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Specialty Drugs Driving Pharmacy Benefit Costs
The most expensive drugs affect the health care picture disproportionately

By Joanne Sammer  4/4/2011
 

Employers trying to keep a handle on their pharmacy benefit costs are finding that one element of pharmacy benefit programs is growing at a much faster rate than the rest. Specialty drugs, which include biologics, injectibles and other pharmaceutical innovations, are no longer an emerging category of pharmacy. They are a fact of life and a growing portion of overall pharmacy benefit spending.

“Specialty drugs still represent less than 20 percent of overall prescriptions—in many cases far lower than that—but these drugs continue to be the primary driver for increased costs,” said Brett Kelly, senior director with Navitus Health Solutions in Madison, Wis.

As these drugs become more important elements of treatment for patients suffering from cancer, multiple sclerosis, rheumatoid arthritis and many other conditions and diseases, not covering the cost of these drugs is becoming unacceptable. If patients can't afford a specific treatment, that could simply lead to greater hospitalization and other costs down the road.

Not surprisingly, the Pharmacy Benefit Management Institute’s (PBMI) 2010 Prescription Drug Benefit Cost and Plan Design Survey of 372 U.S. employers found that 82.1 percent of these employers cover specialty pharmacy drugs.

Given these facts, employers not only need to find the right way to manage the costs of these programs but also need to rethink pharmacy benefit cost management and cost containment overall. To manage the cost of these drugs, according to the PBMI survey, employers are most likely to:

Rely on ensuring a proper dispensing source (39.6 percent of survey respondents).

Have a multi-tiered cost sharing structure with a tier specifically covering specialty drugs (36.6 percent).

Curb waste (35.5 percent).

Manage inappropriate use (33 percent).

High Cost, High Touch

In the meantime, employers need to get a handle on the short-term costs of specialty drugs. The key characteristics of a specialty drug are “high cost, high complexity, high touch,” said Roy Wilkinson, president of Wilkinson Benefit Consultants, a pharmacy benefits consultant in Baltimore. He noted that a month’s supply of specialty drugs to treat multiple sclerosis can cost $2,500 to $3,800 a month.

With specialty drugs costs trending 19 to 20 percent higher per year, Wilkinson said that cutting that trend in half is an aggressive but attainable goal. However, he noted that “only about 45 percent of specialty drug spending gets channeled through the pharmacy benefit manager (PBM). The other 55 percent is in the medical plans and often doesn't get touched by the PBM.” Therefore, any effort to control specialty drug costs needs to take into account the care required during the administration of that drug.

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Specialty drugs costs are trending
19 to 20 percent higher per year.
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Specialty PBMs

Although any PBM can help employers manage specialty drug utilization, specialty PBMs offer more focused expertise. These PBMs can help manage specialty drug programs and costs by leveraging volume purchase discounts from manufacturers and providing access to patient assistance programs offered by manufacturers that help patients cover part of the cost of certain drugs. Employers that are using a regular PBM for their specialty drugs can negotiate the option to carve out specialty drugs for specialized management into their PBM contract.

A specialty PBM can offer a range of services unique to specialty drug usage. They can:

Manage patient care and monitor side effects or adverse events associated with a specific therapy and help patients understand what to expect once they initiate a therapy. In addition, some of these drugs, such as self-injectibles, often require some level of patient education to make sure that the drug is administered properly.

This mix of pharmacy benefit management and case management is an important part of specialty drug programs. Because many specialty drugs have significant side effects, there is a significant potential for waste if a patient with a three-month supply of a drug stops taking that drug after a couple of weeks because of a negative reaction. Having PBMs send out smaller amounts of medications that have a high discontinuation rate is one way to deal with this. For instance, rather than sending out three months worth of a medication, a PBM might send a 15-day supply during the first three months to avoid wasting the drug if the patient does not continue using it, Navitus Health Solutions' Kelly noted.

Monitor the effectiveness of a drug therapy and halt it if the patient is not responding. Health care providers can monitor viral load for patients using certain specialty drug therapies to treat Hepatitis C. With this type of close monitoring, the patient can switch to other therapies more quickly if he or she is not responding rather than waste time and money on a therapy that is not working.

Require patients to try a less-expensive therapy to see if that is effective before a more expensive injectible or other specialty drug.

Long-Term Impact

Rather than simply focusing on drug costs and utilization, employers can examine how specialty drug costs affect the larger health care picture, such as average length of hospital stay. For example, employers should note that many of these specialty drugs hold the promise to improve patient health to the point where the use of these therapies reduces the cost of other elements of health care costs.

“Employers can integrate medical and pharmacy data to isolate the utilization of those patients that are taking the specialty drugs,” said Sean Brandle, national pharmacy practice director with The Segal Co. in New York. “There is software available to track the utilization of a control group ranking specialty drugs vs. a group that is not taking specialty drugs.

This duel between the potential for broader long-term savings and short-term cost spikes is likely to become even more pronounced as new specialty drugs for widespread conditions like diabetes and heart disease come onto the market. Although the costs of such therapies are likely to be significant, they could pay off in better outcomes for those patients.

“This is an ideal opportunity for the integration of medical and prescription drug data,” said Brandle. “If an expensive therapy is effective, that could show up in terms of less absenteeism and greater productivity.”

Joanne Sammer is a New Jersey-based business and financial writer. Her articles have appeared in a number of publications, including HR Magazine, Business Finance, Consulting, Compliance Week and Treasury & Risk Management.

Related Articles:

Preferred Pharmacy Networks Can Cut Costs, SHRM Online Benefits Discipline, December 2010

Most Still Uninformed About Prescription Drug Costs, SHRM Online Benefits Discipline, December 2010

Incorporating OTC Drugs into Benefit Plans Can Lower Rx Costs, SHRM Online Benefits Discipline, October 2010

Individuals' Behavior Costs Billions Annually in Pharmacy Costs, SHRM Online Benefits Discipline, April 2010

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