Specialty drug costs continue to vex employer-sponsored health plans
To address high costs, plan sponsors are trying a variety of approaches.
A new report from Pharmaceutical Strategies Group finds that specialty drugs continue to be a top focus for plan sponsors, in part because they tend to be very expensive.
The drugs tend to also be highly complex and require special handling or administration, the report noted. At the same time, the drugs can have great value: extending life for some patients and keeping them productive and relatively healthy, even when conditions are not cured outright.
Related: ‘Super spenders’ accrued $2.1 billion in specialty drugs costs
“Today, advances in drug therapy allow many patients living with conditions treated by specialty drugs to live decades longer than in the past,” the report said. “As a result, today, many specialty drugs are being used as long-term, chronic therapy for a significant portion of patients.”
Very high costs lead to an “appetite for disruption”
The report noted, as many other sources have, the financial burden that specialty drugs present, both to plans and to enrollees. “Patients who use specialty drugs often have additional health care costs such as non-specialty drugs, doctor’s office visits, outpatient hospital visits, and lab testing to monitor their condition, among others,” the study said. “The monthly total cost of care for a member who uses at least one specialty drug averages $4,846 for the plan and $574 for the member. Annualizing these costs equate to average plan costs of $58,157, and average member costs of $6,894, using the monthly average. These costs are in addition to health care premiums and deductible costs.”
To address high costs, plan sponsors are trying a variety of approaches, the report said, including the use of prior authorization, step therapy, and quantity limits as management strategies. More than 50% of employers use at least one strategy to increase the use of biosimilar drugs. And 8% of plans are currently using alternative funding models, while 31% are exploring their use.
An eye on utilization—but complexity remains a problem
Plan sponsors also are putting a premium on appropriate utilization. This is by far the top priority of plan sponsors, the report found: 37% said reducing inappropriate utilization of specialty drugs was a top goal. The next-highest goal was reducing patient out-of-pocket costs (18%), followed by improving specialty drug adherence and persistency (15%).
The report also stressed the importance of reporting on a plan’s drug spend: “Timely, accurate, and actionable reporting is key to measuring how a plan is doing in specialty drug benefit management,” the report said. “When done well, reporting can highlight areas of opportunity to improve clinical and financial outcomes.”
Among the barriers to reporting is the fact that patients with these conditions often see multiple doctors at multiple facilities. In addition, a single patient’s prescriptions often cannot be filled all at one facility, adding to the complexity.
PSG officials said there was a range of reporting for different areas of specialty drug utilization: “More than 80% of plan sponsors have access to reporting on their total health care costs,” said Tracy Spencer, senior vice president and practice leader of employer groups, labor, and health systems at PSG. “However, clinical outcomes of adherence, persistency and clinical efficacy were reported less often (71% and 31%, respectively). The impact of specialty medications on employee productivity had the lowest reporting rate at 23%.”
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