Companies Join Coalition To Minimize Prescription Drug Costs
Hoping to get a better handle on their prescription drug expenditures, more than 30 large employers have joined Rx Collaborative, a coalition organized by HR consultancy Towers Perrin to reduce employer drug costs through bulk purchasing and greater price transparency.
Billed as the first transparent pharmacy benefit manager (PBM) pricing model and the largest employer coalition of its kind, Towers Perrin said the Rx Collaborative will allow members to save up to 10% on their drug spending in the first year, and will deliver significant additional savings in subsequent years. Medco Health Solutions has been selected as PBM for the group. Under the terms of the group’s agreement with Medco, member companies will pay the PBM a flat monthly fee for each employee in the program, and a fee for each prescription dispensed by mail.
The companies making up the coalition include ING Americas, Eastman Chemical, Mattel, and Unocal. Currently, the group’s member businesses spend a combined $800 million a year on prescription drugs, according to Towers Perrin.
In addition to offering Rx Collaborative members greater economies of scale and improved price transparency, Medco has agreed to pass on to members all drug manufacturer rebates and discounts, and to provide companies with complete information about its purchasing activities. This will enable members to better monitor expenditures, and ensure that they and their employees are getting the best possible price on their medications, Towers Perrin said.
"Prescription drug costs have grown significantly over the past five years," observed David Guilmette, managing director of Tower Perrin’s HR Services business. "Moreover, actual manufacturing costs, discounts and other aspects of drug pricing have been largely invisible to employers, making it extremely difficult for employers to effectively manage their drug benefit programs."
However, Guilmette added, "by banding together and building from a clear picture of actual costs, employers can better manage their programs collaboratively with PBMs, working on utilization management, disease management, formulary development and other efforts that will have a sustainable, long-term impact on overall costs and quality. Working together with all the cards face-up on the table, employers can change the PBM business model and better manage their programs collaboratively with PBMs."
