December 29, 2020

Pharmacy Trends to Watch

As the specialty drug pipeline grows, employers should consider these 3 strategies to manage pharmacy costs.

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As we enter a new year, the pipeline of specialty drugs continues to grow at a rapid pace. While less than 5% of people use specialty pharmacy benefits, they may account for more than 50% of an organization’s pharmacy spend1. High-dollar specialty drugs can take a big hit to a company’s bottom line. The more self-insured organizations know about strategically designing their plan benefits and specialty drug requirements, the better they will be able to maintain prescription drug benefits for their members this year and beyond.

We look at three strategies that organizations should considering implementing into their pharmacy benefit plan to help address the rising costs of specialty drugs.

1). Pass-through PBM contract and how it affects specialty drugs:

Despite the heavy financial impact to plan sponsors, specialty pharmacy medications can be a very large source of revenue for Pharmacy Benefit Managers (PBMs).

Quite often the PBM:

– Manages the prior authorization process

– Owns the specialty pharmacy

– Receives rebate revenue from the manufacturers

In this scenario, the PBM decides what drug is filled, who should receive the medication, and where it will be filled, which can be a conflict of interest. Prior authorization should also be managed by an independent third party.

It’s important to understand how your PBM contract is structured to ensure the pharmacy arrangement works in your company’s best interest. Consider a pass-through agreement or a PBM that does not own the specialty pharmacy.

With a pass-through PBM contract, all pharmacy costs are fully disclosed and transparent. The PBM passes all retail discounts and rebates directly to the plan sponsor. This is important because it makes certain that the PBM is aligned with the company’s goals and has its best interests in mind. Having a pass-through contract should allow an employer to carve out any portion of the benefit if your PBM is not effectively managing your benefit.

A pass-through contract offers the employer greater control over its pharmacy spend, which provides an effective long-term strategy when monitoring healthcare costs and drug coverage options.

2). Aligned benefit design:

It’s important that employers design their coverage options to control costs now and in the future for the types of specialty medications they’re looking to cover. Your specialty pharmacy benefit should be separate from the copays your participants pay for non-specialty medications. In fact, your specialty benefit should be more closely aligned with your medical benefit. Copay assistance will cover a vast majority of the member responsibility. The member is also protected by their annual out-of-pocket maximum.

Why should a member who receives $40k of treatment through their medical benefit pay more than another member receiving $40k of treatment through the pharmacy benefit?

A plan sponsor must have their benefits tightly managed so they have a plan in place if or when a member needs a life-saving treatment that only a specialty drug can offer. Strategies such as requiring prior authorization for all drugs that cost over $1,000, exclusion of non-essential drugs, step therapy, 90-day retail, a smaller network, and balanced copay design should all be considered.

3). Copay and patient assistance programs:

Recent guidance from the Centers for Medicare & Medicaid Services (CMS) allows plans to exclude copay assistance dollars from a member’s deductible and/or out-of-pocket maximum. Organizations can design their plans in a way that works with their PBM to ensure copay assistance is not accumulated towards the member’s out-of-pocket. If you haven’t done so already, speak to your PBM about their program that maximizes copay assistance from the manufacturer.

Alternate funding programs are also available that target patient assistance. Patient assistance programs are usually sponsored by pharmaceutical companies, state programs, and non-profit-sponsored programs/foundations with a goal to provide financial assistance to patients so they can access medications for little or no cost. These patient assistance programs, however, are intended for members who do not have commercial coverage through their employer.

Aligning with a trusted partner is critical to successfully managing your specialty drug costs. For more PBM best practices, view our recent Insight article, or contact a member of our team.



1). Willis Towers Watson Best Practices in Health Care Employer Survey