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The Three Behavioral Factors Driving Rx Spend Waste

September 27, 2011 By: Nadia Category: HealthCare, Medtipster, Prescription News, Prescription Savings Source: Express Scripts 9.27.11

“We have long used financial incentive to eliminate waste. Now we’re finding that tools that build upon the insights of behavioral economics and psychology can have powerful, positive effects.”
- Alan Garber, MD, PhD, Professor of Health Economics, Stanford University

The above quote is from Dr. Alan Garber, one of the most respected healthcare economists in the country. Dr. Garber recognizes that Plan Sponsors have a critical need for a “new toolbox” to help eliminate healthcare spend waste and drive better behavior.

Plan Sponsors will certainly agree with the statement “behavior is important”, but they are also acutely concerned with dollars. They will want to know specifically – in hard dollars – how behavior is impacting their costs.

What stands between the doctor and optimal health outcomes is consumer behavior. Wasteful pharmacy-related behavior costs the healthcare system a staggering $403 billion a year:

Drug Mix: $51 billion – People using a brand drug when a generic drug would be just as effective

Channel Choice: $6 billion – People choosing to continue to get their maintenance medication at a retail pharmacy instead of using home delivery

Non Adherence: $106 billion – People not taking their medications appropriately

Clearly, consumer behavior is a factor that you cannot leave out of the equation when trying to get the most out of your pharmacy benefit. So what can we do to motivate people to change? To improve Rx spend effectiveness?

Most PBMs offer two options to increase the effectiveness of the plans performance – passive education programs and mandatory programs. Mandatory programs are effective, but because of the potential for noise, many Plan Sponsors have not wanted to use them. Passive programs solve the noise issue, but don’t achieve the effectiveness that most plans need today. So how do we move from where we are today to maximizing plan performance without putting mandatory programs in place?

We can close a great deal of this gap by applying the behavioral sciences to healthcare. This allows Plan Sponsors to achieve greater effectiveness without the member disruption.

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