April is Stress Awareness Month. Let SHRM make your work life easier: Join Now
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Expensive biologics are key culprit driving up health care spending
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Employees face growing challenges in paying for expensive specialty drugs, according to a new report that examines initiatives by employers and policymakers to control rising pharmaceutical costs.
The National Business Group on Health (NBGH), a Washington, D.C.-based association of 420 large U.S. employers, recently released
Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals. The report notes that spending for specialty medicines, including biological drugs manufactured using living organisms, is projected to overtake spending for traditional pharmaceuticals over the next several years.
"With spending on specialty drugs skyrocketing, large employers, and employees who use these medications, are struggling to manage rising costs," said Brian Marcotte, NBGH president and CEO. "Most employers we surveyed now rank specialty pharmacy as the No. 1 driver of rising costs" for health care.
In November 2015, the AARP Policy Institute in Washington, D.C., prepared
a study of 115 specialty drugs and found that:
Since the study, the rising costs for specialty drugs haven't slowed, benefit specialists say.
What Can Employers Do?
"Specialty pharmacy is different from other medications in many ways, including having a tendency to be much more expensive—some meds cost in the tens of thousands of dollars per treatment," said Steve Wojcik, NBGH's vice president of public policy. "As a result, we are seeing growing numbers of employers, along with their health plans and pharmacy benefit managers, implementing many [cost-control] techniques."
NBGH's annual Plan Design Survey of large employers, noted in the group's report, found that respondents were:
"While reducing or removing policy obstacles to better pricing will be a major step forward, the real solution must involve manufacturers," Marcotte said. "Ultimately, they will need to address the growing concerns about pricing and adopt pricing models that respond to and better reflect those concerns."
"High specialty pharmacy prices are facing growing public and political pressure," Wojcik agreed. "Combined with employers' concern over their ability to manage rising costs, we believe now is the time to review public policies that influence the pricing, prescribing and administration of specialty meds."
[SHRM members-only toolkit: Managing Health Care Costs]
Rising Drug Costs Require Greater Retirement Savings
Projected savings by employees to cover their health care in retirement went up last year after several years of decline, according to new research by the nonprofit Employee Benefit Research Institute (EBRI) in Washington, D.C. The main reason: out-of-pocket spending for prescription drug use, said Paul Fronstin, director of EBRI's health research and education program and co-author of the February report,
Savings Medicare Beneficiaries Need for Health Expenses: Some Couples Could Need as Much as $350,000.
EBRI found that, in 2016, a 65-year-old man would need $72,000 in savings and a 65-year-old woman would need $93,000 if each had a goal of having a 50 percent chance of saving enough to cover their health care expenses in retirement. If they wanted a 90 percent chance of having enough savings, the man would need $127,000 and the woman would need $143,000.
Those with high prescription drug costs would need to save substantially more. For a married couple both with drug expenses at the 90th percentile throughout retirement who want a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings would be $349,000 in 2016.
Related SHRM Articles:
Costs Care Management Vital in Tackling Specialty Pharmacy,
SHRM Online Benefits, February 2017
Employers Prepare for 2017 Drug Price Hikes,
SHRM Online Benefits, October 2016
Attention Turns to Specialty Pharmacy,
Benefits Quarterly, May 2017
Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Now and let SHRM help you work smarter.
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.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies