Cost Effective

An Industry Insight feature with Progressive Medical

Are workers’ compensation medication costs getting you down? Tron Emptage, of Progressive Medical, explains further.

“Medical costs are predicted to hit $497.5 billion by 2016”
-Tron Emptage of Progressive Medical

According to The Journal of Workers Compensation, drug cost increases between 2005 and 2006 averaged 6.5%. Companies need to become sophisticated in the ways they manage their drug costs. Pharmacy benefit managers can help companies understand industry issues and put together programs that are going to maximize dollars. Pharmacy programs that manage issues with high utilization, physician behavior, overuse of pain medications and off-label use are essential to manage medication costs.

Price inflation is projected to increase medication costs from $200.7 billion in 2005 to $497.5 billion in 2016. This represents an estimated 148% increase in 11 years. The number of prescriptions purchased between 1994 and 2005 increased 71%, compared to US population growth of only 9%.

These statistics are attributed to a rise in prescriptions, changes in the mix of medications being used (from older, less expensive medications to newer, higher cost medications), and manufacturer price inflation for existing medications.

What’s more, brand medications can cost up to three times more than their generic counterparts. While 47% of prescriptions are filled with brand medications, they comprise 88% of the $250 billion spent on prescriptions in the United States each year.

Brand medications are all too often used in place of generics due to the lack of education on the availability of new generics and the misconception that brand medications are more effective. Generic medications have the same components as branded ones, including intended use, effects, risks, side effects, safety and strength. The only differences are flavor, color, shape and inactive ingredients.

Overspending also occurs when prescriptions are filled that are not related to an insured’s injuries. For example, an insured refills a high blood pressure medication, birth control pills, diabetes supplies, or antidepressants and passes those costs on to the insurer. These unrelated or non-compensable medications cost the insurer hundreds of dollars each month and may result in court ordered coverage of unrelated medications.

The PBM solution

A PBM has various programs that work together to reduce medication costs for the company. These programs include offering a vast national network that offers volume discounts on medications. They also encompass various processes to ensure that injured parties are using the program and accessing available discounts, leading to good penetration. PBM programs should offer additional savings through mail order and by enforcing the use of generic medications when they are available.

By using a PBM, company’s can receive savings of up to 25% on their overall pharmacy spending. While many companies partner with a PBM to minimize the impact of rising drug costs, they also realize administrative and injured party satisfaction benefits.

Satisfying injured parties is the highest priority for companies. A PBM can help assist with this goal by reducing out-of-pocket expenses for the injured party, making it easier for the injured party to get the medications they need through a vast national network and by offering a mail order program.

Some examples of the administrative benefits a PBM provides to the human resource professional include less paperwork for medication invoices and reimbursement issues, easily accessible prescription history for the injured party and increased ability to detect utilization issues and potential problems.

As medication costs continue to rise at a rapid rate, companies are facing increasing challenges in containing medication expenses. By using an experienced PBM that offers a comprehensive range of programs, company’s can get control of medication costs while maintaining, or even increasing, injured party’s satisfaction.

Ultimately, it is important for a PBM to have experience in the workers’ compensation industry, offer a vast national network, extensive clinical pharmaceutical experience in the DUR program, flexible and user-friendly technology and maintain strong reporting features. A PBM should be easy to work with, offer customized solutions and demonstrate its value to your organization through day-to-day activities and reporting.

Since joining Progressive Medical in 2000, Tron Emptage has been an integral part of the Progressive Medical team, moving the company forward to be a national player in the pharmaceutical managed care arena.

Emptage is the visionary of Progressive Medical’s strategic initiatives. He has over 16 years of pharmaceutical experience, including expertise in all aspects of the delivery of pharmaceutical care. Emptage’s professional achievements include a Bachelors of Science degree in Pharmacy and a Masters of Arts in Counseling. Along with his education he spent several years using his skills in pediatric and adult hospitals. He also has experience in the home infusion arena, dealing with pain management and chronic disease states prior to his employment with Progressive Medical.