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  • If You Have to Ask, You Probably Can’t Afford It

    “If you have to ask, you probably can’t afford it.” This phrase, commonly attributed to J.P. Morgan, famous as an American financier and for being, well, wealthy, was often used to describe the enormously expensive luxury items such as yachts, private planes, islands, etc. Typically reserved for the things only uttered in Robin Leach’s plummy tone or for the more modern reader: as seen on MTV Cribs.

    So, what does this snarky statement about “you probably can’t afford it” have to do with healthcare?! Seemingly everything at the moment. Moreover, not just healthcare, but one particular segment of the equation that seems to be growing at an untenable clip: Rx.

    While everyone has seen, read, heard, and most likely personally felt the impact of rising medical costs, they’re often associated with a defined event — a visit to your physician’s office for treatment, an inpatient stay for something more serious, an outpatient procedure, or maybe an ER visit when something goes bump in the night. Varying access points along the continuum of healthcare with a defined episode triggering the expense. Pharmacy, well that’s a different story.

    Don’t get me wrong, you can still grab a Z-Pak for that seasonal cold and be one and done, but that no longer is the norm. Express Scripts, a Pharmacy Benefit Management (PBM) company which manages plans covering more than 100 million people, has an average Rx script count of 1.45 scripts per member per month across their book of business. Couple that use with a projected trend increase detailed in a recent Segal Survey with non-specialty costs of 10.3 percent in 2018 (down from 11.6 percent in 2017) and we’ve got a “you probably can’t afford it” situation on our hands.

    Let me further tint your rose-colored glasses with an alarming trend in the industry of the four major health carriers acquiring, or being acquired by, the four largest PBMs:

    So, you take a complicated and expensive part of a complex industry and you inject less competition…feel hopeless yet?!

    Not to fear, there truly is light at the end of the tunnel. Our Nebraska Division Leader, Beau Reid, wrote a great blog in September titled “Medicare for All.” While his blog focused on the often debated single-payer system, a key tenet of his messaging was transparency and competition based on value and quality. This rings true in the pharmacy space as well and is something that you as employers, we as consultants, and all of us as consumers must demand. And I say this…there is hope.

    At Holmes Murphy, we’re spending a lot of time and energy focusing on the pharmacy side of the equation. Our enterprise team is developing tools to help clients identify spikes in use and, ultimately, address the health concerns that may be driving this increased utilization. In addition, we’re evaluating the price side of the equation to analyze spend, identify the best partner in a narrowed field, and take advantage of rebates and other pricing programs available to our clients. The pharmacy space is changing rapidly and solutions once available only to jumbo-sized employers, such as carving out from your medical carrier’s PBM, are now available to employers of varying sizes and across geographies. It sounds complicated and it can be, but that’s why we’re here and that’s what we do. Pharmacy will continue to be an evolving dialogue, and in the near-term, something we should all be prepared to change, tweak, and otherwise iterate each year. It’s important, it’s expensive, and at 1.45 scripts per member, it’s here to stay.

    Let’s get smarter together, and we will navigate these changing waters. Stay diligent and let’s remember, we have to ask what it costs because we’re all paying for it!

    Published on: 10.29.18

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