Employers continuing to struggle with increasing health care costs now identify specialty pharmacy drugs as a top cost driver, and many are looking to their benefit advisers for tactics with which to control their medical plan’s drug spend.

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. Brian Marcotte, NBGH’s president, calls the concern “significant,” considering specialty pharmacy currently impacts only about 2% of the population, but advancements in the manufacturing of these expensive drugs threaten to greatly increase the number of employees using them.

As employers consider their 2015 health plan designs, they “are very focused on specialty pharmacy drugs and the potential impact they have” on the company’s bottom-line, says Marcotte. Benefit advisers can add value by offering solutions to reign in the costs of these drugs, including programs to limit the quantity of the drugs dispensed at any one given time, the use of prior authorization to confirm the necessity of the treatment, and even the use of a freestanding specialty pharmacy.  

“Benefit advisers should make sure employers are utilizing all of the specialty clinical programs offered by the medical and pharmacy vendors for their benefits,” says Brenda Gagnon, a pharmacy benefit adviser and president and CEO of the health care consulting firm B.M Gagnon Associates.

This is especially true in light of the fact the utilization of the drugs is bound to increase. “Current estimates for specialty medications are that they will cost an employer 50% to 60% of their total health benefits by 2016,” says Gagnon.

That’s true not only because the high cost of developing and manufacturing the drugs is reflected in their high price tag, but also Gagnon says, because “drug manufacturers have put more effort into finding more than one drug therapy for the drug.”

For example, she notes, AbbVie’s Humira is used for rheumatoid arthritis, Crohn’s disease, colitis and psoriasis.

Research and development costs are “passed onto the employer when an employee is taking a specialty medication,” Gagnon adds, saying the cost of the drugs can be anywhere from $1,200 to $12,000 a month, depending on the disease.

Utilization controls

An employer client has no control over the high price tag on these drugs, says Michael Zucarelli, national pharmacy practice leader for the employee benefit and financial firm CBIZ.

Where benefit advisers can help employers tame their client’s drug spend, however, is through health plan options designed to manage these drugs’ utilization, he says.

First and foremost, plans should have some sort of appropriate use protocol or prior authorization. Such a procedure would ensure claims are reviewed to make sure the drugs are safe and effective for the employee, as well as safeguard the plan financially, suggests Zucarelli.

In addition, employers have an opportunity to manage drug use as the number of specialty drugs available to treat any one disease expands, creating competition within the drug classes.

Employers “can now become a little more creative in how they set up their plan. They may prefer one or a couple of treatments over another,” he says.

This can be designed as a formulary in which a less expensive drug option would be covered at 100% and the more expensive option would require the employee to pay 100% of the cost share, he says. Otherwise, it can be set up as a step-therapy program, in which the more expensive drug cannot even be used until the less expensive option has been tried and failed.

“We’re seeing plan sponsors look at that as an option and more are adopting it,” says Zucarelli, adding that he typically advises employers to institute a step-therapy program as soon as possible, while it affects only a small number of plan members.

Advisers can also work with employers on channel management, Zucarelli suggests, saying employers should have a consultant, pharmacy benefit manager, or medical plan carrier evaluate where the drug spend is to gain visibility and look at opportunities for site-of-care management.

“Maybe a patient is getting a particular specialty drug in a hospital infusion suite and that may not be the most convenient or cost-effective treatment,” he suggests.

Gagnon agrees employers can use a third-party consultant company like Artemtetrx, which uses data analytics to evaluate claims data and identify high drug spend and opportunities for cost management across clinical management, reimbursement management, site of care management and plan design.

When an employer client raises a question about a high-dollar claim, Zucarelli says the plan’s PBM or carrier could also be asked to do a case review and insure the patient is taking the high-cost drug for an appropriate use.

“Unfortunately, once an employee is on a certain drug, it’s hard to get them off of it or switch it,” he says, adding that that’s why he suggests employers get a lot of these tactics in place now, before the use of the drugs increases, which is inevitable.

“Getting these management techniques in place now is going to further minimize disruption,” he adds.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access