Montgomery County IU 23: Countywide Self-Insured Prescription Drug Program Saves $19 Million

 In only two and a half years, members of a consortium facilitated by Montgomery County Intermediate Unit 23 (MCIU) saved more than $19 million in prescription drug costs.

Together, 20 Montgomery County school districts and other schools decided to move from a fully insured prescription drug program with a major insurer to a self-insured prescription drug program in 2010.
“The aggregation of over 11,000 employees and their dependents provided a very attractive purchasing volume to the pharmacy management markets. As a result, the self-insured program has been very successful in reducing school employee health care prescription costs – a big-ticket item for school districts and other local education agencies,” said Stan Wisler, MCIU CFO/ Director of Management Services.   
Under self-insurance prescription plans, employers pay the costs of pharmaceuticals directly, instead of through premiums paid to insurers. The consortium saved by contracting prescription administration and price negotiating to pharmacy benefits manager Future Scripts. In its three-year deal, Future Scripts guaranteed an aggressive pricing schedule for significant savings, based on the consortium’s group-buying power. An initial investment of $150,000 to $200,000 funded consultants, legal costs for document development, and other administrative costs.
Fully insured, the consortium members spent $27 million a year on prescription-drug premiums. Self-insured, they saved $1.3 million in the first six months of 2010, $7.3 million in 2010-11, and $11 million in 2011-12.

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