Business

HealthPartners' Dr. Charlie Fazio on managing pharmacy costs

Highlighting the best deals comes out of frustration with prescription costs.

By Christopher Snowbeck

July 7, 2018 at 7:22PM

Dr. Charlie Fazio, HealthPartners' medical director, said pharmacy costs now consume more of the health care dollar than hospital costs. (The Minnesota Star Tribune)

As frustration endures with prescription medicine costs, health plans are developing tools that highlight the best possible deal at the pharmacy counter.

Bloomington-based HealthPartners launched one such program in 2017 in partnership with GoodRx, a company that gives consumers information about costs at rival pharmacies.

Available via website or app, the tool shows a consumer's out-of-pocket cost in the context of overall benefits, said Dr. Charlie Fazio, the medical director at HealthPartners.

Minnetonka-based Medica and Golden Valley-based PreferredOne said they have similar tools. Last year, Minnetonka-based UnitedHealthcare launched a program so patients and doctors can access comparative costs before prescriptions are written.

Q: To what extent are health care consumers today struggling with medication costs?

A: If we take in a dollar in premium for an insurance policy, at this point we spend 20 cents of it on pharmacy. Not drugs you get in the hospital — this is outpatient or delivered to your home or something like that. Twenty cents on pharmacy. It's more than we spend on hospital care, which is now about 19 cents. It gives you some sense for how things have changed in the industry over time. The other issue is that there are data that change a little bit over time but that show us about half of the people who pick up their prescription don't take it the way it was prescribed. And as many as 20 percent of new prescriptions go unfilled. There's some evidence to suggest that in the last 10 years or so, a growing reason for both of those things is the out-of-pocket cost.

Q: The 20 cents of pharmacy cost, has that share been growing or is the hospital share shrinking?

A: The hospital's not going down, no. The pharmacy is increasing at a rate faster than the other components of care and is taking up more of the costs.

Q: Why did HealthPartners decide to start offering a consumer tool for handling medication costs?

A: Our impetus was twofold. One is the rising cost of drugs. But then the other part of that was the growing frequency with which consumers have fairly significant cost shares as part of their commercial insurance coverage. With more out-of-pocket expenses, there's an opportunity for people to get some cost savings by knowing where the better price is available.

Q: Is it right that deductibles can be at least $1,300 for an individual, or $2,600 for a family?

A: "At least" is probably the important phrase in there. Depending on the product, the deductibles can go much higher than that.

Q: How does the online tool work?

A: If you're a HealthPartners member, you can go to the website. Once you've logged in, you can pull up your drug history. You can ask it to tell you: Were you to refill that drug, what would it cost at a variety of pharmacies? And then it would list those in order of distance to your home and/or in what your out-of-pocket would be. If you take multiple medications, it will give you this information one at a time or for the whole combination.

Q: What's the consumer response been like?

A: It's creating interest. In the last two months we had about 17,000 unique visitors to the site, and of those visitors about 450 people changed where they currently get their medication.

Q: What does that level of switching tell you?

A: The easy conclusion would be: They found a place where they could save some money. I suppose it's also possible that they found that some place closer to home was no more expensive than the place that they had been going. The other thing that we see often is that, once all the information is available to people, they will make a different choice such as getting a 90-day supply through the mail.

Q: What are some of the big-picture concerns about medication spending?

A: The issues that come up from a policy point of view have to do with the pricing as medications are released, the rationale for pricing changes and how the costs of research are factored in. There also are things like the direct-to-consumer advertising, the rules around patent protections and the loopholes within those rules to hang on to patent status for a longer period of time — those are all things that need to be addressed from a policy point of view.

Q: The idea for the online tool, though, isn't to address the big picture, right? It's more about helping individuals work within the current system?

A: That is exactly right. We have societal and policy issues around the cost of drugs. We need to address those. But for where we are right now, how do we help an individual who needs a medication and who has a certain benefit set to find the best value that they can?

Right now, a number of the drugs that come up tell you what your out-of-pocket is and then also tells you what the health plan spend is. By the end of July, we hope to have an upgrade to what's out there so that every single time you'll know what the health plan spend is, as well as your own spend. We'd love over time to figure out a way that we engage the consumer in total spend.