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How to Protect Your Pharmacy Costs During COVID-19

COVID-19 is affecting all areas of pharmacy management. For instance, pharmacy benefit managers (PBMs) are limiting the self-audit of their pharmacy network to let pharmacies focus on fulfilling an influx of patient prescriptions. Meanwhile, states are relaxing benefits restrictions such as prior authorization requirements and easing limits on prescription quantity and refills, making it easier for patients to access medication.1

Employers are already experiencing the effects of these policy changes in higher pharmacy costs and a spike in drug utilization. While giving employees greater access to life-saving prescription medications is vital, relaxed restrictions also allow bad actors to take advantage of the system via fraud, waste and abuse (FWA) — and a reduction in PBM self-audits only makes this easier.

Employers should proactively protect themselves and their pharmacy costs. Although PBMs are limiting audits, organizations may still want to pursue one. However, they must first decide whether an audit is necessary and then decide how to proceed.

Should You Conduct an Audit?

There are several indicators that signal whether pursuing a pharmacy audit is necessary. By investigating their population data, for example, employers can identify potential evidence of FWA before requesting an audit. This fact-finding mission also gives employers a stronger case for a PBM to conduct one if needed.

There are four areas employers should examine with the help of a third-party provider:

1. Study your population in detail. Potential FWA increases with membership size and as your prescription plan designs become more permissive — for instance, if your benefit parameters have not been updated to adhere to the latest PBM anti-FWA program offerings. By studying your population, you can see how it compares with the market and identify any prescribed medications that are outliers.

2. Verify drug utilization. Employers can verify drug utilization and find patterns that may deviate from expectations set under the original PBM contract because of new drugs entering the market, generic launches, or patients stockpiling prescriptions so they don’t have to refill each month.

3. Review benefits costs. Assess pharmacy costs each quarter to see if there are any spikes worth investigating and approach your insurer if you find something. Pharmacy or provider costs may also rise because of COVID-19, but a third party can help you understand what’s suspicious and what isn’t.

4. Monitor drug administration. As more people opt for virtual care, some medications usually administered by a physician in a clinical setting are now being self-administered by patients at home. Employers should know what their insurers and vendors are doing to manage this safely. Are patients being educated on the proper administration of these medications? Are providers following up? Are critically sensitive patients monitored for adverse effects? The potential misuse or misadministration of drugs could cause an increase in unnecessary hospitalizations, emergency room visits, and medications prescribed to address adverse effects.

What to Ask PBMs and Third-Party Advisors 

Once your company has completed its preliminary fact-finding mission, you might decide an audit is necessary. If you want to move forward, planning is critical; an audit takes three to six months from start to finish. To focus your efforts and make the best use of your time and resources, there are three questions to consider asking PBMs and third-party advisers:

What issues are you addressing and what recommendations are you making to support my population?

If a PBM can’t answer this question to your satisfaction, or it becomes clear that they have not been proactive in reviewing your data and making good recommendations, it may be time to talk to an independent expert.

Do I have funds in my PBM?

Cost is always critical when deciding whether to undertake an audit — and rightly so. Ask your PBM if there are credits or pharmacy management funds available in your contract to pay for third-party audits. If so, take advantage of them, as they often expire if they are not used.

What issues are peers in my industry facing?

Ask your independent advisers about what hot-button prescription drug issues organizations of the same size and in the same industry as yours are facing. What deep-dive audit reviews are those clients undertaking to better understand their prescription spending?

To see what happened when one company pursued an FWA audit, see “Protecting Pharmacy Costs: A Case Study" below.

Protecting Pharmacy Costs: A Case Study

In spring 2020, a large construction organization decided to conduct an analysis with Aon to see if there were any medical claims that might be fraud, waste and abuse (FWA). Knowing that typical anti-FWA controls were suspended because of COVID-19, the company wanted to analyze commonalities across patients, pharmacies, prescribers and drugs to identify pharmacies with significant utilization or sudden spikes in utilization over a period of three months. 

After careful review, Aon found that the company’s potentially wasteful gross drug cost was  more than $21 million. The 10 most wasteful drugs accounted for nearly 80% of that wasteful spending, and more than 110 prescribers were involved in prescribing these drugs. The high number of prescribers involved in FWA could suggest that some patients were getting multiple prescriptions for the same drug from different prescribers or that prescribers were writing prescriptions that were not medically necessary for patients.

At the end of the audit, the employer received a list of providers and pharmacies to consider terminating based on the findings of FWA-associated claims and similar prescribing patterns of terminated prescribers. These recommendations were actionable so the employer’s vendors could help block future wasteful spending.

Although PBMs are limiting self-audits because of COVID-19, employers should still feel empowered to maintain benefits oversight, especially if it has been a year since their previous audit. By doing your due diligence and speaking with your PBM or third-party advisers about any areas of concern, your company can protect its pharmacy costs and ensure its pharmacy program is healthy and operating smoothly.

States are Shifting How They Cover Prescription Drugs in Response to COVID-19