Can employer
Earlier this month at the National Republican Congressional Committee, President Donald Trump shared that his administration will announce tariffs on pharmaceuticals "very shortly." Increased prices of goods could spell disaster for the industry, as 80% of essential ingredients for prescription drugs are manufactured outside the U.S., according to the Committee on Homeland Security and Governmental Affairs. Pair this with the fact that the U.S. currently faces 270 drug shortages, and it's clear prescription prices are bound to jump — adding insult to injury to the current average annual hike of 4.5%.
"The logic in some of these tariffs is getting [manufacturing] back to the U.S. and reducing our dependence on foreign suppliers," says Sherri Bockhorst, head of consumer experience and strategy at benefits administrator Businessolver. "Whether that works is yet to be seen. But how will employers navigate this if it does take place and drive higher prescription drug costs?''
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There is no easy solution, and employers will have to be willing to make changes to their current plan design as well as their overall approach to wellness, adds Bockhorst.
A short-term solution
Benefit managers could put their efforts toward educating employees on cash and coupon pricing on their medication versus what they would pay using their health plan's co-pay.
"I am personally on a high-deductible health plan today, and there are many prescriptions that are actually cheaper for me to pay for in cash than to run that through my health plan," says Bockhorst. "That's a win-win: There's no additional cost to the employer."
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The downside of this approach, and one that employees should be informed of, is that they're not contributing to their deductible and out-of-pocket maximum. Employees will need to consider whether their medication is affordable once they have met their deductible and insurer coverage kicks in.
Building sustainable health plans
Bockhorst advises benefit managers to consider offering employees choice in not just their health plan and provider network, but their prescription drug coverage. Depending on the employee's formulary, they have access to different general and brand medications. At open enrollment, it should be clear to employees what formularies correspond with what health plans. Employers may also need to rethink their current health plans and what drugs are covered — if a large portion of the workforce population has certain chronic conditions, then employers will want a formulary that reflects it.
"I do foresee a future where you can start to do the same thing we do with network choices, but from a prescription drug perspective," says Bockhorst. "To offer different formularies and then provide the tools to employees at the time of enrollment, so that the employee can elect the pharmacy plan that best fits the needs of their families based upon their own prescription drug utilization."
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Ultimately, employers will have to focus their efforts on preventing chronic conditions, which are a major driver of prescription drug spend. The CDC estimates that six in 10 Americans have at least one chronic condition. However, up to 80% of chronic conditions like heart disease and type 2 diabetes, and 30% of cancer cases are preventable through healthy lifestyle choices and annual check-ups.
Employers will have to center their plan designs around primary and preventive care. If employees aren't incentivized to stay on top of their health, then employers are going in the wrong direction, says Bockhorst.
But this issue goes beyond health plans. Bockhorst stresses that on a cultural level, leaders will have to consider whether employees have the flexibility to care for themselves, too. Poor work-life balance could very well contribute to unhealthy levels of stress, putting employees at higher risk of anxiety, depression, heart disease and obesity.
"From an employer perspective, how do you help drive a healthier culture?" says Bockhorst. "How do you really change the dynamic in the culture so that you can improve the health of your employees and ultimately drag down those prescription drug costs?"
