Base it on value, not just cost.

This morning's WSJ reports on insurers' struggles to manage healthcare spending through prescription benefits.  The article discusses whether an insurer with an in-house pharmacy benefits management group is better at managing prescription coverage rather than a large independent PBM.

In a related WSJ Health Blog post, Jacob Goldstein writes

Insurers such as Aetna and Cigna argue that by owning their own PBMs, they can more cohesively manage patient benefits. But others have argued that the huge PBM specialists can leverage their size to get better prices from drug makers, lowering cost.

What is troubling about these two articles is that they discuss healthcare costs as discrete line items rather than as interrelated parts of a complicated whole. Even worse, there is no mention of improving the health of the people covered by those plans.  It is as if improving the health of patients is, at best, a separate "work stream" (to use some overused business jargon), and, at worst, an afterthought to lowering prescription spending. 

We can't just impose lower prices or mandate the use of generics and see long-term savings. That is temporary solution.  In fact, there are many examples of employers that have designed benefits for employees (and dependents, if covered in the plan) with certain chronic diseases that actually try to improve prescription adherence by removing barriers (like copays) or incentivizing them (free diabetes supplies or pharmacist coaching), leading to improved health outcomes and lower healthcare spending.  Places like Asheville, NC or the cities in the Diabetes Ten City Challenge,employers such as PPG Industries and coalitions including Lancaster Business Group on Health, have had impressive results in the area of value-based benefit design.

For more information on the combined benefits of creating a healthier workforce and lowering healthcare spending, you can visit GSK's Center for Value-Based Health Management, an online resource for benefits managers, brokers, and others.