“Treating patients with the right drug at the right time is always the priority,” say Chad Westover, CEO of University of Utah Health Plans. But cost is also important, which is why Westover says that his insurance company continues to “encourage the use of high value medications that improve patient outcomes and, at the same time, reduce the cost of overall health care.”

What can patients do to spend less on their prescription medications? Working with their prescribing doctor is a critical component. “Patients should always ask their prescriber if they are recommending the lowest cost medication that will effectively treat their condition,” says Westover. Additional recommendations include asking specifically for lower-cost generic medicines, shopping around for the pharmacy with the best prices using insurance plan tools, and requesting 90-day rather than 30-day supplies of prescriptions.

As for how public policy can address the cost of prescription drugs in the market, Westover believes that “affordability and accessibility are the fruits of competition.” In his view, understanding what drives cost increases and allowing insurers to make their own decisions regarding pharmacy network and drug coverage will let patients find what works best for them.

These are a few of the insights and views that Westover shared in his Q&A with Sutherland Institute. The full interview is below.

Derek Monson, Sutherland Institute vice president of policy: From your perspective as an insurer in Utah, how big of a contributor have prescription drug costs been to the increasing cost of health insurance and medical care?

Westover: To understand the impact prescription drug costs have to the overall increase in health insurance costs we consider two components. The first component is the percentage of prescription drug expense to the total combined medical plus pharmacy expense. Prescription drugs account for approximately 17.5% of overall healthcare expenses. The second component to consider is the annual increase in prescription drug expenses. Over the last three years this has been running in the mid- to upper single-digit range, 6% to 8% annual trend. Combining these two components results in prescription drug costs contributing approximately 1.2% to the annual increase in healthcare costs (7% annual Rx trend x 17.5% Rx as % of total = 1.2%). The table below illustrates that if overall healthcare costs are increasing at 5.4% annually, prescription drugs contribute 1.2% of the increase. 

Rising costs of prescription medications was identified as an area of concern and has been a significant focus for our health plan over the last 6 years, leading to the development of an internal team to manage this area. In that time we have seen new drug prices skyrocket. While prescription drugs are about 20% of overall medical expense, it’s important to note that this includes a mix of a large number of high value generic drugs as well as a smaller number of high cost specialty medications with varying value. To be sure, specialty drugs are the far majority of new drugs approved on the market today with higher and higher price tags. We continue to encourage the use of high value medications that improve patient outcomes and, at the same time, reduce the cost of overall health care. We use both clinical and pharmacoeconomic data to help guide us in our decision-making for drug coverage.

Monson: What tools or strategies would you recommend to patients to help them find the most affordable prices on their prescription medications?

Westover: We recommend a patient have their prescriber check if there are equally effective generic options available. Generic drugs cost significantly less than brand name medications. These will be the lowest cost options available. In the majority of cases, there is a generic medicine available to treat a patient’s illness.

The second recommendation is that patients should always ask their prescriber if they are recommending the lowest cost medication that will effectively treat their condition. It is encouraged to ask questions and work with your doctor to find the medicine that is most affordable and still effective.

A third recommendation is to compare prices from various pharmacies. Not all pharmacies have the same prices, nor do they offer the same contracted rates to insurers. There are usually tools available through the plan to help find the lowest-cost pharmacies.

For the University of Utah Health Plan, our members can use Drug Finder to research the drugs that are available and how much they will pay out-of-pocket for each option.

Members of health plans may also call their pharmacy customer service for assistance.

Another option to lower costs is request their provider prescribe a 90-day supply instead of a 30-day supply. Often 90-day rates may provide savings over usual 30-day rates for maintenance medications.

Choosing the right health plan benefit is also very important. The selection of a plan with lower premiums does not always result in lower overall out-of-pocket costs. Understanding total cost is important when selecting which plan is right for a member. How a drug is covered in a member’s particular benefit plan, including costs, is just one piece of the decision in selecting a health benefit plan.

To this end, the University of Utah Health Plan has a prospective member portal which enables consumers to select a health benefit and get estimated costs based on the benefit they have selected. This portal ties all the pieces together for the member, including premiums, benefits and cost.

Monson: As an insurer who pays a large portion of prescription drug costs, how do you approach striking the right balance between preventing unsustainable cost growth in prescription drugs and ensuring patients can afford the prescriptions that they need?

Westover: Both parts to this question are very important. Treating patients with the right drug at the right time is always the priority. There is, however, a balancing act. With prescription costs increasing year over year, all insurers and patients are experiencing the rising challenge of pharmaceutical manufacturers’ price setting strategies. Our approach to staying on the right side of that struggle includes making physicians part of the decision-making process. This means teaching them how much new medications cost and how they compare to other, less expensive, but still very effective medications. One such example is the use of statin cholesterol medications, which are highly effective and also very low in cost, before the use of newer and higher cost treatment options. We have a clinical committee that meets every other month which evaluates new drugs and makes decisions about the drugs we will cover. This committee comprises qualified Utah doctors and pharmacists and compares the effectiveness and the costs of drugs to determine which medications are most cost-effective. Generic medications are encouraged before a brand when appropriate.

While there are products on the market that are of varying value, this committee can help sort out the highest value for patients, weighing both effectiveness and cost.

Formularies (a list of coverage prescription drugs) and benefit design options are important tools used by health plans and pharmacy benefit managers (PBMs) to encourage price competition and reduce drug costs.

Having a strong clinical team who can evaluate these therapies, assess medical necessity for each individual member, balance total cost of care, and make sure these medications are used effectively is critical to assure our members are getting the best treatment for their money.

Monson: Some criticisms of insurers include not covering, or dropping from coverage, medications prescribed for a patient by their doctor, and making payments based on rebated/discounted prices while patients with high deductibles or co-insurance in their coverage pay based on the manufacturer’s list price. Are these criticisms fair, and what are insurers doing to address them? 

Westover: There is criticism about the way health plans determine coverage for services, including medications. As for medications, the criticism happens because some of the biggest names in the PBM marketplace have shifted a lot of the cost to the member and kept the discounts for themselves – in the form of profit. Most insurers are not doing enough about it. UUHP does not operate in that way.

First, our formulary, or list of covered medications, is determined by local physicians and pharmacists who know how doctors are treating their patients.

Second, we operate our pharmacy benefits in a completely pass-through and transparent manner – which passes the lowest price available on to our clients and members, who see benefit immediately by paying less at the pharmacy, even in their deductible period.

Third, we focus on lowest-net-cost AND best effectiveness when we make drug coverage decisions. Even when we recognize that a very expensive drug is the most effective and ideal for the member, we cover that drug. Other times, when there is competition between multiple drugs that are essentially equal from a clinical perspective, we negotiate lower prices and cover the medication that is the best price. Doing this allows insurance premiums to stay as low as possible and keep benefit options for members very broad.

There are some carriers that will carve out high-cost drug coverage, even for therapies that have shown clinical value. Again, UUHP does not work this way. We have found ways that are in the best interest of the members to balance cost as described above.

Monson: In your view, what state policy reforms are needed to improve affordability and access to prescription drugs for patients?

Westover: Overall, Utah does a very good job managing pharmacy cost. However, affordability and accessibility are the fruits of competition. State policies can keep Utah healthcare vibrant by allowing each insurer to make decisions about drug coverage and pharmacy networks for themselves and let consumers decide what is best for them. When policy starts to dictate or mandate coverage, we lose the ability to negotiate, which ironically results in prices tending to increase. So, understanding how interests are aligned and what motivates cost increases is the best way to lower costs.