Online Tools Promote Rx Comparison Shopping

By Staff Report

Nov. 12, 2004

Employers looking to reduce their prescription drug costs have a new tool available to them: independent prescription drug-price comparison Web sites.

    Many employers already encourage their employees to use the online price comparison tools their insurers or prescription benefit managers make available to them. These Web sites give employees information on generic drugs or the price benefits of ordering prescription drugs by mail rather than purchasing them at retail outlets.

    New independent Web sites created by either government officials or private companies go beyond these offerings, though, to provide price comparisons between pharmacy chains or regional pharmacies and offer comprehensive alternative drug options. For example, New York State Attorney General Eliot Spitzer has a Web site that compares prices for the 25 most commonly prescribed drugs at pharmacies in every county in the state.

    Although these new Web sites were initially geared toward uninsured individuals without prescription drug coverage, some of them are adding information and tailoring their product offerings to help employer clients reduce their prescription drug spending.

    Such sites are seen as particularly useful to employees in consumer-driven health plans, providing them with information they need to make informed and cost-effective purchasing decisions.

    For many years, the major managed-care companies and PBMs have used Web sites to guide their members’ decisions regarding drug costs. For example, Franklin Lakes, N.J.-based Medco Health Solutions Inc. has a price-comparison tool on its Web site so members can check the formulary status of medications and compare the cost of various medications to generics or other brand-name alternatives, a spokeswoman for the PBM said. Medco members can also compare their copayment for a 90-day mail-order supply versus a 30-day supply purchased retail, the spokeswoman says.

    These Web sites, though, have limitations that prevent employers from fully realizing all potential cost savings, observers say.

    One is that they list only direct generics rather than alternatives in the same therapeutic drug class that may be as effective as the prescribed drug, says Toby Rogers, president of Rxaminer, a Chicago-based company that offers an independent drug-price comparison Web site.

    “People have done a good job of getting (employees) to take direct generics,” he says. “Where I think employers and other payers are leaving money on the table is on indirect generics and brand-name alternative drugs. In getting people to switch to those, there are substantial savings implications for employers.”

    The new Web sites try to fill this void by offering information on indirect generic or brand-name alternatives. For example, if the cholesterol-lowering drug Lipitor is entered into the search engine, the Web sites will not only search for brand-name alternatives but also for generic alternatives for other drugs in Lipitor’s therapeutic class.

    Rxaminer takes this approach a step further by offering information on the dosage levels at which an alternative drug needs to be taken to be as effective as the originally prescribed drug, Rogers says. The drug and dosage information is developed by Rxaminer’s medical board, which comprises physicians and pharmacists.

    These newer Web sites are helpful because they give the kind of specific information on drug alternatives and dosage levels that assists doctors in writing effective prescriptions, says Bridget Eber, national pharmacy practice leader for Lincolnshire, Ill.-based Hewitt Associates Inc. “The newer sites do that level of translation for the participant and the provider,” Eber says. “That could have some very specific cost savings implication. The other advantage is that the newer Web sites tend to be more comprehensive in identifying more drugs that treat a given condition.”

    Although only a handful of employers currently use these Web sites, there are several potential advantages for plan sponsors, observers say.

    One of the key advantages is cost savings. Anecdotal evidence indicates that employers using these new Web sites have already seen solid savings, consultants and others say.

    Rxaminer data shows that plan sponsors have saved about $75 per member per year by using its system, so that a plan with 1,000 members can save about $75,000 per year. Rogers cites potential savings to employers of 18% to 22%, a number supported by anecdotal information from consultants.

    Rogers says one of his company’s employer clients achieved 7% annual savings with just 10% of its members using the Web site. “Most employers agree that that’s a big enough number that, as a payer, it’s worth looking into,” he says.

Role in consumerism
    The employers currently using these Web sites have health-plan designs that feature coinsurance mechanisms or take a consumerist approach, with designs that offer a financial incentive to employees to switch to alternative drugs, observers say.

    “If (employees) can come to our Web site and cut their prescription drug bill in half, they might be able to stay under their limit and not have to pay anything out of pocket,” says Gabriel Levitt, vice president of research for White Plains, N.Y.-based “They can stretch the sacred health-care dollars they have available to them.”

    As more employers implement coinsurance or consumer-directed health-plan designs, these Web sites can serve as a key part of an overall cost-reduction strategy, observers say.

    “It doesn’t hold much value for the employers of the world today,” says Kevin DeStefino, a national pharmacy consultant for Watson Wyatt Worldwide who is based in Phoenix. “It holds promise for tomorrow’s benefit design, being driven by consumerism.”

    “I would anticipate that employers would have a high demand for them,” Hewitt’s Eber says. “I think employers would be more interested after there’s a little more savings reported.”

    Plan designs with set copayments do not offer many financial incentives for employees to switch, an issue the new Web sites are attempting to address.

    Rxaminer is piloting a new product that would allow employers with traditional copayment structures to offer financial incentives to their employees for choosing lower-cost prescription drugs.

    In this program, employees would be able to look up prescribed drugs online and see the drug options available, a few of which would feature rebates for employees to use the alternative drugs, Rogers says.

    The employees would receive rebates for purchasing from the drugs’ vendors, and the employer would save money because the employees are selecting the lower-priced drugs–even though employers would pay the rebates to their employees.

    “That’s our answer to those employers that can’t change their plan designs but are looking for ways to motivate members to switch,” Rogers says. “The best plans are these plans with member incentives.”

From the November 8 issue of Business Insurance. Written by Gloria Gonzalez.

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