The burden of paying for specialty pharmacy drugs is a top concern for employers, compelling benefit advisers to take a more active role in their clients pharmacy benefit management and increasing the importance of the negotiating practices of pharmacy benefit managers.
Half of large employers say the cost of specialty pharmacy drugs is their second or third highest cost-driver, behind high-cost claims and special conditions, according to a recent survey by the National Business Group on Health. As employers consider their health plan designs, they "are very focused on specialty pharmacy drugs and the potential impact they have" on the company's bottom-line, says NBGH President Brian Marcotte.
Benefit advisers heeding their clients concerns have begun offering solutions to reign in the costs of these drugs, including programs to limit the quantity of the drugs dispensed at any given time, the use of prior authorization to confirm the necessity of the treatment, and even the use of a freestanding specialty pharmacy.
Specialty medications treat complex conditions such as hepatitis C, multiple sclerosis, cancer, HIV and rheumatoid arthritis and often require special handling, storage and administration. The Pharmacy Benefit Management Institute estimates specialty medications, which currently make up about 30% of total drug expenses, will increase to 50% or more of total drug expenditures by 2017 or 2018.
With the utilization and cost of specialty drugs continuing to rise, NBGH says 43% of large employers had developed a specialty pharmacy cost management strategy for 2014 and another 18% are planning to do so this year. Those cost management strategies include an increasingly important role for the pharmacy benefit manager.
I believe the rise of specialty drugs has made PBMs more accountable for the M in their name, says Bill Bacich, executive vice president of the pharmacy benefit management and employee benefit consulting firm Solid Benefit Guidance.
Plan sponsors expect to get the most for their dollar, and look to the PBMs to ensure that everything is being done to control costs while balancing member care, he says.
Just a few years ago, specialty drugs were truly special, meaning they were one of a kind. Today, many drugs arent so special anymore, with multiple competitors within a given therapeutic class. The increased competition leads to more aggressive price negotiations as no pharmaceutical company wants their drug locked out from coverage, he adds.
Managing the condition
Employers and their advisers hoping to successfully manage specialty drug costs, however, should not limit their negotiations to price and cost controls, but instead consider managing the condition for which the drugs are prescribed, industry experts agree.
Its no longer viable for any employer to look at specialty pharmacy in a PBM vacuum, says Nadina Rosier, the national pharmacy director for Towers Watson. They really need to look at specialty pharmacy more comprehensively.
As much as a client or employer pays for the drug, multiply that by three because thats how much they pay for the condition, she says.
Its incumbent upon benefit advisers to be far more aggressive with not only the PBMs, but the health plans to provide for more aggressive pricing and clinical management strategies that are outside the box of just negotiating price year over year, says Rosier.
Every employer is unique, and the most important role a benefit adviser can play, Bacich says, is partnering with both the plan sponsor and PBM to review each clients specific utilization to see where the areas of focus should be.
PBMs and health plans offer a suite of clinical and utilization management rules for all therapeutic classes that can help control costs.
The key for a benefit adviser is to help their employer clients navigate through these rule sets to implement those rules that are consistent with the plans overall objectives, he says.
The most common management techniques are the same as for traditional medications, including step therapy, prior authorization and quantity limits (including 15 day fills), according to NBGH.
Because many specialty drugs are injectable and may need to be administered by a health care practitioner, another important way to control specialty drug spend includes site of care management, meaning directing employees to less-expensive venues to have their medication administered rather than in a hospital.
According to the NBGH Large Employers 2015 Health Plan Design Survey, the percentage of employers using site-of-care management for specialty medications will nearly double from 10% in 2014 to 18% in 2015.
Another strategy growing in popularity with PBMs is the use of exclusionary formularies, lists which specify particular medications approved to be prescribed and, more importantly, reimbursed for, under a particular insurance policy.
PBMs have always contracted for rebates, Bacich says, which pharmaceutical companies view as investments.
For example, he says, if a pharmaceutical manufacturer provides a 10% rebate for preferred placement on a PBM formulary, their return on investment calculation is based on an expectation they should get at least a 10% increase in market share to break even on the rebate dollars invested.
Today, with PBMs getting aggressive with exclusion type formularies, it doesnt take a whole lot of math on the pharma side to figure out that an aggressive rebate investment of a high percentage is much better than your drugs market share going to 0% if you are locked out of the benefit, says Bacich.
Rosier says management controls should also address medication adherence to the drugs.
For example, she says, Towers Watson has a number of clients that have implemented first fill reports. When a patient is new to therapy on a specific specialty medication, the care management nurses outreach to that patient to make sure they understand how to take the medication, address any questions about side effects, and discuss any concerns financially or clinically that could impact that patients adherence.
Its difficult to quantify the savings from managing medication adherence, she says, so sometimes benefit advisers dont feel comfortable talking about these sorts of management controls.
Clients are hyper-focused on saving money, says Rosier. But the reality is that if patients dont take the drugs as prescribed and are not on the right medicines, it doesnt matter what drugs youve excluded from the formulary.
The benefits of approaching specialty pharmacy in a more comprehensive way will become more apparent to employers as specialty drugs become available for conditions affecting wider populations of people.
For example, in late 2015, Bacich says a new class of cholesterol lowering agents, PSCK9 inhibitors, is expected to enter the market.
More than 102 million American adults, 20 years or older, have high cholesterol, according to the Centers for Disease Control. Research on PSCK9 inhibitors released by the pharmaceutical companies developing them find the specialty drugs to be more effective than the current standard treatment for high cholesterol, statins.
Today, generic simvastatin can typically be obtained for less than $10 per month. These new drugs (while targeted for specific populations of patients) are estimated to cost $6,000 to $10,000 per patient per year, he adds.
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