Is there a pharmacist in the house?

Pharmacists’ expertise can help make the most of your drug plan dollars, and identify health issues in a workforce
By Christine Than
|Canadian HR Reporter|Last Updated: 12/22/2005

The role of pharmacists in managing drug benefit plans has evolved in the last 10 years — albeit slowly. Formerly a drug data record-keeper, the pharmacist now plays an important role in ensuring appropriate drug spending, controlling drug costs as much as possible and, more importantly, using claims data to better understand workplace health issues.

Interpreting claims data, a unique skill of pharmacists, can help develop health strategies to reduce future use of drugs.

Many pharmacists find it curious that certain drug benefit plan sponsors use external advisors who have no access to a consulting pharmacist.

Pharmacists are experts in prescription and non-prescription or over-the-counter drugs. They require university designations and must practise a minimum number of hours per year to maintain their professional qualifications. Pharmacists providing advice to drug plan sponsors typically have a retail pharmacy background, but some also have a hospital background.

The prescription drug universe contains more than 8,500 chemical entities with many prescribed for the same therapeutic purpose. Questions of value for money and value for health outcomes are just some of the topics pharmacists are asked to consider and advise on.

As Canada’s labour force ages, the mix of drugs is also changing from acute care to maintenance and chronic care. Heart disease remains the major consumer of prescription drugs for the typical drug benefit plan sponsor. Subcomponents of heart disease, conditions such as hypertension or high cholesterol levels, are controlled with chronic long-term drug therapy. Plan sponsors that provide retired employees with drug benefit coverage are also affected by the longevity factor, namely that people live longer and therefore take these drugs for a longer period. If it wasn’t for advances in pharmacological treatments, the patient’s quality of life and disability-free years would be much reduced.

To make sense of it all, benefit plan managers need pharmacists as an integral part of their plan management teams. They are, after all, recognized experts in prescription drugs.

Formulary management

Pharmacists frequently create and maintain restricted (non-open) formularies used for claims reimbursement. With more drug therapies available today, the pharmacist’s knowledge is needed more than ever. Pharmacists can evaluate new drugs approved by Health Canada, provide concise health impact reports and estimate the cost impact to drug benefit plans. This enables plan sponsors to make informed choices for formulary management.

Pharmacists can help create formularies based on the generic substitution rules and regulations specific to each province and accepted regional pharmacy practice. They can create customized formularies to meet a plan sponsor’s specific needs. For a group that includes mostly young office workers, a pharmacist can assist in creating a formulary that contains drugs that meet the specific needs of these workers, such as sclerotherapy treatments (for varicose veins), different methods of birth control and fertility drugs.

Pharmacists can create managed care formularies where every drug added to a formulary is previously studied in regards to cost-effectiveness and its budget impact. If the results are favourable, then the drug is added to the formulary; if the drug is not deemed cost-effective, then it’s excluded.

Managed care formularies are effective as a cost-containment measure. They ensure that plan sponsors are paying for the most appropriate and cost-effective treatment available.

Most provincial bodies have already developed managed care formularies to control public spending while meeting the needs of beneficiaries. These provincial formularies typically contain approximately 3,500 drugs. Today, many plan sponsors still choose to allow coverage for open formularies, thereby increasing drug cost expenditures but avoiding plan member complaints.

Plan design and management

Pharmacists can be the driving force in creating certain cost-control measures. Measures such as a prior authorization program, a carrier approval program, the implementation of tiered formularies and mandatory generic substitution are some plan design elements that require pharmaceutical expertise.

A prior authorization allows reimbursement for targeted high-cost or high-volume drugs for plan members meeting pre-established criteria.

For example, the drug Enbrel, which treats rheumatoid arthritis, costs $20,000 per year. If targeted by this program, the main criteria for plan members to have access to this drug would be to undergo therapy with methotrexate, which is very effective and much less expensive. Only if the patient is unresponsive to treatment under methotrexate would payment be authorized for Enbrel.

A carrier approval program targets specific high-cost drugs that may be misused and requires authorization from the carrier prior to reimbursement. Pharmacists are responsible for setting prior authorization criteria and identifying drugs for which an analysis may be necessary prior to reimbursement under a carrier approval program.

For example, growth hormones are often included in the carrier approval program. This expensive type of drug — depending on the dose, one prescription may cost upwards of $3,000 — is indicated to treat rare genetic diseases such as Turner’s Syndrome or other rare hormonal problems related to certain cancer tumors.

However, growth hormones are sometimes misused as anti-aging agents. There is some anecdotal evidence that these hormones may improve skin elasticity, increase muscle mass and decrease body fat composition. By requesting a medical exam prior to reimbursement, plan sponsors can be sure that growth hormones will be reimbursed for approved uses only.

For certain costly drugs, the plan member may have to submit a medical history prior to being covered. These are special authorization requests. Pharmacists are often responsible for evaluating these requests based on the information provided by the attending physician.

Plan sponsor, stakeholder education

Pharmacists working in the group insurance industry routinely answer questions about drug therapy. They are often asked to intervene in more complex cases, such as when plan members are suffering from rare diseases and using rare drugs. As well, they can examine cases where fraud or abuse is suspected. Because of their training and their ease of access, pharmacists are the best health care professionals to tap for information on new drugs coming to market, new guidelines for disease treatment, physician prescribing habits and current clinical guidelines.

Provincial rules and regulations influence private drug plan coverage. Pharmacists are in a unique position to understand, explain and interpret regulatory applications to private drug plan coverage.

As an example, the Quebec market is subject to a mandatory universal drug coverage. When plan sponsors want to implement cost containment measures — by not covering certain drugs, for example — they would be wise to consult with a pharmacist to ensure that the measures do not break the law.

Group utilization and trends analysis

At the end of every policy year, plan sponsors frequently request a group utilization analysis to be performed by pharmacists. A disease category analysis, a drug utilization analysis and an analysis of the highest paid claimants is performed (while preserving plan member anonymity). Recommendations as to plan designs or additional cost-control measures are also made. This sets a basis for a plan sponsor to focus on the core problem, namely plan member health, not the actual cost of drugs.

Provider audit and plan member audit

Pharmacists actively participate in the audit process. Provider audits ensure drug claims submitted at the point of sale are submitted in accordance to the insurer’s policies and procedures. Because of her experience in the field, a pharmacist is the ideal professional to help identify common errors, “shortcuts” or “tricks” providers may use when dealing with claims submissions.

A good example concerns the quantity dispensed, known as a “days supply,” and claims submission. Many private drug plans only allow claims submission payment for a 30-day drug supply. However, dispensing pharmacists can manually modify the days supply and plan sponsors may end up paying more than they had originally planned. A pharmacist auditing drug claims can easily recognize when quantities do not correspond to the days supply indicated.

Pharmacist input can also be of value in performing plan member audit in regards to drug abuse or over-utilization.

Pharmacists working in the group insurance industry wear many hats. They put their scientific and clinical training, their business acumen, their people skills and their extensive experience in retail to good use on a daily basis to ensure appropriate benefits plan management. If only more plan sponsors would take advantage of the expertise, think of the productivity gains available and the maximization of the drug benefit plan investment.

Christine Than is a pharmacist in the department of pharmacy services with Montreal-based business solutions firm Emergis. She may be contacted at (866) 363-7447, ext. 6820, or

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