Articles on Pharmacy Benefit Management

Incentives for Patients to Switch From Prescription to Over-the-Counter Drugs Can Produce Large Savings for Members and Plans Alike

Featured Health Business Daily Story May 1, 2008

Reprinted from DRUG BENEFIT NEWS, biweekly news, data and business strategies for health plans, PBMs and pharmaceutical companies.

By Neal Learner, Managing Editor, (nlearner@aispub.com)

A program that incentivized patients to switch from prescription drugs to over-the-counter (OTC) alternatives saved members thousands of dollars and provided the insurer with a solid return on investment (ROI), according to the PBM and health plan responsible for the initiative. WellPoint NextRx and Blue Cross & Blue Shield of Rhode Island (BCBSRI) recently ended a year-long pilot program that offered OTC allergy drugs at no charge to members. Other health plans and PBMs say they too are eyeing programs that can move members to lower-cost OTC drugs when appropriate.

Under BCBSRI's "OTC Options Program," more than 4,600 members received OTC allergy drugs, such as loratadine, at a zero copayment. The initiative, which aimed to encourage members to switch from higher-cost brand drugs such as Allegra, saved members roughly $260,000 in copays, the companies said April 7.

The program aimed to lower out-of-pocket costs of members, as well as health plan spending on drugs that treat allergies, explains Christopher Medici, a spokesman for BCBSRI. "There are OTC options that are equally effective as compared to much more expensive prescription counterparts," he tells DBN. Medici says that in the allergy category, BCBSRI had an Rx cost reduction of more than $250,000, compared with the previous year's costs.

"There was not reduced utilization, but the utilization shifted to drugs that cost less," he notes. "The OTC option in the allergy category cost less than $10 per month on average. The prescription alternatives cost on average $60 for generics and between $75 and $100 for brand-name alternatives. So there is a $50-to-$90 savings per month on the drug costs."

Leslie Porras, spokeswoman for WellPoint, says the OTC Options Program is one pilot within a portfolio of WellPoint NextRx programs. Others offer savings to members on medications to treat high cholesterol, depression and gastric reflux, Porras adds. She notes that BCBSRI plans to keep the OTC Options Program and will explore treating other conditions by encouraging OTC use for conditions such as stomach acid, eye allergies and acne.

There are cost-saving opportunities for plans through the use of OTC products, she tells DBN. "The cost savings depends upon the volume of prescriptions in the category and the price difference between the OTC and prescription drug."

Other plans also have been implementing programs to boost OTC utilization.

Mark Brueckl, assistant director of pharmacy affairs at the Academy of Managed Care Pharmacy (AMCP), says that he helped implement an OTC incentive program when he worked at Independent Health in Buffalo, N.Y., a few years back. Under that program, OTC products were placed on the health plan's formulary tier with the lowest copays, and members had to receive a recommendation from their doctor to use them.

"There had to be an order from the physician," Brueckl says in an interview. "So they couldn't just walk in and request it. There was at least that limiting step."

Independent saw the opportunity to provide an equally efficacious product at a lower cost as a win-win for members and the plan, he adds. "We felt justified, and our [pharmacy and therapeutics] committee backed us up, that allowing the members to receive these products— being ordered by a physician — was in the best interest of everyone. The members got a lower copayment, and the plan had a lower drug spend."

Addressing Pharmacy Reimbursement Issue

Brueckl says that providers and members generally were happy with the program. The one challenge, he adds, was with the pharmacy providers. Their concern centered on being reimbursed for OTC sales in the same manner as Rx products, he explains.

"Typically pharmacies make a higher markup on OTCs than they do on their prescriptions, so we had to account for that," Brueckl says. "We came to a reasonable reimbursement rate for these over-the-counter products, that both the plan could live with and our retail pharmacies could live [with]."

Navitus Health Solutions, a PBM subsidiary of Wisconsin-based Dean Health Insurance, also offers OTC coverage under its formulary, says Steve Jones, senior manager of analytics and program management at Navitus.

In addition, Navitus can design a pay-for-performance (P4P) program around switching to certain OTC products, he tells DBN. Take, for example, the brand drug Nexium in the proton pump inhibitor class. Prilosec OTC, which is therapeutically equivalent, costs $24 as opposed to $160 for Nexium, Jones says. "We would certainly offer that as a P4P, to communicate the opportunity to prescribers to consider [Prilosec OTC] for members, and document the savings and changes that occur," he notes.

Brueckl asserts that plans generally do not see OTC programs as a way to push drug costs onto members, but rather as a means to find the most cost-effective product — both for the member and the plan.

"It is something that a lot of plans are starting to look at," he says. But he adds that pharmacy benefit executives must also look at the contract terms. "Our contract with the members was such that we could allow coverage of OTC products," Brueckl says of his former work with Independent. "But some of the plans' language may be more restrictive, and they have to go about rewriting their whole contract."

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