July 2012 Public Sector Letter, "Emerging Strategies for Managing the Cost of Prescription Drug Coverage"

Abstract

As state and local governments slowly recover from the Great Recession by making tough budgetary decisions and structural changes, they continue to look for various sources of savings. One area of focus is prescription drug coverage, where cost trends are projected to increase at a rate far higher than general inflation.

This Public Sector Letter discusses five strategies for managing the cost of prescription drug coverage by answering the following questions:

  • How can the plan maximize savings associated with new generic drugs?
  • What are the advantages (and disadvantages) of creating a custom retail pharmacy network?
  • What can be done to promote drug-therapy compliance?
  • Why is analysis of utilization the first step to managing the high cost of specialty drugs?
  • How can couponing be combatted?

The five strategies discussed in this Public Sector Letter are intended to augment, not replace, cost-management strategies already in place. The existing programs might already include financial incentives for participants to use generic drugs, to use step therapy and/or a tiered approach to brand-name drugs. The discussion concludes with additional important considerations about the implementation of prescription drug cost-management strategies, including how to communicate the change(s) with participants.

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