Symbria Rx Services helps clients manage impact of rapidly rising generic drug costs

A perfect storm of critical factors is squeezing skilled nursing providers into an increasingly tight space between rising drug costs and shrinking reimbursement. For years, insurers have encouraged patients to choose generic drugs because they were less expensive than brand-name equivalents. As a result, most prescription drugs currently in use are generics. However, during the past year, the cost of generic drugs has risen at record rates – including the cost of medications that have been on the market for many years.

According to AIS Health:

  • Branded drug price inflation remained in the 10-12% range in 2014.
  • Generic drug prices jumped from a decrease of 4% in 2011 to an increase of 6.8% for 2014.
  • Generic drug inflation peaked in the second quarter of 2014 at 11%.

The trend of rising generic drug prices shows no sign of slowing during 2015. In fact, Evercore ISI forecasts a 7-10% rate of weighted drug inflation for 2015. And a managing director of Evercore ISI's Health Services and Technology Research Team recently stated that generic drug prices could rise at a "faster growth rate than we've seen in the last couple of years."

How higher pharmacy acquisition costs affect pricing
These price increases are hitting Symbria Rx Services – and consequently our client communities – where it hurts, on the bottom line. 

Symbria Rx Services rarely adjusts our pricing formula because we understand how important medication cost management is to our clients who count on the contracted discount rate we've agreed upon. However, when our costs go up and we deliver medications at the agreed-upon discount, our clients' costs will also rise.

(Symbria Rx Services cost + acquisition cost increase) X Client discount = Higher client cost

What we're doing to help clients help manage rising generic drug costs
Although we are unable to influence drug pricing at the manufacturing and wholesale levels, Symbria Rx Services offers several recommendations to help clients manage medication expenditures:

  1. Consider rising costs when budgeting for the next fiscal year. This is especially important for Medicare Part A business, because our clients are responsible for these residents' medication costs.

  2. Use formulary prescribing to contain costs. We urge clients to ask physicians serving their communities to use our Preferred Drug Formulary – especially the auto-substitution option. The auto-substitution formulary lists highly inflated generics as non-preferred options and offers alternative generics with more stable pricing in the same classes. For example, a recent formulary update listed a commonly prescribed generic cream as non-preferred because it cost $384.68 – and recommended an alternative that was available for only $127.71.

  3. Take advantage of formulary tools. Our pharmacy also offers tools that prescribers can use to make cost-conscious choices, reporting that helps our clients identify prescribers whose formulary compliance is less than ideal, and an Admission Planner tool that can help client communities identify new admissions who have the potential for higher-than-average medication costs.


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