The Secret to Managing Pharmacy Spend...Go Overseas!
“American consumers are subsidizing the cost of prescription drugs for the rest of the world. Pharmaceutical companies make 51% of their profit in the United States, while other countries are paying 5 to 50 cents on the dollar of what we pay in America for the same drugs.”
These are words from Gary Becker, CEO of ScriptSourcing, a pharmaceutical solutions and engagement company that helps self-funded employers procure name-brand and specialty medications at a lower cost. Their goal is to help employers take control of health insurance costs, and provide affordable medications to employees. This mission was born out of deep need:
- 25% of healthcare spend is on prescription drugs
- The cost of name-brand medications are increasing at a rate of 13% per year
- 20% of hospitalizations are due to medication non-adherence
- By 2020, specialty medications will account for 50% of drug spend
Becker saves his customers hundreds of thousands of dollars per year by sourcing drugs from international pharmacies, implementing medical tourism programs, providing Pharmacy Benefit Manager (PBM) oversight and working directly with pharmaceutical manufacturers. We sat down with Becker to learn more about the innovative solutions that ScriptSourcing provides to its customers.
[Editor’s note: RFP365 was in no way incentivized or rewarded for this publication. All views are the contributor’s alone.]
Q1. Describe ScriptSourcing’s business model. How are you able to save your clients so much money on prescription drugs?
[Becker] ScriptSourcing works with companies to implement prescription drug programs that save employers and employees money without compromising benefits. We partner with select benefits consultants, PBMs and Third-Party Administrators (TPAs) to provide the most competitive pricing for specialty and name-brand medications.
Also, rather than have the PBM source all of the employer’s specialty medications, ScriptSourcing attempts to source these medications at a significant savings - typically 50-75%.
Q2. What cost-saving programs are available to your customers?
[Becker] The first is an international mail order pharmacy program. ScriptSourcing works with 4 tier-one countries - Australia, New Zealand, Canada and the United Kingdom - to ship lower-cost name-brand and specialty medications to the United States. These countries are deemed by Congress to have the same, or higher standards and regulations as the United States, but they have socialized medicine, so their governments negotiate directly with pharmaceutical companies to obtain drugs at a lower cost.
Medications in tier-one countries are manufactured, packaged and sealed at the exact same facilities that we get our prescription drugs from in the United States. They are shipped to brick and mortar pharmacies, where pharmacists fill prescriptions for customers.
ScriptSourcing partners with these tier-one country pharmacies to ship name-brand and specialty drugs to the United States, so that customers pay a fraction of what they would for the drugs at a local pharmacy.
To ensure that medications are sourced appropriately, we have multiple safety protocols in place. For example, we never ship a drug that is not FDA-approved. Additionally, we do not ship medications that are heat or cold-sensitive. We also require customers to keep a 30-day supply of their medication on-hand so that they do not run out of the drug while their 90-day supply is being filled internationally. Finally, we do not ship medications that can be commercialized, such as Viagra or Cialis.
Another solution that we provide to our customers is a medication review program. We have a team of doctors and pharmacists that provide independent prior authorization to ensure that medications are being prescribed clinically appropriately to patients. We also work with a network of specialty pharmacies that bid for our customers’ business. By adding competition into the pharmaceutical sourcing process, our customers save tens of thousands of dollars on their scripts.
We also have a Manufacturer Assistance Program (MAP), where we work with pharmaceutical manufacturers to provide free, or lower-cost medications to members taking maintenance drugs. While each manufacturer has different criteria to qualify for their assistance program, a household of four earning $120,000 or less per year can typically qualify to receive lower-cost medications.
Finally, we have an international pharmacy tourism program that allows members and a companion to travel to places such as Mexico, or the Cayman Islands to receive treatment for their conditions. The cost of care is significantly lower, and patients receive an all-expense paid trip for accessing care abroad. For example, we will give members taking Humira $3,000 twice per year to visit to San Diego. They can fly first-class, stay in any hotel and go sightseeing. The only thing that we ask them to do is drive 20 minutes into Mexico to receive their Humira injections. When this happens, we are able to save employers nearly $30,000, because Humira costs $55,000 per year in the United States, whereas it is only $19,000 in Mexico. ScriptSourcing provides this opportunity to members when we are unable to source medications through our international pharmacies.
Q3: Why are prescription drugs significantly less expensive in other first-world countries?
[Becker] It is a combination of things. First, governments in other first-world countries negotiate directly with pharmaceutical companies to provide prescription drugs to its citizens at a lower cost. In the United States, PBMs act as the intermediary between manufacturers, pharmacies and patients. The problem with this model is that many PBMs own their own specialty pharmacies, which creates a disincentive for them to provide members with the lowest-cost drugs to manage their conditions. Another issue is the lack of competition among PBMs. In the United States, 3 PBMs - CVS CareMark, Optum and Express Scripts - represent nearly 75% of the market. This allows them to gauge prices and engage in opaque contracts with employers that result in significant upside for the PBM. CVS Caremark, Optum and Express Scripts are also publicly-traded companies, which means that they are aligned with their shareholders, not their customers.
ScriptSourcing recommends that our customers contract with fiduciary PBMs, because they return rebates entirely to the employer. They also do not own their own pharmacies, so there is no conflict of interest. Fiduciary PBMs are paid by the client, not the pharmaceutical companies.
Q4: What advice would you give to brokers, or employers looking to manage their pharmacy spend?
[Becker] Empower employees to be great consumers of their healthcare, and manage the healthcare supply chain. ScriptSourcing is the best solution in the marketplace to help employers manage the pharmacy supply chain. We do this through our international pharmacy programs, and by engaging with PBMs that have the same objective as us, which is to control healthcare costs without diminishing benefits.
Thank you for the great interview Gary Becker! Get more benefit administration RFP tips here.