Optimizing Pharmacy Plan Designs: A Guide to Enhancing Client Benefits for Brokers and Consultants

By Team PCM | September 26, 2024 | Blog post, Plan Management, Pharmacy Benefits

Ever rising healthcare costs continue to be a significant concern for self-insured plan sponsors. Among these spiraling costs, pharmacy expenses represent a substantial and growing portion of overall healthcare spend.

Industry expert projections and employer surveys point to a cost trend increase of 11.4% in 2025. Already outrageous specialty drug costs are projected to increase another 13.3% next year.¹

For benefits brokers and consultants striving to provide the best solutions to their clients, understanding and effectively managing pharmacy plan trends, utilization patterns, and cost drivers is crucial. Having a comprehensive analytics strategy in place can pave the way for better pharmacy plan designs and more cost-effective solutions.

Analyzing Pharmacy Plan Trends and Utilization

The first step in building better pharmacy plan designs is to delve into plan data using analytics. By analyzing historical claims data and trends, consultants gain valuable insights into how members are utilizing their pharmacy benefits. This analysis includes examining prescription volumes, medication adherence rates, therapeutic class utilization, and the impact of specialty drugs.

Understanding these trends allows consultants to identify patterns that influence plan costs and member health outcomes. For instance, recognizing high utilization of GLP-1 or psoriasis drugs can prompt discussions about formulary adjustments or the implementation of clinical programs to promote cost-effective alternatives or improve medication adherence.

Formulary Development: Tailoring Coverage to Needs

Formulary development plays a pivotal role in shaping pharmacy plan designs. A formulary is a list of medications covered by a health plan, and its design significantly impacts both cost and access for plan members. Consultants can leverage their analysis of utilization patterns to recommend formulary adjustments that balance cost containment with optimal clinical outcomes.

For example, promoting the use of generic medications when appropriate can yield substantial savings without compromising efficacy. Moreover, ensuring access to essential medications while managing the cost of specialty drugs through tiered formularies can help control overall pharmacy spend.

Bolstering Plans with Clinical and Savings Programs

In addition to formulary management, consultants enhance plan designs by integrating clinical programs aimed at improving health outcomes and reducing costs. These may include therapeutic alternative programs, pharmacy tourism programs, alternate funding (PAP), and disease management initiatives tailored to chronic conditions prevalent among plan members.

By identifying gaps in care and implementing targeted interventions, brokers and consultants can help mitigate the need for costly medical interventions down the line. Furthermore, savings programs such as manufacturer rebates, pharmacy discounts, and mail-order options can provide additional cost benefits for both employers and employees.

PBM Contract Transparency: Ensuring Fair and Cost-Effective Terms

Pharmacy Benefit Managers (PBMs) play a crucial role in administering pharmacy benefits and negotiating pricing with pharmacies and drug manufacturers. However, the complexity of PBM contracts can sometimes obscure the true costs and potential savings opportunities. By utilizing annual market check and contract performance reviews, consultants can be sure that the health plan is receiving contracted rates that align with market trends, ensuring their clients receive fair pricing and optimal terms.

Truly transparent, comprehensive market checks include scrutinizing contract terms related to pricing methodologies, rebate structures, and network agreements. Negotiating favorable terms can lead to reduced costs for prescription medications and improved overall value in pharmacy benefit plans.

Enhanced Benefit Design

In conclusion, the analysis of pharmacy plan trends, utilization patterns, and spend is instrumental in developing enhanced pharmacy benefit designs for clients. By focusing on formulary development, integrating clinical and savings programs, and advocating for PBM contract transparency, brokers and consultants can effectively manage costs while promoting better health outcomes for plan members.

1. Segal 2025 Health Plan Cost Trend Survey: https://www.segalco.com/consulting-insights/2025-health-plan-cost-trend-survey#:~:text=The%20survey%20reports%20respondents’%202025,outpatient%20prescription%20drugs%3A%2011.4%20percent.

Optimizing Pharmacy Plan Designs: A Guide to Enhancing Client Benefits for Brokers and Consultants

By Team PCM | September 26, 2024| Blog post, Plan Management, Pharmacy Benefits

Ever rising healthcare costs continue to be a significant concern for self-insured plan sponsors. Among these spiraling costs, pharmacy expenses represent a substantial and growing portion of overall healthcare spend.

Industry expert projections and employer surveys point to a cost trend increase of 11.4% in 2025. Already outrageous specialty drug costs are projected to increase another 13.3% next year.¹   

For benefits brokers and consultants striving to provide the best solutions to their clients, understanding and effectively managing pharmacy plan trends, utilization patterns, and cost drivers is crucial. Having a comprehensive analytics strategy in place can pave the way for better pharmacy plan designs and more cost-effective solutions.

Analyzing Pharmacy Plan Trends and Utilization

The first step in building better pharmacy plan designs is to delve into plan data using analytics. By analyzing historical claims data and trends, consultants gain valuable insights into how members are utilizing their pharmacy benefits. This analysis includes examining prescription volumes, medication adherence rates, therapeutic class utilization, and the impact of specialty drugs.

Understanding these trends allows consultants to identify patterns that influence plan costs and member health outcomes. For instance, recognizing high utilization of GLP-1 or psoriasis drugs can prompt discussions about formulary adjustments or the implementation of clinical programs to promote cost-effective alternatives or improve medication adherence.

Formulary Development: Tailoring Coverage to Needs

Formulary development plays a pivotal role in shaping pharmacy plan designs. A formulary is a list of medications covered by a health plan, and its design significantly impacts both cost and access for plan members. Consultants can leverage their analysis of utilization patterns to recommend formulary adjustments that balance cost containment with optimal clinical outcomes.

For example, promoting the use of generic medications when appropriate can yield substantial savings without compromising efficacy. Moreover, ensuring access to essential medications while managing the cost of specialty drugs through tiered formularies can help control overall pharmacy spend.

Bolstering Plans with Clinical and Savings Programs

In addition to formulary management, consultants enhance plan designs by integrating clinical programs aimed at improving health outcomes and reducing costs. These may include therapeutic alternative programs, pharmacy tourism programs, alternate funding (PAP), and disease management initiatives tailored to chronic conditions prevalent among plan members.

By identifying gaps in care and implementing targeted interventions, brokers and consultants can help mitigate the need for costly medical interventions down the line. Furthermore, savings programs such as manufacturer rebates, pharmacy discounts, and mail-order options can provide additional cost benefits for both employers and employees.

PBM Contract Transparency: Ensuring Fair and Cost-Effective Terms

Pharmacy Benefit Managers (PBMs) play a crucial role in administering pharmacy benefits and negotiating pricing with pharmacies and drug manufacturers. However, the complexity of PBM contracts can sometimes obscure the true costs and potential savings opportunities. By utilizing annual market check and contract performance reviews, consultants can be sure that the health plan is receiving contracted rates that align with market trends, ensuring their clients receive fair pricing and optimal terms.

Truly transparent, comprehensive market checks include scrutinizing contract terms related to pricing methodologies, rebate structures, and network agreements. Negotiating favorable terms can lead to reduced costs for prescription medications and improved overall value in pharmacy benefit plans.

Enhanced Benefit Design

In conclusion, the analysis of pharmacy plan trends, utilization patterns, and spend is instrumental in developing enhanced pharmacy benefit designs for clients. By focusing on formulary development, integrating clinical and savings programs, and advocating for PBM contract transparency, brokers and consultants can effectively manage costs while promoting better health outcomes for plan members.

1. Segal 2025 Health Plan Cost Trend Survey: https://www.segalco.com/consulting-insights/2025-health-plan-cost-trend-survey#:~:text=The%20survey%20reports%20respondents’%202025,outpatient%20prescription%20drugs%3A%2011.4%20percent.