Ethica Helps Large Employer Achieve 20%+ Savings with Low Net Cost Medications
Client: Financial Services Organization
Overview
A financial services organization was concerned that its current formulary favored highly rebateable brand-name drugs over clinically superior and lower-cost alternatives. This lack of optimization was driving up pharmacy costs without necessarily improving health outcomes for members. The client sought a strategic approach to formulary management that would prioritize cost-effective and clinically sound medication options.
Challenges
- Formulary design favored high-rebate brand-name drugs over lower-cost, clinically superior alternatives.
- Lack of visibility into cost savings opportunities through formulary adjustments.
- Significant financial impact from high-cost medication classes, particularly GLP-1 agonists.
Solution
To address these concerns, we conducted an in-depth evaluation of vendors that could support unique formulary overlays. By soliciting proposals and analyzing cost-saving opportunities, we developed a transition plan that optimized medication selection while maintaining clinical integrity. Key components included:
- Identifying vendors that specialized in formulary optimization and cost containment.
- Analyzing savings opportunities through transitioning medications to more ideal therapies.
- Strategically managing high-cost medication classes, including GLP-1 agonists.
Additionally, Ethica partnered with a large employer to implement a long-term strategy focused on innovation under the Rx benefit. By assessing opportunities beyond the incumbent PBM’s formulary, we identified more cost-effective medications that provided greater savings while maintaining clinical efficacy. Key outcomes included:
- Increased access to effective medications at a lower cost to the Plan.
- 90%+ physician acceptance rate when transitioning members to optimal alternatives.
- Copay waivers to incentivize member participation.
- More than 20% estimated savings in overall drug spend.
Results
The optimized formulary structure resulted in significant cost savings and improved financial sustainability:
- 4% to 10% reduction in gross pharmacy spend.
- Improved alignment of drug choices with clinical efficacy and cost efficiency.
- Enhanced formulary transparency and control over high-cost drug categories.
- Additional 20%+ savings through strategic medication transitions.
