Taking on the Specialty Drug Cost Challenge

Taking on the Specialty Drug Cost Challenge

Our Thinking / Healthcare /

Taking on the Specialty Drug Cost Challenge
Calendar19 February 2016

Much of the pressure driving up pharmacy benefit cost comes from specialty drugs. While some new drugs represent important breakthroughs in the treatment of complex diseases, the spike in the specialty drug cost trend rightfully has employers looking for creative strategies to manage cost growth.

There are at least three areas to consider: Sourcing (getting the best price for the drug), site of care (getting the best price for administration, since many of these medications are infused), and clinical management (establishing best-practice rules for the circumstances under which a specific drug is administered).

Here are some of the simpler strategies to discuss with your carrier or PBM:

  • Comprehensive site-of-care review. It may make sense to have some specialty drugs purchased through the medical plan rather than through the pharmacy plan; for example, oncology. In some cases, doctors can get these medications more cheaply than PBMs.
  • Exclusive specialty. All specialty drugs are handled by one provider as a way to obtain better unit costs. However, this is not always the best option, as it limits flexibility.
  • Specialty formulary. This strategy may be considered for drug classes where there is adequate competition, for example, four or more drugs with similar profiles.
  • Clinical rules audit. Reviewing current clinical rules (usually from the PBM or carrier, if drug benefits are carved in) compared to best practices.
  • Home health care. As part of a site-of-care review, consider the patient’s home as a venue for infused medication. This may require patient education to self-administer the medication, and is currently common in hemophilia and certain other disease states.

Larger employers may want to consider these more complex cost management approaches:

  • Specialty carve-out. Investigate these new specialty-only PBMs (Acaria Health, Magellan and Diplomat Specialty Pharmacy). While they aren’t mainstream yet, specialty-only PBMs -- which address sourcing, site-of-care and clinical rules -- will get more attention in next few years as specialty drug costs continue to rise.
  • Members with hemophilia may be able to access 340B pricing through Hemophilia Treatment Center. (The 340B Drug Discount Program is a federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices.)
  • 340B pricing. While this is far from mainstream, a few employers have established relationships with a local hospital, ACO and/or contract pharmacy to get deeply discounted specialty drug pricing. Note that the 340B program has some complex rules regarding patient requirements to access the better pricing so this fact should be included in any review of this option.

Cost for specialty drugs will continue to rise for the foreseeable future, and none of these strategies is likely to solve the problem once and for all. But with specialty drug costs now squarely in the spotlight, we’re starting to test innovative new approaches to cost management, and learning more about the trade-offs between medical and specialty drug costs. In other words, it’s far too soon to throw in the towel.

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