Human Resources and Benefits

Rising Prescription Drug Costs: A Hard Pill To Swallow


Prescriptions are the fastest growing cost impacting healthcare budgets, and there is not an end in sight. In fact, on October 16, 2017, the following was announced:

“Spark Therapeutics’ gene therapy for an otherwise incurable rare eye disease, if approved, could be a major milestone for the disease itself as well as the field of gene therapy. The therapy, Luxturna, was recommended for approval by a Food and Drug Administration advisory committee on Thursday, paving a path towards possible approval by mid-January. Just one administration of Luxturna could help treat the disease, called biallelic RPE65-mediated inherited retinal disease (IRD). But the advance is expected to come with a cost almost without precedent: around $650,000 total, according to Stifel analyst Stephen Willey, though some Wall Street analysts say the therapy could cost nearly $1 million total.”

Unfortunately, these types of orphan drugs are not uncommon. In addition, brand name scripts have skyrocketed at an average of 13% and the 50 most popular generic drugs have increased 373% over the past four years. One such example is generic Abilify (Aripiprazole). The retail cost now is over $900/month. Below are other frightening facts:

  • Medication to treat cystic fbrosis is over $50,000/year.

  • Short bowl syndrome drug Gattex is over $500,000/year.

  • Drug for RSV in children, Synagis, is $1,500 retail, yet billed through the hospital system can be as much as $10,000/month.

  • Hep C treatment (a 12-week pill) is anywhere from $80,000 to $120,000 in the U.S., yet costs in other countries are as low as $1,000.

High-cost specialty medications account for 25% of prescription expenditures and are predicted to spike to 50% by 2020. In 2012, specialty medication costs were $87 billion, and in 2020 these costs are projected to reach $400 billion. Health plans simply cannot absorb these costs. Based on the latest announcements from Congress, there will not be any substantial changes in the near future impacting the cost of prescription medication. Employers must continually increase plan deductibles and out-of-pocket costs in order to find some rate relief. In addition, employees and their families are having to make decisions on filling prescriptions or putting food on the table – this used to be the case only for the elderly but is now the case for a large majority of working families. The result is medication non-adherence which contributes to a 20% increase in hospital admissions and readmissions.

What are some levers we can pull to help employers with this ever increasing trend? We’ve implemented the following solutions, resulting in significant savings for health plans, rather than cost shifting to members.


Due to heavy lobbying in Washington, the U.S. does not negotiate any medication costs. As a result, most multi-national drug companies report record earnings reaping over half of their worldwide profits in America alone. Medications in the U.S. are grossly overpriced and are two to ten times more expensive in the U.S. than other countries. Pharmacy cost mitigation programs provide safe affordable brand name and specialty maintenance medications at a reduced cost to employers and employees. The substantial savings opportunities that these mail order programs provide (anywhere from 70 to 90%) are due to the low prices negotiated between most developed nations and the pharmaceutical companies. For example Tecfdera (used to treat M.S.) costs around $5,700/month in the U.S. This drug can be purchased for as low as $1,000/month through an international prescription provider. I have several clients who have implemented a pharmacy cost mitigation program and have truly recognized the savings. The plan pays 100% of the cost. We provide consultation services to a large Taf-Hartley Trust, and in their first quarter they only had 15 prescriptions filled but saved over $35,000.


Patient assistance programs include advocates who work with major drug manufacturing companies to get medication to the member at little to no cost. The medications come directly from the drug manufactures who make the brand name medicine. Co-pay card programs offered by drug manufacturing companies can minimize employee out-of-pocket costs for prescription drugs. The cards can enable patients to afford the medications preferred by them and their physicians.There are Pharmacy Benefit Managers (PBMs) who search out copay assistant programs on every script, regardless of the member’s copay. In addition, they work with manufacturers, advocacy groups, and charitable organizations to find additional member cost savings. However, beware of those programs that do not have a mechanism in place to apply the member’s copays, deductibles, and out-of-pocket costs – particularly if they have a high deductible/HSA plan.


These services provide a call center (staffed with licensed pharmacists) for employers and employees where they answer questions about the employee’s prescription drug plan and its benefits; identify alternative medications or treatments that are less expensive or might better help patients; explain the process for requesting exceptions to the plan; and approve or deny requests for exceptions to the plan. They truly are in the best position to provide medication management services to employees, assuring they are on the right medication at the right price.


Utilization management on the pharmacy has become essential. When step therapy, prior authorization, and quantity limit programs are in place, plans can recognize a savings of over $4 per member per month and manufacturer rebates are increased by as much as 20%.


Implementing a second opinion process for specialty medications could result in savings to the plan and the members. Employees could be incentivized to seek a second opinion when prescribed a certain high-cost medication. Ultimately, the decision lies with the patient and their doctor. However, there is potential for alternative medications to be considered first. As an employer, you have to recognize what you can and can’t control with regard to prescription cost. I believe the effort put forth in implementing the programs outlined in this article have set our company far and above our competition. We are utilizing data analytics to identify the true drivers and bringing forth true cost savings programs with proven and measurable results.


Mary Kay Puckett has over 30 years of experience in the health benefits field advising large, self-funded employers on employee benefits, risk management, and outcome-based wellness. She is a Certified Health Consultant and a Group Benefits Disability Specialist, and she holds the Health Insurance Association of America designation and the Certified Wellness Program Manager designation. Mary Kay is a member of the International Foundation of Employee Benefits, the Self Insurance Institute of America, and SHRM. She is also involved with several local non-profit foundations.