October 9, 2019

Specialty Medications Could Account for 50% of the U.S. Drug Spend This Year

5 Best practices your company needs to know to help avoid skyrocketing prices.

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Insight provided by Bryan Klazinga, VP of Pharmacy Benefits

Pharmacy Outlook

Specialty and high-cost medications continue to dominate the news. Health plan sponsors are rightly concerned about the possibility that their medical costs could skyrocket if a few of their members started treatment. With the pipeline of new medications on the rise, and the introduction of gene therapies, it’s important for organizations to take a step back and review strategies that may help them control the utilization and spend of high-cost medications. Read on to learn about five best practices that can help companies manage their medication costs.

5 Best Practices:

Managed Benefit Design – The first strategy that must be employed in order to pay for life saving cures is that plan sponsors must have the rest of their benefits tightly managed. Strategies such as requiring prior authorization for all drugs that cost over $1,000, exclusion of non-essential drugs, step therapy, 90-day retail, smaller network and balanced copay design should be considered.

Independent Prior Authorization Review – In many cases, the PBM that manages the prior authorization, not only owns the pharmacy dispensing the product, but also maintains the relationship with the manufacturer who often has a say in the review criteria. This can be a conflict of interest. Companies can help mitigate this issue by working with an independent party that can manage the prior authorization process for them.

Copay Assistance – Recent guidance from 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.

Coinsurance on Specialty Medications – In order to maximize assistance without significantly impacting the member, companies could look to provide 20% coinsurance with no maximum for specialty brand medications.

Temporary Exclusion of Certain Specialty Drugs – There are many questions that are unanswered when a new drug comes to market. Are there other medications in the same class?  Is the medication safe?  What prior authorization criteria should be established?  These are all questions that need to be answered before a plan sponsor pays for a high-cost medication.

In the News: What else is happening in regards to high cost medications?

There are several other strategies that companies are looking into to help control their specialty medication costs. However, some of these options may not be as viable. Here are a few other approaches that some organizations may be looking into:

  • Exclusion of Specialty Medications – Some organizations have designed their health plans to completely exclude specialty medications in order to take advantage of patient assistance. This strategy allows access to dollars from manufacturers and foundations because they are not covered by the plan. However, the question remains if the plan should cover the cost for patients who do not qualify for assistance.
  • International Pharmacies – There can be significant savings with the use of other first world country pharmacies. However, the legality of the practice has always been in question.
  • Medical Tourism – There is no doubt that certain treatments are much cheaper in other countries, but the concern over patient safety has curbed its appeal.
  • Insurance for Select Gene Therapies – Some organizations are beginning to offer coverage for gene therapies for a flat fee per member, per month. This may have appeal to companies that want to limit their risk. However, these programs are very new and cover only a few select products.

The more you know…

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. In just a few years, 1-2% of your population could account for 50% of your pharmacy spend1.  Hard decisions about the benefit design will need to be made to sustain the benefit long term.  These strategies are meaningful actions for companies to stay ahead of their pharmacy costs.

For more guidance on planning or evaluating your pharmacy benefit management strategy, contact a member of our team today.

Source 1: https://www.pharmacytimes.com/news/something-has-to-give-balancing-specialty-drug-cost-with-value