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Specialty drug conflicts of interest: Employers must act now to control the chaos

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Specialty drug costs have continued to escalate by double digits year over year, representing 35-55% of a plan sponsors total pharmacy spend. At the same time, less than 2% of the scripts drive upwards of 50% of the pharmacy plan spend. With these stats it’s no surprise that employers identified “managing specialty drugs” as the highest priority for benefit directors in a Midwest Business Group on Health survey.

To make matters worse, pharmacy benefit managers (PBM) who own the specialty pharmacy continue to complete their own prior authorizations for specialty drugs. Employers footing the bill should be concerned about this clear conflict of interest for the PBM. Employers don’t let hospitals complete their own pre-certifications for surgeries and they don’t let the hospital determine the length of stay. Employers use an independent pre-certification strategy for two obvious reasons patient protection from unnecessary surgeries and procedures and a fiduciary responsibility to the plan assets.

The specialty drug conflict of interest doesn’t mean the PBM’s have done anything wrong, illegal or even unethical. It’s just a conflict of interest. If every specialty drug the PBM approves has the potential of generating revenue for the PBM and/or for the PBM’s specialty pharmacy then conversely every specialty drug the PBM denies has the potential of costing the PBM and/or it’s specialty pharmacy revenue, thus diminishing profitability.

In order to maximize the plans fiduciary responsibilities a contract with appropriate terms and definitions mut be in place to allow the plan to exercise their right to carve-out prior authorization.

A carved-out prior authorization of specialty drugs provides:

  • Proactive, patient protection from unnecessary specialty drugs that are often powerful and potent medications with potentially harsh side effects.
  • Mitigated risk and fiduciary responsibility in managing the plan assets.
  • Financial savings/discounts from stop loss carriers who also encourage a carved-out, independent prior authorization.

An independent prior authorization of specialty drugs that leverages evidence-based medicine ensures access to medications proven safe and effective while at the same time providing cost control for the plan and member

Plan sponsors are under increased pressures to mitigate risk, optimize plan performance and generate savings for the plan and the participants now more than ever. As our country returns to “normalcy,” benefits buyers can contribute to short and long-term recovery of lost revenue by partnering with consultants and risk managers who take the work off their shoulders. It’s not always easy to find trusted sources which is why employer resources such as EmployeRxEvolution, a service through the Midwest Health Purchasers Collaborative, a subsidiary of the non-profit Midwest Business Group on Health, exist.

For employers that already have a quality contract in place with their PBM, it’s important to act now to incorporate an independent review of all specialty drug prior authorizations. If the contract has language that prevents the plan from contracting for independent reviews, then it’s time to have an independent non-biased consultant renegotiate the contract.

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