags on specialty drugs, used to treat many chronic conditions, are giving us sticker shock. And the price of just one high-cost drug can consume a significant portion of your company’s health care budget.
Intensifying the problem is drug hyperinflation. This happens when suddenly, the price of a medication jumps erratically, for no justifiable reason.
Superficially high price tags on prescription drugs have been making headlines for years. Overnight, a brand name drug called Daraprim®, that’s been around since 1953, soared from $13.50 per tablet to $750 per tablet External Link. The decades-old generic antibiotic, doxycycline, increased from $20 a bottle to $1,849 External Link in just six months.
It’s a troubling trend, particularly for people who rely on commonly used drugs, like insulin, to live. Over the past 60 years, the list price of insulin External Link has gone from about 75¢ to $250 — an increase nearly 43 times the rate of inflation. EpiPen® prices have been inflated nearly 500 percent External Link over the last decade. In many cases, consumers can’t keep up with increasing costs, even when they rely on the medications to live.
What is drug hyperinflation?
Certain costs, especially those for new, effective therapies, can be justified. The problem is when costs rise on prescription drugs that offer little or no value to other available alternatives. Hyperinflated drugs are medications that have prices that are much higher compared to other readily available, clinically equivalent drugs. For example, Posaconazole, an antifungal medication, is priced at $4,500 for a 30-day supply External Link. It’s alternative, fluconazole, costs less than $14.
The hyperinflated drugs’ price is not supported by evidence of greater clinical efficacy or safety compared to their lower-cost alternatives, and this leads to higher costs for employer groups and members.
Usually the only difference between a hyperinflated drug and a more cost-effective alternative is a slight difference in the formulation of the drug. Here are a few ways hyperinflated drugs are disguised:
- The drug will have the same active ingredient but may be formulated differently, for example, as a capsule instead of a tablet.
- The drug manufacturer tweaks a particular ingredient, resulting in a “new” drug that adds no clinical value and often extends patent protection.
- The “new” drug combines two active ingredients into one pill, resulting in costs substantially higher than the costs of the individual ingredients.
How Wellmark curbs wasteful spending on hyperinflated drugs
Since 2020, Wellmark has been working to identify hyperinflated drugs, in order to contain costs, ensure appropriate utilization, and stop unnecessary spending.
How are we doing it? Our claims review process identifies hyperinflated drugs and blocks them from the Wellmark Drug List opens in new window. This process is guided by the oversight, review and approval of the Wellmark Blue Cross and Blue Shield Pharmacy and Therapeutics Committee (P&T):
- When the P&T committee reviews new drugs approved by the FDA, it includes review of the price set by the manufacturer and the prices of other therapies for that condition.
- For any new products (i.e. existing drug, different formulation) entering the market, our weekly Medi-Span External Link process reviews and considers the cost relative to alternatives. This helps us determine if and where to place it on the Wellmark Drug List.
- Our pharmacy team also subscribes to a drug price monitoring tool that alerts us to price increases on existing products.
To date, Wellmark’s process for eliminating wasteful spending on hyperinflated drugs has led to $22 million dollars in savings since the program was implemented in 2020, through the first quarter of 2021.
We’re doing the heavy lifting
We know that pharmacy benefits — and the costs associated with those benefits — are a top priority. By combining innovation, transparency, cost management strategies, and a full range of clinical programs, we can encourage the use of lower-cost drugs without limiting access — or performance — for your employees and their families.
Enlist Wellmark Blue Cross and Blue Shield to handle the back-end negotiations, compliance, pharmacy management strategy and independent PBM oversight, and your organization will be free to focus on the details that matter to you.
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