Reimagining Pharmacy Financing

March 2024

Authors

Joan C. Barrett, FSA, MAAA
Consulting Actuary
Axene Health Partners, LLC

Tony Pistilli, FSA, FCA, CERA, MAAA, CPC
Consulting Actuary
Axene Health Partners, LLC

Nathan Stokes, ASA, MAAA
Consulting Actuary
Axene Health Partners, LLC

Gregory Warren, FSA, FCA, MAAA
Partner and Consulting Actuary
Axene Health Partners, LLC

Description

Prescription drug costs remain a critical concern for consumers, payers and policymakers alike. Despite legislative efforts, such as the Inflation Reduction Act, the challenge persists, often impacting medication adherence due to cost. For example, more than 30% of Americans report they have not taken medications as prescribed in the last 12 months due to costs. This paper discusses an alternative to policy solutions: reimagining pharmacy financing in the commercial space using a value-based reimbursement model. The model aims to increase transparency in drug pricing, encourage pharmaceutical competition, align stakeholder incentives and mitigate total cost of care (TCOC) increases. This paper demonstrates that it is possible to implement such a methodology under the current infrastructure but acknowledges potential limitations.

Materials

Reimagining Pharmacy Financing

Acknowledgments

The authors’ deepest gratitude goes to those without whose efforts this project could not have come to fruition: the volunteers who generously shared their wisdom, insights, advice, guidance, and arm’s-length review of this study prior to publication.

Project Oversight Group members:
Julie Wang, FSA, MAAA
Karen Shelton, FSA, MAAA
Karen Nixon, Partner & CEO, Nixon Benefits
Jeffrey D. Dunn, PharmD, MBA
Newell E. McElwee, PharmD, MSPH
Martin D. Marciniak, RPh, MPP, PhD
John Michael O’Brien, PharmD, MPH

The Health Section Council:
Lina Chan, FSA, MAAA
Greg Fann, FSA, MAAA, FCA
Kevin Francis, FSA, MAAA
Mandy Geyer, FSA, MAAA
Gabrielle Guzman, FSA, MAAA
Shuaiqing Liu, FSA, MAAA
Derek Ray, FSA, MAAA
Karan Rustagi, FSA, MAAA
Shereen Sayre, ASA, MAAA
Alisa Swann, FSA, MAAA
Lydia Tolman, FSA, MAAA
Julie Wang, FSA, MAAA

At the Society of Actuaries Research Institute:
Achilles Natsis, FSA, MAAA, FLMI, Health Research Actuary
Ladelia Berger, Community Engagement Manager
Erika Schulty, Research Administrator

Questions or Comments?

Give us your feedback! Take a short survey on this report. Take Survey

If you have comments or questions, please send an email to research@soa.org.