Supply and demand: negotiating the prescription drug labyrinth to reduce costs

Prescription drug costs are increasing at a rate of 15% to 17% a year and a look into the future does not bring much better news. Employers can expect to see more numbers like these as doctors more aggressively treat diseases using drug therapy, the population continues to age and pharmaceutical companies continue to spend billions of dollars on direct-to-consumer advertising aimed at consumers who are desensitized to the true costs of their prescriptions. In this environment, it is unlikely that companies can realistically expect to reverse costs of even to avoid cost increases. However, this article provides employers with a prudent approach to managing both the supply and demand sides of the prescription drug equation in order to reduce their level of increase. Supply-side management focuses on negotiations with vendors, while the demand side focuses on managing employee utilization.