Strategies for employers to control the rising cost of specialty drugs

The COVID-19 pandemic has exacerbated the focus on already burgeoning challenges for employers — especially when it comes to the skyrocketing costs of specialty drugs. In the current economic climate, this puts significant strain on employers already facing tough decisions around employee health benefits. In fact, the U.S. specialty market is expected to hit $310 billion by 2023, and 75% of the nearly 7,000 medications in development are specialty drugs.

Read more: 6 ways to mitigate specialty drug costs

This rise in costs has been largely driven by two dynamics — increasing utilization and rising drug prices. Utilization is increasing as a result of an expanding patient population and as people age into certain chronic, complex diseases. In fact, the number of people aged 65 or older is anticipated to increase to 1.5 billion by 2050, up from just 524 million in 2010. The list prices for specialty drugs have also been rising rapidly over the past decade. For example, spending on all medicines used in the treatment of patients with cancer reached nearly $150 billion in 2018, up 12.9% from the previous year, and by 2023, oncology spending alone is projected to reach nearly $240 billion.

Patient impact
The stakes are equally high for patients. Specialty medications treat many complex conditions, such as cancer, hepatitis C and multiple sclerosis. These often life-changing treatments can dramatically improve, and sometimes cure, a condition. We’ve seen this in hepatitis C, and now gene therapies are hitting the market with the promise to revolutionize quality of life and outcomes for patients. However, data shows that about 63% of patients faced financial challenges following a diagnosis, for example, with cancer.

The challenge for employers is how to pay for the high price tag that comes with providing coverage for these therapies. In some cases, the financial burden could bankrupt small to midsize employers and self-insured plans. The result: a cost and care conundrum for employers as they aim to control specialty drug costs while enhancing clinically appropriate care for plan members.

Navigating a complex market
There are many specialty management solutions in the marketplace that promise to help employers mitigate rising specialty drug costs and protect their bottom line. Here are some emerging learnings we’re seeing in specialty benefit management and important factors for employers to consider as they balance cost and care:

Innovative cost management should not compromise member care. The best way to maintain high-level care while reducing cost is by finding areas of waste. This can include inappropriate utilization, and inefficiency along with having strong negotiating power with manufacturers to deliver lowest net cost to payors. An integrated specialty management model will ensure a member starts and stays on the most clinically appropriate therapy at the lowest cost.

Accreditation is key. Accreditation validates compliance with pharmacy benefit management standards as well as all state and federal regulations, licensing and other regulatory requirements as applicable. In addition, accreditation ensures a partner has an appropriate operational and clinical infrastructure, and altogether, offers independent, third-party assurance of quality services.

Connected specialty drug management that treats the whole patient is critical. Members on specialty medications need more than just a pharmacy to dispense medications. Integrated benefits should include high-touch digital resources, access to disease management support from specially trained clinicians, integrated electronic health records that help providers keep pace with care, and other tools that help them start and stay on the most clinically appropriate treatment. This type of member-focused approach can also help avoid downstream medical costs due to complications or disease progression. Further, research has shown that specialty benefit management programs for patients with specialty conditions such as multiple sclerosis, for example, are associated with better outcomes.

Use of nonprofit patient assistance to offset the member cost-share of expensive specialty medications. These assistance programs play an important role in helping the uninsured and under-insured access medicines. Instead, employers should help members access manufacturer-sponsored copay cards, when appropriate, and employ a copay optimization program, as part of their integrated specialty plan design. This will help keep their medications affordable without driving high plan sponsor costs while ensuring members have access to additional support through connected specialty pharmacy management solutions.

International specialty drug sourcing comes with inherent risk. International firms work directly with the member, taking the payor out of the “equation” altogether. However, the trade-off is that the substitution of FDA-approved prescription drugs with unapproved, or even counterfeit, versions that may have substantially different risk profiles can pose serious health dangers to consumers, especially in vulnerable patient populations.

While a piecemeal or carved-out approach to specialty benefit management may seem like a cost-saving solution, it may not be in the best interest of plan sponsors or their members as it perpetuates a fragmented, siloed system, may compromise member care and can actually increase employer costs.

At all times — but particularly amid the ongoing pandemic — clinically appropriate access to specialty medications is critical. In today’s highly dynamic and uncertain marketplace, I believe an integrated specialty benefit with innovative plan design and a connected model can effectively put the brakes on specialty spend, delivering value to employers and better care to members.