No HR professional is exempt from the planning.
Take the work out of creating and maintaining an employee handbook.
SHRM Seminars will host HR education every month in San Francisco this fall! Select the program that meets both your scheduling and development needs.
Join us, September 27 - 28.
The most expensive drugs affect the health care picture disproportionately
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:
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.
Specialty drugs costs are trending 19 to 20 percent higher per year.
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:
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.”
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.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies