This measure is important because it monitors our estimated net spend on pharmaceuticals and identifies any concerning changes in the spend trend. This assures that we are maximixing rebate opportunities and utilization management programs.
This performance measure estimates net drug spending by subtracting all rebates invoiced from gross payments to pharmacies. Net cost is driven by both pharmacy payments and rebates. Achieving the lowest possible net cost is driven partly by managing pharmacy reimbursement through optimal management of our pricing methodologies such as the State Maximum Allowable Cost (MAC) program and Specialty Drug MAC. In addition, rebate optimization is driven by tightly managing our Preferred Drug List (PDL). Factors guiding our PDL decisions include both clinical appropriateness and consideration of drug acquisition cost, federal and supplemental rebates. We manage non-preferred products through effective strategies such as prior authorization, quantity limits, and step therapy.
While we always see some fluctuations based on drug mix and seasonal variations, the trendline has been relatively stable. We did see some slight declines in gross and net spend in 2nd and 3rd quarter 2020 which are attributable to fewer prescriptions being filled in pharmacies during the COVID pandemic.
Narrative last updated: 12/03/2020