Managing drug costs: The perception of managed care pharmacy directors

Objective: To examine the perceptions of health plan pharmacy directors abo ut drug costs and uti- lization drivers, interventions the plans use to con trol drug expenditures, and strategies considered necessary to permit conti nued provision of a comprehensive drug benefit. Study Design/Methods: A multipart survey developed and mailed to 500 pharma cy directors of managed care organizations across the country. Results: The survey respondents (response rate = 18%) represented managed c ave health plans in the following percentages: 49% of respondents were from network/independent practice associations; mixed-model health maintenance organizations (HMOs), 20%; group HMOs, 15%; and staff-model HMOs and networ k/preferred provider organizations, 8% each. Drug mix and utilization were reported to be the primary drivers of drug expenditures. Half the responden ts rated inflation as a somewhat strong cost driver. Interventions the heal th plans use to control drug expenditures include formularies, generic subs titution, preauthorization, manufacturers' rebates, drug benefit design, ph ysician profiling, target drug programs, academic detailing, and tiered cop ays. With the exception of formulary use, generic substitution, and manufac turers' rebates, which all the plans have instituted, the types of interven tions used by the different model types vary widely. More than half the pha rmacy directors reported generic substitution, drug benefit design, and dif ferential copays as very effective interventions used to control drug costs . Conclusions: The majority of pharmacy directors predict continued double-di git increases in drug expenditures over both the short term and the long te rm. Of the respondents, 91% reported that additional limits and/or exclusio ns to the benefit design would be necessary to control these increases. To continue providing a comprehensive drug benefit, 54% indicated they would h ave to achieve sufficient cost savings in other areas to offset increases i n drug costs.