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Alaska Care Plan auditors, PBM practices credited with multimillion-dollar prescription savings
Summary
State health administrator told the Senate subcommittee the Alaska Care Plan uses formularies, specialty pharmacy contracts, audits and market checks; a recent market check produced $10.7 million in improved pricing for the retiree Medicare drug plan and federal subsidies return over $100 million annually.
The Senate Finance Subcommittee on March 17 heard a detailed summary of cost‑saving practices used by the Alaska Care Plan to manage prescription drug costs for active employees and retirees.
For the record, Steve Ramos, chief health administrator for the Alaska Care Plan within the Department of Retirement and Benefits, described a suite of measures the plan uses: premium formularies constructed to maximize rebates, use of a specialty pharmacy that lowers specialty-drug costs by about 2 percent, quantity limits, utilization management, prior authorizations, an orphan-drug review process, and incentives for home delivery.
“Basically, our PBM sells us drugs cheaper than anybody else. It's part of our contract with them to give us discounts on drugs in aggregate,” Ramos said. He added that the state audits both drug claims adjudication and rebates; auditors sign nondisclosure agreements to verify aggregate rebate returns that the plan receives.
Ramos told the committee the plan conducted an annual market check that yielded a $10,700,000 improvement in pharmacy pricing for EDGAR, the Medicare plan for retirees 65 and older. He also noted the Employee Group Waiver Plan (EGWP) — the Medicare prescription drug arrangement for retirees — returns just over $100,000,000 a year in federal subsidies.
When Senator Bjorkman asked why the pharmacy benefits manager (PBM) did not surface that $10.7 million without a market check, Ramos explained the contract is six years old and market conditions change; the market check is a competitive pricing review followed by renegotiation with the PBM.
Committee members asked follow-up questions but did not take legislative action at the hearing. Ramos said the department continues auditing and market-checking vendor performance and pricing as part of its ongoing benefits administration.
