Driving Innovation in Rx Benefits

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.