Top 3 Things You’ll Learn
- Some employers are accessing lower drug costs internationally, known as pharmaceutical tourism, to provide employees with more affordable medications.
- International drug sourcing offers potential cost savings for self-funded plans through purchasing medications from other countries.
- Employers should consider the pros and cons, including safety and clinical management concerns, when evaluating international drug sourcing and explore alternative strategies to optimize cost management.
The rising cost of medications continues to pose a serious financial threat to self-funded health plans. To tackle this challenge, employers are exploring innovative ways to reduce their pharmacy expenses. One approach gaining attention is international drug sourcing, where medications are obtained from other countries.
International drug sourcing simply means getting prescription medicines from outside the United States. There are two main methods: working with a vendor who collaborates with a local pharmacy capable of shipping internationally, or traveling to another country and bringing back the medications personally. This latter approach is sometimes called “pharmaceutical tourism.”
International drug sourcing can be an appealing option to employers, as it offers an opportunity to purchase medications at lower prices, leading to long-term savings for their self-funded plans. Employers should consider the answers to four key questions before pursuing international sourcing.
When considering international sourcing, what is the goal in mind?
As a self-funded employer, it’s important to know what you want to achieve when you make changes to your plan. Are you looking to save money, improve the member experience, or address specific medication needs?
For example, if saving money is your top priority, it may be worth working with your broker to reexamine your contract to find more ways to lower costs beyond just international sourcing. Taking a broader look at your pharmacy benefit program will ensure your approach aligns with your overall objectives and allows you to make informed decisions.
How will you evaluate the success of international sourcing?
It’s crucial to establish clear metrics for evaluating the impact of international sourcing on various aspects of your pharmacy contract and overall plan performance. Consider the following questions to guide your assessment:
- How will you measure the financial savings achieved through international sourcing? Will you compare the costs of medications obtained internationally with those sourced domestically?
- Will the success of international sourcing be evaluated based on member satisfaction and the overall member experience? How will you gather feedback and assess member perceptions?
- How will international sourcing affect other parts of your pharmacy contract, like formulary management, rebates, and contract value? How will you monitor and measure these effects?
How important is the member experience to you?
Being sensitive to the member experience is essential when evaluating international sourcing. Consider the following questions to gauge points of sensitivity and assess how international sourcing aligns with your desires:
- What do you expect in terms of accessibility, convenience, and continuity of care for members who may need to use international drug sourcing?
- How does international sourcing align with your commitment to personalized care and delivering good health outcomes for your members?
- Are there alternative strategies that can save money while still providing a positive member experience, like negotiating better pharmacy contracts or having independent clinical oversight?
By understanding your members’ needs and aligning international sourcing with their desired experience, you can customize your recommendations while optimizing cost savings and overall pharmacy benefit management.
What potential issues may arise when outsourcing claims?
One issue is the safety and legality of these drugs. Medications from outside the country may not have the same safety measures and reporting requirements as those regulated by the FDA. This means there could be risks like mislabeling or adverse effects that aren’t properly reported.
Travel is another potential issue to consider. It can be costly to travel abroad just to get a cheaper medication. Consider also how this will be perceived by other employees on the plan if one employee is granted a “free vacation” because they use a particular medication.
There are also worries about the supply chain. Drug importation could lead to increased demand, which may lead to shortages, higher prices, and rationing. It’s important to find a scalable way to lower medication costs that won’t cause these problems.
Lastly, the savings might not be as significant as they seem. Factoring in rebates, discounts, fees from international vendors, and the use of more expensive brand medications instead of cheaper generics, the overall cost savings may not be that great. It’s important to think about the financial aspects and make sure the quoted savings are truly beneficial.
The bottom line
The main reason many employers consider international drug sourcing is the potential financial benefit it offers. It can be an attractive option to lower prescription drug costs for both the employer and their members. However, it’s crucial to acknowledge the current status of legislative efforts aimed at legalizing medication importation. Despite multiple states attempting to pass such laws, these proposals currently find themselves in a state of stagnation at the FDA level. Notably, Florida has taken legal action against HHS in response to the delay. Encouragingly, the latest news indicates that the FDA has stated it will make a decision on the matter in the fall.
At RxBenefits, we believe there are other solutions available that can better address your needs. Our holistic approach focuses on managing utilization through our comprehensive Protect suite of clinical solutions and minimizing risk with supplemental stop-loss coverage provided by our sister company, RxPharmacy Assurance.
When evaluating international drug sourcing, it’s essential to carefully consider the pros and cons, including safety and clinical management concerns, alongside the potential financial advantages it may bring to your organization and members. By exploring alternative strategies and partnering with us, you can find a more suitable and effective solution to manage your drug spend.