Managing drug costs starts with measuring them clearly

As a measure of cost management success, the traditional definition of drug trend is flawed. It’s inconsistent--every pharmacy benefit manager (PBM) defines drug trend differently. And it can hide, rather than reveal, the actual amount of money spent on drugs.

When it comes to measuring true costs and getting a laser-like focus on the best cost management opportunities, net prescription drug cost is the answer. That’s why this year Prime redefined drug trend as the change in net prescription drug costs. Also known as “net ingredient cost,” net prescription drug cost measures the average prescription cost, including manufacturer rebates and administrative fees. It’s a simple, clear measurement of how well PBMs are managing actual drug costs. Since utilization is not a factor in ingredient costs, this measure reflects success in fighting drug price increases, rather than in denying access to needed care.

Despite evolving market dynamics and challenging conditions, our research continues to show that Prime has one of the lowest net costs in the industry. In 2014, we helped clients save nearly $5.50 on average, per prescription.1 This result underscores our strong record of success in working with you to keep drug costs low.

Actual costs carry more weight

For drug costs, the starting point matters. Actual costs carry the most weight, even if the percent increase is exactly the same. In 2014, costs increased about 13 percent industry-wide. We estimate pharmacy costs will continue to increase 10 to 12 percent in the coming years. Net drug costs will be the clearest way of measuring these cost increases. Starting low and keeping costs low will make all the difference.

Prime’s net prescription cost vs competitor average1

 

2013

2014

% change

Prime

$58.99

$66.67

13.0%

Competitor average

$63.58

$72.12

13.4%

Prime savings per prescription

$4.59

$5.45

 

Take a look: we've renamed Prime’s Prescription drug cost report to reflect the inclusion of net costs.

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  1. Prime Therapeutics (2009–2014). 2009–2014 Pharmacy Benchmark Study.
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