The Ins and Outs of Onsite Pharmacies (Part 2)

Click HERE to read Part 1

When you institute your own pharmacy or join an established pharmacy organization, it is “closed.”  This means that only employees and dependents insured on the member health plan can use the pharmacy. Often, many groups join together to form the membership to help offset the overhead and administrative costs. A management company owns the pharmacy operations (and the resultant insurance, licensing, and liability exposures), so the entity has a contract to use the pharmacy.  Often, one or more anchor members start the pharmacy, own the fixtures, furniture, and stocked items, and sometimes lease or build the facility, with the pharmacy management company billing the cost of prescriptions back to the member health plan or workers’ comp plan. If the anchor members allow others to join the pharmacy, they can charge back the overhead and cost of prescriptions to the new members based on utilization.   Prescription claims data is sent to the health plan administrator – and the workers’ comp administrator if plans are self-funded – for stop loss/self-insured-retention reporting.  The pharmacy accepts e-scripts from any licensed physician or mid-level practitioner.  If you are large enough or have enough groups who work together, you can open a brick-and-mortar pharmacy conveniently located to your work location.  Otherwise, medications can be provided to your employees via mail order from another location.  Urgent, one-time medications would still be available to be filled at a local pharmacy.

This closed pharmacy concept focuses on communicating with physicians in your area that prescribe the most and/or highest cost drugs and keeping patients compliant with their medication regimen.  The pharmacist evaluates all prescriptions for each patient for effective medication synchronization and patient compliance.  The pharmacist can manage both patient flow and community interaction by utilizing pre-packaged medications in commonly prescribed amounts, including 90 days’ supply.  The pharmacist becomes a partner with the physician, the health plan, the workers’ comp administrator and the patient to evaluate each patient’s individual circumstances and help manage their conditions.  This team approach, along with the convenience of home mailing of medications, leads to greater patient understanding and adherence to treatment.

This pharmacy generally does not carry peripheral items like beauty products, chips, soft drinks, and milk.  It will often carry first aid and diabetic supplies.  Since you, the employer, are partnering with the pharmacy management company, you can help direct what is available for your employees.

The savings to the health plan are often great enough that the pharmacy can offer prescriptions to employees at reduced or no co-pays, encouraging your employees to use the facility. The overhead of constructing and outfitting a brick-and-mortar pharmacy is generally recouped within two years of savings. As with any new program, the cost/benefit analysis of your particular group needs to be evaluated. The pharmacy management company can take your specific claims data and determine what the savings would have been had those drugs been filled through the closed pharmacy.

Each state has specific pharmacy regulations that would apply to employers in that state. Your pharmacy management company would be responsible for compliance with any local, state, or federal regulations. As an example, in Tennessee, a health plan cannot exclude any pharmacy or incentivize utilization to a preferred pharmacy through plan design such as lower co-pays to a particular pharmacy. However, a pharmacy can charge whatever co-pay it chooses and is not required to charge the plan co-pay. Therefore, the pharmacy could advertise to your employees that they will not charge a co-pay for certain medications, thereby saving your employees money.

As we see the cost of prescriptions continuing to rise, we need to find alternatives to manage our budgets and provide effective benefits for our employees. This is one key way that pharmacy costs can be managed for both your entity and your employees.

*The views and opinions expressed in the Public Risk Management Association (PRIMA) blogs are those of each respective author. The views and opinions do not necessarily reflect the official policy or position of PRIMA.*