Achieving Outstanding Results with Tailored Network Strategies

Establishing the City’s Objectives

A medium-sized city in Michigan with 1,350 members was seeking ways to lower its pharmacy benefit costs, which were growing under its existing traditional pharmacy benefit manager (PBM). With its member covered by a two-tier, open formulary including generic and brand medications, the city was especially interested in reducing costs through better formulary management without sacrificing access to medications. In addition, the city wanted to partner with a PBM that would pass through all pharmacy network discounts and drug manufacturer rebates.

Based on these criteria, the city partnered with Navitus Health Solutions Taking into account proposed formulary management strategies, network savings, pass through of rebates and improved pricing through Navitus’ specialty pharmacy, Navitus predicted that is could save the city 8.8% in annual drug costs after two years.

Revamping Formulary Management

Working closely with the city, Navitus advised transitioning to a three-tier plan design and a managed formulary, which would provide superior savings by directing members to clinically-effective medications with lower costs. To change member behavior, notification letters were sent to members and prescribers with alternatives for existing prescriptions and a three-month window for obtaining a lower-cost alternative. With these changes, the city saved $800,000 in its first two years with Navitus while successfully minimizing member disruption.

Deploying Utilization Management and Mail Service

The city also implemented prior authorization and step therapy edits for select high-cost drugs as another means of formulary cost control. As a result of these efforts, the city’s generic utilization increased by 14.2% over two years.

In addition, members with a 30-day supply for maintenance medications were encourages to use mail delivery for greater drug discounts and lower member copays. This resulted in savings of over $150,000 by the second year.

Realizing Network Savings

With the goal of minimizing disruption for its members, the city opted to implement Navitus’ broadest network options, which includes the vast majority of retail pharmacies and all major chains. Despite this, they still realized significant network savings due to Navitus’ aggressive Maximum Allowable Cost (MAC) pricing. In contrast to other PBMs, this single MAC price list is applied across all distribution channels — retail, mail and specialty. As a result, the city saw 23% in network savings in its first two years with Navitus.

Exceeding Expectations in Cost Reduction

As a result of its partnership with Navitus, the city experienced outcomes that far surpassed its expectations. After two years, the city’s total net plan cost decreased by 12.5%, well ahead of the 8.8% savings initially projected. The city also saw results that exceeded contractual rebate guarantees for branded products in all pharmacy channels – retail, mail and specialty.

Finally, plan-paid member per month (PMPM) costs decreased by 0.7% in the first year and 2.2% in the second year, despite manufacturer price increases that impacted the plan’s top 10 drugs.

Getting Started

Are you interested in exploring how a truly transparent, pass-through model and formulary management could lower your plan spend? Contact us at [email protected] to learn more.