Small Firms Feel the Pinch First
The impact of high prescription drug costs is no joke for small business owners. Many feel that the seemingly exorbitant prices for pills charged by drug companies have presented them with something of a devil’s dilemma: either accept spiraling costs, cut benefits to their employees, or cobble together some lose-lose combination of the two. Smaller businesses, particularly those with 2,000 or fewer employees, are particularly vulnerable to cost spikes due to an inherently smaller risk pool. If even a handful of employees were to require high-cost specialty drugs, a smaller company’s annual plan price profile could be dramatically impacted.
Drug Dilemma Solutions:
- PEO Pooling: PEOs, or Professional Employer Organizations, function as a kind of umbrella corporation with the purpose of bringing together many size businesses to reap the benefits of a significantly enlarged risk pool.
- Subscribe to a health advocate service for your employees: A health advocate is a hired professional who answers all types of medical related questions and speaks up for the employee so they can better understand their illness and get the care and resources they need, which gives them a peace of mind and helps focus on recovery.
- Get Proactive: Small businesses can also pursue some proactive policies that can help put a lid on prescription pill costs through some methods such as “split-fills”, “step-therapy”, or even prior authorization. We will explore some of these proactive strategies in future articles.
Employer pharmacy costs rose 9.5 percent in 2015 and are projected to rise 10 percent this year. However, despite the rising tide of healthcare costs, of which prescription plans are but one wave, there are some strategies a small business can pursue to blunt the “incoming tsunami”. One of the most effective strategies is to band together with other businesses through a PEO to spread their risk, thereby reducing costs and improving benefits offered.
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