Addressing drug pricing through innovation

Published November 14, 2018

Rapidly rising prescription drug costs are drawing increasing fire from lawmakers, patients and the healthcare industry. A new Blue Cross Blue Shield Health of America report finds that, despite the growing use of cheaper generic drugs among Blue Cross and Blue Shield commercially insured members, overall prescription drug spending continues to rise because of the high cost of branded and specialty drugs. And their costs continue to rise. But behind every price hike is a patient struggling to afford a much-needed drug, or a small employer trying to keep health costs down for the whole company. 

Blue Cross Blue Shield companies across the country are testing innovations to ease that burden.

The challenge: spotting drug price increases faster

In Mountlake Terrace, Wash., a team from Premera Blue Cross (Premera) recently reviewed drug claims from the previous three months. They found that one manufacturer had increased the price of a generic antibiotic from $500 to $2,300 a bottle. They also uncovered that the price of a popular diabetes drug had increased 10-fold over just a few months. Premera senior clinical pharmacist Dan Danielson says he realized he couldn’t stop manufacturers from increasing their prices. “But we realized we needed to do a better job of spotting those drug price increases sooner and communicating those increases out to doctors,” says Danielson. “We needed to take that 90-day window and shrink it down,” he says.

Shrinking the window between detection and action

Danielson and a team of company innovators managed to distill their data down to the individual drug level, and they can now compare drug prices from the current to the previous month. A weekly report from Premera's pharmaceutical benefits manager (PBM) now alerts the team to any drug showing a 15 percent or greater increase within a week - a measure of price inflation that can translate into an increase of more than $50,000 a year per patient in spending on one drug, says Danielson. 

Getting the word out to doctors

The team then shares the information with doctors as quickly as possible. “From the time we detect the price increase,” says Danielson, “we get the information to as many doctors as possible within one day.” A doctor communications team sends letters, emails and calls provider groups about the increases. Consultants who work with larger doctors’ practices may reach out or visit to provide more specific information, depending on what doctors prescribe most.

The team is developing ways to monitor how the information leads providers to change prescribing habits, direct patients to lower cost and equally effective medicines, and, ultimately, lower overall drug spending. But letting doctors know as quickly as possible about drug price increases has already made a difference.  “We had three provider organizations come back and tell us, ‘Thank you for letting us know. We’re checking [prescription drug prices] not only for Premera customers, but looking at all of our patients,’” says Danielson. One major goal is to help lower members’ out-of-pocket costs. And when it comes to overall drug spending, Danielson says, the program had already reduced that by more than $15 million dollars in the program’s first year, mid-2016 to mid-2017.

Paying for drugs that work: To ensure members pay only for drugs that work, Highmark Blue Cross Blue Shield is among a handful of insurers piloting new "outcomes-based" contracts with drug manufacturers. Here's how it works: An insurer signs an agreement with a drug maker based on whether that drug can meet specific goals for patients. If not, drug makers pay insurers some of the money back to offset the cost. If the drug doesn't meet the contract's goals, doctors can be alerted that another drug might help patients more than the one they're currently taking. For example, in April 2018, Highmark BCBS signed such an agreement for a drug that treats asthma and chronic obstructive pulmonary disorder. Kasey Reitmeyer, pharmaceutical manufacturer relations director for Highmark BCBS, explains that, for this contract, the goal is to make sure "a patient's symptoms don't worsen while taking the drug." The hope, she says, is to help patients avoid visits to the doctor's office or emergency room because the drug is helping them keep their symptoms in check.

Premera Blue Cross and Highmark Blue Cross Blue Shield are independent licensees of the Blue Cross Blue Shield Association, an association of independent, locally operated Blue Cross and Blue Shield companies.