International drug sourcing can help lower pharmacy costs — and boost health outcomes

The overarching goal of employer-provided health plans is to offer high quality coverage at low out-of-pocket (OOP) costs, encouraging employees to actually use their health benefits rather than ration and defer care. Perhaps nowhere is this commitment more crucial than in the Rx area where costs have been soaring for decades — but employers can put the brakes on significant year-over-year increases with the help of an international pharmacy program.

With nearly half of U.S. adults ages 20 to 59 taking at least one prescription medication, drug price increases affect a high percentage of any working population. GoodRx research shows that list prices (also known as Wholesale Acquisition Cost) have increased by 32% for all drugs since 2014. It’s not all that surprising, considering that every year manufacturers raise prices in January and July. In January 2021, the average increase was 4.6%, more than double the inflation rate at that time.

Read more: "Perverse incentives": Why the healthcare market is motivated to provide high-cost, ineffective care

A recent Commonwealth Fund report found that the United States spends more on prescription drugs than the 32 nations that belong to the Organisation for Economic Co-operation and Development — combined. At the same time, the U.S. represents just 25% of drug sales.

Brand-name drugs are the primary drivers of rising prescription drug spend, accounting for 77% of all Rx spending, yet only 10% of prescriptions. In the U.S., these medications can cost up to 3.5 times more than in other countries.

Why? The most commonly cited reasons are no single-payer negotiation on pricing, little governmental regulation, prices rising faster than inflation and little comparative research across drugs. Other countries have government bodies that directly negotiate pricing with manufacturers, often refusing to pay higher prices for new drugs that do not improve the effectiveness of treatment over existing options.

Read more: Ask an Adviser: Why do average wholesale price discounts not matter?

These rising drug prices are one of the most significant costs to self-insured plans. Employees with plans requiring co-insurance or a deductible for prescriptions typically see higher OOP costs when drug prices increase. Even those with flat copay plans are not necessarily shielded, as often the higher the prices increase on specialty drugs, the higher the copays go. As prices rise, restrictions on coverage can become more common by adding prior authorization requirements, quantity limits or step therapy. All of these factors make accessing medication more difficult for employees.

Up to 30% of prescriptions are never filled, according to a review in Annals of Internal Medicine, and roughly half of medications for chronic diseases are not taken as prescribed. The Centers for Disease Control and Prevention reports that after six months, the majority of patients on medications prescribed for chronic conditions will be taking less medication than prescribed, or will have stopped altogether. The most commonly cited reason? Cost.

This can lead to lost productivity and absenteeism for employers, not to mention increased medical claims from additional physician and emergency room visits and hospitalizations.

Read more: Ask an Adviser: How do I shield employees from healthcare cost increases?

Medication adherence (or lack thereof) can affect quality and length of life, health outcomes and costs. The U.S. is paying a high price for non-adherence, which is estimated to cost the healthcare system $300 billion a year.

As employers search for ways to bridge the gap between health outcomes and affordable care, international sourcing to lower prescription claims costs is becoming more common. Americans living close to northern borders have been crossing over to Canada to buy their medication for decades. Working with a reputable international pharmacy program provides a way for plan sponsors to access savings of up to 70% on brand-name medication prices.

Typically, these programs are offered at a zero-dollar copay to incentivize employees to use the program, meaning that any cost barriers to accessing medication are removed for the employee. This can significantly assist with medication adherence, which leads to better health outcomes and a healthier, more productive employee.

Read more: Inflation is rising. What does it mean for health plans?

Providing an additional option to control prescription drug costs to both the employer and employee is a winning formula and real enhancement to the health plan. Funds saved by the employer are available for other areas of health spending, and any money employees save on co-pays, co-insurance and OOP costs can only increase their satisfaction with their workplace, leading to a happier, healthier workforce.