Specialty Drugs Pose Additional Challenges to Employers

Employers are constantly grappling with the areas that present the most significant costs to their business and how to effectively manage these costs for optimal outcomes. This is especially true for health care benefits, which have marked substantial growth in cost over the past few years, with specialty drugs playing a substantial role, according to the Employer Perspectives on Specialty Pharmacy: Continued Focus on Controlling Rising Drug Costs session presented at the Asembia Specialty Pharmacy Summit 2017.

While employers can see the high cost of specialty drugs—usually in the thousands—they are aware of large rebates; however, there is a lack of line-item accounting. Employers are now speaking up about a lack of transparency in the health care industry, largely driven by the high cost of specialty drugs. As a result, the panelists noted that employers are looking to make changes.

The issue of transparency is more than a decade old. Employers do not need to focus on transparency of all drugs, just the costly ones, according to the panelists. Employers are not focused low-cost generics, but are more interested in increasing the transparency of low-volume, high-cost specialty drugs that drive spending. With the shift towards transparency, there will be significant disruption in the health care industry that is similar to the disruptive impact to retail shopping that occurred when Amazon was created, according to the session.

During the session, David Dross, MBA, partner, National Pharmacy Practice lead at Mercer Health & Benefits, discussed the benefits of groundbreaking hepatitis C virus drugs compared with earlier therapies.

“If these drugs weren’t adding a lot of therapeutic value, it would be easy to not cover them,” he said.

While some plan sponsors may think that there would be substantial benefit by not including costly drugs, Dross advised that the therapeutic and financial impact of the drug must be balanced.

“Looking at the idea that there will be roughly 40 or so new specialty introductions each for the next 5 years. Those will bring $20 billion to $25 billion in new spend each year,” Dross said. “That’s the reason some plan sponsors are saying ‘can I just exclude them?’”

Employers are largely concerned that a low percentage of drugs are resulting in billions of dollars in pharmacy spend each year, with that number increasing annually. They are also concerned that the budgetary impact of new prescriptions is unknown at the time of approval and launch, according to the panel. Another issue raised by employers is that specialty drugs are managed by both the medical and prescription drug benefits, but are handled differently. Achieving consistency between medical and pharmacy benefits is key to optimal cost containment, according to the panel. 

With specialty drugs accounting for a substantial portion of pharmacy spend, employers are searching for new ways to manage these costs. While some employers have reduced costs by not covering certain drugs, others have varied benefit partnerships. Developing new relationships for specialty drug management can be used by employers to potentially reduce drug costs, according to the panelists.

In the public sector, most Medicaid plans typically use specialty pharmacies as a manager and rebate aggregator. While placing the Medicaid model into the private sector would prove difficult, there is still more that employers and plan sponsors can do to bring innovation to specialty drug management, according to the panel.

“Specialty pharmacy is going to continue to deliver breakthrough care opportunities. It’s also going to be one of the biggest contributors to the health and benefits trend—that’s not going to go away, that’s going to continue,” Dross concluded.