Pharmacy Cost Reduction Imperative at United HealthCare

Abstract

care organization (MCO) headquartered in Edina, Minnesota, recently instituted pharmacy benefits consolidation and streamlining that reduced its double-digit pharmacy cost trend to less than 6% in 1997, while improving customer and physician satisfaction through a three-tier pharmacy plan. The methods employed are expected to afford continued savings and benefits through 1998 and beyond. After United HealthCare acquired MetraHealth in late 1996, the organization served more than 13 million individuals across the United States through preferred provider, health maintenance, and exclusive provider organizations as well as through managed indemnity, point of service, group and individual Medicare, worker's compensation, and specialized provider network products. Approximately 7.5 million pharmacy lives were covered under thousands of different benefit designs, dozens of pharmacy networks, and more than a dozen different formularies nationwide. Each health plan independently managed its pharmacy program. Although United HealthCare had a pharmacy benefit manager (PEM), Diversified Pharmaceutical Services Inc., it became clear that consolidation and streamlining of pharmacy benefits was needed to reduce a trend in which other medical ex-