A different look at your Pharmacy Benefits

A different look at your Pharmacy Benefits:

Key Performance Indicators (KPIs) such as the Generic Effective Rate, Brand Effective Rate, costs per member per month, and utilization per member per month, are used in the PBM industry to assess the performance of pharmacy benefits.

We recognize the importance of these indicators and use them in our analysis as well. However, limiting analysis to these two dimensions (drugs and members) can have an effect on whether or not important perspectives and savings opportunities are considered.

In our view, there are other important aspects, like for example pharmacies. We look at our clients’ costs performance and management in multiple dimensions, which required the creation of additional KPIs.

Our innovative approach is based on two pillars:

Look at the business from multiple dimensions, and
Create system logics to prevent potential clinical or administrative issues at the point of sale

One example

We asked ourselves if variances in pharmacy practices may have an impact on pharmacy costs as well. Based on this, we came up with a new indicator, “average cost per unique member” visiting X pharmacy provider or group of pharmacies in a given timeframe. For this analysis, pharmacies with negligent volume are excluded and the comparison is made between similar pharmacies. This way, specialty pharmacies are not compared against community pharmacies.

The results

When looking at the results, it was interesting to find no correlation at all between the discounts negotiated with a particular pharmacy and the results of this new KPI. This means the cost per script or discount negotiated is not necessarily a predictor for cost per unique member. In some of the cases, when measured by this new indicator, pharmacies with more aggressive discounts were twice as expensive as those with a less aggressive discount.

These results triggered the search for more information to help find potential causes. After this, we came up with another key indicator, “average number of prescriptions per unique member” visiting a given pharmacy or group of pharmacies in a given timeframe.

What we found

This indicator showed a stronger correlation between the average number of prescriptions per unique member and the average cost per unique member than the correlation to a negotiated discount. Interestingly, further analyses in this last indicator showed a considerable difference in about 10% to 15% of pharmacies versus the rest of similar pharmacies. This means that there are ten to fifteen percent of pharmacies that average more prescriptions per unique member when compared to similar pharmacies. Although there could be reasonable justifications for this finding, the data warrants a closer look.

A new solution

We have found certain pharmacy practices that increase costs to our clients. With this in mind, we created logics in our proprietary system to avoid the adjudication of claims that should have never been adjudicated.

Looking at pharmacy benefits costs in different ways helps us save about 15% in drug costs, reduce cost trends year over year to our clients, and improve the quality of the pharmacy benefits at the point of sale. In doing so, we can avoid any potential harm to your members or a potential FWA case.