PMSI report sees reversal of three-year trend on pharmacy spend

A pharmacy benefit management company's use of clinical programs to push generic drugs and decrease utilization, along with an industry settlement involving the average wholesale price of medications helped drive down pharmacy spend in 2010, according to a new report. PMSI said the results represent a reversal of a three-year trend of increasing drug spend.

The company's 2011 Annual Drug Trends Report shows decreases in pharmacy costs and utilization based on an analysis of 5.4 million retail and mail-order transactions between 2008 and 2010. The overall 2.3 percent drop in the average spend per injured worker was driven by reductions in both the average cost per day of supply and the average days of supply per injured worker.

"The average cost per day of supply is an indicator of overall drug product cost," said Maria Sciame, PMSI's executive director of clinical services. "Another, more familiar term for this indicator is drug price." PMSI's report showed that the average cost per day of supply decreased by 2 percent. Additionally, the average days of supply per injured worker dropped by 0.3 percent.

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"The average days of supply per injured worker is a measurement of utilization that may be usedinstead of the number of prescriptions per injured worker," Sciame said. "We found that the average days of supply per injured worker accounts for utilization changes associated with mail-order pharmacy transactions more effectively since the quantity of medication associated with retail and mail-order prescriptions may differ significantly. It could be the difference between a 30-day retail supply of medication versus a 90-day mail-order supply."

PMSI also credits its improved mail-order penetration rate, a 2.8 percent increase to 29.3 percent, as one reason for the overall decrease in pharmacy spend. The average mail order cost per day of supply in 2010 was approximately 19 percent less than the average retail cost per day of supply.

Another major factor contributing to the improved results was the unusually small increase in the average wholesale price, which Sciame likens to the sticker price of a medication. The year 2010 was the first full year following the average wholesale price adjustment for hundreds of National Drug Codes, as a result of a class action settlement involving two major publishers of drug pricing information.

"In previous years, average wholesale price increased between 8 and 10 percent," Sciame said. "After the rollback, we measured an increase of only 3.5 percent. This small increase certainly had an impact on overall prescription cost."

Finally, a focus on less-expensive medications combined with comprehensive utilization control initiatives helped push down overall pharmacy spend. "We were really successful in our ability to impact brand to generic mix," Sciame said.

According to the report, generic dispensing, the percentage of all prescriptions dispensed that are generic, increased by 3.5 percent. Generic efficiency, the percentage of generics dispensed when a generic formulation is available, increased by 0.7 percent.

"Since we were able to drive the use of less-expensive drugs, overall prescription costs went down," Sciame said. "This, combined with the utilization decrease associated with our MedAssess clinical program, tipped the scales in favor of an overall spend decrease."

Read more at the WorkersComp Forum homepage.

May 16, 2011

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