Analysis of prescription drugs is required of the plan sponsor as a direct result of their cost, trend and stakeholder complexity that includes drug manufacturers, wholesalers, retail and mail order pharmacies, specialty pharmacies, insurance carriers and TPA's, pharmacy benefit managers and plan members. Noted below are plan design, drug categories, organizational structures, formulary management considerations and elements to be negotiated under the financial structure to ultimately impact prescription drug trend.

PLAN DESIGN
Copayments — Fixed Dollar Paid Per Prescription
Coinsurance — Percentage of of the Drug Cost Per Prescription

DRUG CATEGORIES
Generic — Chemically Equivalent to Brand/No Patent Protection
Single Source Generic — One Generic Manufacturer/Limited Period
Multi-Source Brand — Brand and Generic/Multiple Manufacturers Single Source Brand — Patent Protected Drug/One Manufacturer
Preferred Brand — Brand Drug on Formulary
Non-Preferred Brand — Brand Drug Off Formulary
Lifestyle — Not Medically Necessary/Life Enhancing
Specialty — Low Volume, High Cost for Chronic/Complex Illnesses

ORGANIZATIONAL STRUCTURE
Carve-In — PBM Owned/Contracted by Medical Carrier/TPA
Carve-Out — PBM Directly Contracted by Plan Sponsor

FORMULARY MANAGEMENT
Formulary — Preferred Drug List    
Open — Large List of Drugs/Not Required to Choose From List
Closed — Restricitive List of Drugs/Required to Choose from List
Preventive Drug List —  Drug List with No Copayments 
Enhanced Drug List —  Deductible Waived/Copayments/HDHP

UTILIZATION MANAGEMENT
Prior Authorization — Prior Approval Before Any Reimbursement
Step Therapy — Less Expensive Treatment Required First
Quantity Limits — Maximum Quantity Dispensed at One Time

FINANCIAL STRUCTURE
Discounts — % Reduction from Average Wholesale Price
Rebates — Money from Rx Manfacturer to Payer/Provider/Client
Dispensing Fees —  Dollar Amount/Per Prescription/To Pharmacy
Administrative Fees — Access and Management Fees for Program
Distribution Channel — Retail, Mail Order, Specialty Pharmacy




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