Strength in Numbers: The Powerful Cost-Saving Benefits of Pharmacy Coalitions  

September 27, 2022

By Joe DiBella, Executive Partner, National Employee Benefits Practice Leader at Conner Strong & Buckelew 

With prescription drug prices continuing to grow, employers and plan sponsors are seeking new ways to combat rising costs without impacting their members.  

Americans spend more on healthcare than any other country in the world, primarily due to the extremely high cost of prescription medications. While prices are not rising as quickly as in prior years, prescription drug costs have still increased 2.5% since the beginning of the COVID-19 pandemic. Since 2014, prices have risen an astonishing 35%.  

Specialty pharmaceutical costs are a significant driver of these increases. Specialty pharmaceutical prescriptions accounted for a staggering 51% of total pharmacy spending in 2021. This is even more surprising considering only 2% of the population uses them.  

In light of these trends, employers and plan sponsors facing rising costs are being forced to react. As such, pharmacy coalitions are rising in popularity – and for good reason. Joining them is one of the most effective steps organizations can take to keep spending on pharmaceutical drugs in check. 

Benefiting From Economies of Scale 

Pharmacy coalitions are groups of employers, plan sponsors, and other large purchasers of prescription drugs that have banded together to gain purchasing power and negotiating strength. By aggregating members, they’re able to place large orders of prescription drugs at a time, thus commanding more competitive pricing than if a single organization were to negotiate a deal alone.  

Typically, these coalitions bring together thousands or even millions of members to vastly improve their negotiating positions. These savings are passed on to plan sponsors and employers. As a result of the stronger negotiating power, greater purchasing power, and competitive pricing that comes with joining a coalition, these partnerships can save employers and plan sponsors up to 25 percent of their annual pharmacy spend.  

This pricing power is even more valuable today as pharmaceutical drugs have become more commoditized. In an attempt to minimize disruption to their members, employers and plan sponsors are often reluctant to make changes to their benefits plans. Yet most of the time, members won’t see any of their pharmacy benefits change and will face little to no disruption in their health plan at all after joining a coalition. They’ll still be able to access the medications they need, just at better prices.  

Maximizing Your Participation 

Aside from greater pricing and purchasing power, joining a pharmacy coalition with the support of an experienced insurance broker can come with many additional benefits that can help employers and plan sponsors further reduce their overall pharmacy costs.  

For example, coalitions often come with custom preferred medication lists that help members avoid low-quality, high-cost drugs when superior, less-expensive alternatives are available. Integrated patient assistance programs that facilitate appropriate medication use among members are also often provided through prescription care management programs. These high-touch patient and physician medication management programs have been proven to drive better outcomes for patients.  

Employers and plan sponsors should also ensure they receive access to custom data reporting and analytics that can help them identify medication management opportunities. National pharmacy pricing transparency tools, like GoodRx, can also come in handy for patients making decisions about which drugs to purchase and where to find the best price.  

Employers and plan sponsors will want to ensure they join pharmacy coalitions that provide these benefits in addition to greater purchasing power. Selecting a coalition that works best for the organization is best accomplished alongside a knowledgeable insurance broker that understands the landscape and can help them make the best decision based on their needs.  

Continued Cost Challenges 

Unfortunately, prescription drug prices aren’t likely to come down anytime soon. As new sophisticated specialty drugs continue to come to market and drive up overall pharmacy spending, employers and plan sponsors should consider acting as soon as possible. Pharmacy coalitions are great places for these organizations to start. They’re a fit for nearly any organization with more than approximately 250 employees and can provide valuable purchasing power that translates to thousands of dollars in savings each year. They offer very little disruption to members and should be considered by almost any employer or plan sponsor seeking greater control of their pharmacy spend.  

 Partnering with knowledgeable and experienced insurance brokers can help these organizations get the most out of their participation. At Conner Strong & Buckelew, we offer our employee benefits clients access to these coalitions and support their participation by offering a world-class clinical team, including clinical pharmacists that will strategize overall pharmacy design and analytics.  

There’s no reason to overpay for prescription drugs.  

Reach out to us today to see how power in numbers can lower your overall prescription drug costs.  

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Employee Benefits, Pharmacy & PBM Management

Practice Leader

Joseph M. DiBella

Executive Partner, National Employee Benefits Practice Leader

More than 27 years of employee benefits experience

Previously led national and large account business for Horizon Blue Cross Blue Shield of New Jersey