Flip The Script On Rx

 In Advisors

Americans spent $335 billion on prescriptions in 2018, and are projected to spend more than $511 billion by 2025 — an increase of over 52%, according to Express Scripts. In an analysis of internal data, the pharmacy benefit manager found Americans had on average more than 18 prescriptions in 2019, and 80% of those were necessary to manage chronic conditions.

It’s clear that something needs to change for consumers. Managing Rx costs is a burden many Americans can’t bear, pushing them to take chances with their health that hurt them more in the long run. Almost a quarter of consumers who suffered a price increase on medications simply declined to fill the prescription, while roughly one in 10 took an expired medication or skipped a dose to make it last longer, Consumer Reports found.

Advisors play an important role in helping clients control medication costs for their employees, and it’s something they can start doing today. Here are three areas where advisors can begin helping clients reduce pharmacy spend right away. 


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Pharmacy benefit managers buy prescriptions for health plans at lower prices than what the plans pay for them — a simple economic concept, but one that puts plans at a serious disadvantage and can put millions of dollars on PBMs’ balance sheets. 

Some PBMs say they offer their services for free. Of course, you never really get anything for free. Instead of charging an administrative fee, these PBMs keep the difference between what they charge health plans and what they reimburse pharmacies.

Advisors can start demanding transparency by working with PBMs that use pass-through pricing and set out their administrative fees clearly, so health plans know exactly what they’re paying for. 


The pharmacy benefit manager model creates an inherent conflict of interest. PBMs negotiate rebates from manufacturers for making their products preferred drugs in health plan formularies, according to a paper in the Yale Law & Policy Review. If PBMs pass those savings on to clients, great — but they’re under no obligation to do so. 

Courts that have considered the question of PBMs’ fiduciary obligations to plan participants tend to take them on a case-by-case basis, Bloomberg Law reported. In the meantime, PBMs are bringing in billions of dollars through rebates. A 2019 survey by Pew Charitable Trusts found manufacturer rebates more than doubled between 2012 and 2016, growing from $39.7 billion to $89.5 billion.

Make sure you’re getting your clients the most savings by asking these four questions: 

  1. Are Rx rebates shared with clients? 
  2. Can clients get rebates as cash?
  3. Can clients audit the rebates that have been applied? 
  4. Do clients have any control over the prescriptions in the formulary? 

Specialty Rx Management 

Advisors can bypass PBMs altogether to help clients tackle the outsized impact of specialty prescriptions. Specialty drugs account for about 2% of prescriptions, but almost half of Rx spending goes toward these expensive medications. 

Copay cards split the Rx costs between drug manufacturers and health plans. Similarly, medication assistance programs are offered by manufacturers to help reduce patients’ Rx costs.  

Although the Food and Drug Administration prohibits importing medications to the United States, lawmakers’ attitudes around that are changing. President Donald Trump signed an executive order in September declaring that Medicare should not pay more for medications than the lowest prices charged in countries with similar GDPs. 

Get creative to grow your business 

Employers are overwhelmed by complicated benefits programs. Even those who work with a consultant say managing complexity is getting harder, according to Guardian Life’s 4th annual Workplace Benefits Study. 

Employers need creative experts who understand how to control healthcare costs. Advisors who find innovative solutions like self-funding for their clients can help them save 10% compared to commercial insurance. Rx management is a key factor impacting clients’ health plans, and one that advisors can begin controlling today.

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