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How Software Tools Can Cut Pharmacy Spending


By David Costill

An Interview with Michael Rea, PharmD, Founder and CEO of RX Savings Solutions 

Has the environment of heightened scrutiny on high drug pricing in recent months increased pressure on health plans to manage pharmacy costs more effectively?

Drug manufacturers ushered in the New Year with price hikes on more than 1300 prescription drugs, with increases that averaged nearly 10%. Many companies pledged to keep those increases under this mark, yet it’s still almost 4 times the rate of inflation. So, despite all the scrutiny and, in the more publicized instances, outrage, the industry continues to raise drug prices with relative impunity. Health plans have been under pressure to manage pharmacy costs for years. Most plans we’ve talked to were already planning for double-digit increases to their pharmacy spend this year. The latest price hikes only intensify that pressure.     

Are there opportunities to reduce spending through better pharmacy cost management—or is pharmacy spending too unpredictable?

Pharmacy spending is actually fairly predictable, in that we know it’s going to go up, as annual drug price increases have shown us. Despite those realities, there are numerous opportunities to reduce the $100 billion in avoidable prescription costs each year. Consumers hold the keys here, so long as they are empowered to manage those costs themselves. They need to know what their options are, what they cost, how to attain lower-cost alternatives, and they need the ability to make these decisions as easily as shopping for a television, hotel room, or even a box of cereal. Our solution delivers all the information they need to make the best choices for their health and finances.   

How can software tools help payers and employers to reduce health care costs and improve outcomes?

I think any tool that helps patients afford the medications they’re prescribed will lead to better adherence and thus healthier outcomes. That, in
itself, helps reduce health care costs. However, we can attribute much of the rising cost of prescription drugs on the sheer complexity of the system, one that makes it extremely difficult for even payers and employers to understand the true price of the drugs their members are prescribed and the plan is paying. What all of us need is transparency not only with respect to pricing but the availability of lower-cost therapies that can manage the same conditions with the same effectiveness. Some tools provide this, but only to a limited or skewed extent.  

Can you break down the process of how Rx Savings Solutions’ software can help payers reduce pharmacy benefit spending?

It all boils down to putting the information in the hands of the consumer. Our solution starts off by analyzing imported pharmacy claims for each and every member on a health plan. Our patented algorithms look for all possible clinical and financial therapies. The majority of these savings opportunities take the form of therapeutic alternatives along with various generics, fulfillment options, and other options we present to members on their personalized dashboards. These savings alerts are displayed on a member’s dashboard, and the member can choose to receive notifications by text or email. By informing and educating the member on their savings opportunities, the member saves money on the next prescription fill and so does the plan moving forward.   

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How does the Rx Savings Solutions platform integrate into a payer’s existing patient management platform?  

For health plans, we will institute a Single-Sign-On (SSO) to streamline a member’s access in the Rx Savings Solutions member portal. This not only benefits the health plan in driving member engagement with their own platform, but it allows for seamless integration into the Rx Savings tool as well. We also allow white label, the user interface, so that members have a consistent, familiar experience from end to end.    

Can you give a real-world example of a case where the platform helped reduce costs? Are the savings and outcomes generated through use of the platform measurable?

Absolutely. We are in the transparency business, so we track and report all savings opportunities and realized savings down to the dime. Results are presented to every client on a monthly basis. We also report member engagement and action rates, formulary and unit cost savings, and other metrics. A client’s [return on investment (ROI)] typically increases with time, as more plan members engage and realize the savings opportunities. One of our earliest clients, the State of Kansas Employee Health Plan, began seeing positive ROI within 6 months of going live. Nearly 40% of eligible employees are registered with us to date and, combined, the plan and our members have saved more than $20 million. 

How can software tools help to encourage changes in patient behavior? Can the Rx Savings Solutions’ software increase adherence or help patients make smarter health care choices?

Again, any tool that enables individuals to use their consumer instincts will encourage change. Unfortunately, over the course of decades the system has programmed consumers to suppress those instincts. Their doctors prescribe them a medication. Their pharmacy tells them what it costs. Very few questions are asked or answered, and very few choices or an ability to shop around have existed. We pay what it costs, even though that price may vary 2000% across the “market.” If we can’t afford it, we don’t get that important therapy or we sacrifice other basic needs. Either way, our health or well-being suffers. Our solution addresses all of those issues in a positive way. We also proactively notify members of savings opportunities, and even automate the process of getting a prescription change. In addition to better purchasing behavior, we drive better adherence with features that help members track all of their medications, dosages, and intervals, as well as set reminders to take them.

Does the platform offer any unique solutions for employers looking to reduce pharmacy spending?

We serve many large, self-funded employers, several of which are among the Fortune 500. I think the reason they choose us is because we have a unique offering that is proven to reduce their pharmacy spend. Unlike simple price-shopping tools, we work within their health plan and pharmacy benefit, so member costs can be applied to high deductibles and employer spending is contained in the plan. We’re plan- and PBM-agnostic. Our suggestions are completely unbiased, and constantly updated from a clinical standpoint. The biggest difference between our solution and simple price-shopping tools is we proactively alert members to every savings opportunity that exists. We do all the heavy lifting, rather than a member having to go out and find those savings on their own. 

Is there anything else you would like to add?

Our mission is to help people save on their prescriptions. We’ll soon have more than 2 million members with access to our solution, but our original “member,” a former patient of mine named Betty, still inspires everything we do. Our goal has always been to simplify pharmacy. At the end of the day, we’re all the payers in this system. If we can help the ones with the most pain, we believe that will eventually help everyone by creating a more pure and transparent marketplace. 

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