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Lowest Net-Cost

Most health plans are set up with a rebate strategy to help offset rising prescription drug prices. Drug companies use rebates as an incentive to push name brand drugs to consumers. An employer group’s formulary (AKA the plan’s approved drug list) is constructed with the goal of getting higher rebates from drug manufacturers and greater discounts. However, while large rebates can disguise themselves as savings, they do not account for lower cost generics or alternatives that have similar or identical clinical outcomes, nor do they yield the lowest net-cost.

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On average, 22% of an employer's annual healthcare spending is on Rx.
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Rebates can lead to negative incentives

Most Prescription Benefit Managers (PBMs) are financially encouraged to promote higher costing drugs, leading to greater rebates and specialty revenue for themselves. PBMs also decide what portion of the rebate, if any, goes back to the employer. With rebates driving decisions, lower cost alternatives may not be prescribed or even included on the approved drug list. Novo Connection has always passed through 100% of rebates to our groups and our approach includes a customized, more comprehensive formulary.

Why a Lowest Net-Cost Approach to Rx Spend Can Save More

Our Lowest Net-Cost formulary looks at overall drug costs and rebates and considers generic options to drive down costs. The approved drug list on our Lowest Net-Cost formulary contains many more prescription drug options to allow for the greatest savings and the best clinical outcomes for the patient.

 

Novo Connection’s Lowest Net-Cost strategy also has an independent clinical team that utilizes the most up-to-date clinical data to make more informed decisions – allowing members to receive the safest and most effective treatment for their conditions. Not relying on rebates means there is no backdoor financial interest which allows our plans to have a larger formulary, more options, and ultimately, lower costs.

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