As healthcare costs have risen, the insurance industry has relied upon increasing premiums as its main compensatory vehicle.
The 2005 Bruckner Group (BGI) Study of Payers indicates that the largest purchasers of healthcare—major employer groups—are
beginning to aggressively refuse continued price hikes. The evidence suggests they have to. Despite creative attempts at risk-sharing
and consumer-driven plans, employers spent $330.9 billion in 2003 on health insurance, representing a 12 percent increase
from 2002, according to the Employment Policy Foundation. Compounded by the expected cost
shifting the new Medicare prescription benefit places onto the system, employers are sending clear messages to the managed
healthcare system: "Figure it out with what we are already paying, and don't come back asking for more." The strength of this
"customer pushback" is unprecedented, forcing payers to even more aggressively scrutinize the cost side of their business.
They will need to find every way possible to stretch healthcare dollars further, even by instituting programs no one in the
industry would have expected.
Aggregate employer cosy of employee health insurance
The 2005 Bruckner Group study is based on extensive discussions with managed care payer decision-makers who represent greater
than 80 percent of covered lives in the United States, about all major therapeutic classes with significant pharmaceutical
utilization. BGI analyzed this year's results against its previous payer studies and determined that payers are moving with
even greater aggressiveness toward two major cost-cutting goals for their pharmaceutical and biological therapy utilization:
- ensuring that new therapeutics added to their armamentarium deliver healthcare value commensurate to or in excess of their
- restricting, wherever possible, the use of branded pharmaceuticals and biologicals to an identifiable patient base with particular
healthcare needs necessitating their use.
Traditional Methods, on Steroids
Payers continue to rely on traditional methods for policing utilization: step management programs, prior authorizations, and
tiered formularies. Yet pharma manufacturers should expect that, going forward, while these programs will appear to be similar
in principle to what has come before, in practice they will be quite different.
The Size of the Piece Depends on the pie
Consider that many managed care organizations (MCOs) strongly believe that there are still great efficiencies to be realized.
The 2005 BGI study indicates that pharmacy directors can identify significant opportunities for cost control in most classes
through improvements in the efficient utilization of resources. Their previous programs have demonstrated proof of concept
that historical utilization can help determine the patient profiles best suited for a particular expensive alternative. The
goal is to provide patients with the least expensive therapy that matches their diagnosis, prognosis, previous utilization,
and risk factors.
One classic example is in the area of pain relief. Branded COX-2 inhibitors are widely used to manage pain in many patients
for whom their use is clinically unnecessary. According to data published in the American Journal of Managed Care in November 2003, up to 73 percent of patients who use COX-2 inhibitors lack the risk of gastrointestinal (GI) adverse events
common with use of NSAIDs (non-steroidal anti-inflammatory drugs) such as GI bleeding and ulcers. Many payers believe that
as long as their analysis of the clinical data indicates pain relief similar to old-school OTC pain relievers such as ibuprofen
and aspirin, they will save money and achieve the same outcomes by matching patients to therapy based on risk profiling.