Traditional plan design strategies – focused on managing costs and clinical outcomes – has been part of pharmacy benefits for over 25 years. However, the identification of employer and industry best practices and proven strategies to more effectively manage specialty drugs has yet to clearly emerge. Although 85% of employers are still using traditional benefit designs for specialty drugs, others are looking to the future by reprioritizing what they are currently doing. An overview of what they are currently doing versus what they plan to do in the future includes:
- 45% increase in selecting a narrow network that will assume the risk
- 45% increase in offering no drug formulary (cost sharing is based on whether drugs are lifestyle/convenience based (higher cost share); business preserving or life-saving (lower cost share)
- 41% increase in structuring specialty as a carve-out
- 17% increase in considering a single benefit incorporating drugs into the medical plan
- 10% increase in shifting more cost to the employee
- 34% decrease in using traditional plan designs
- 15% decrease in adding a specialty tier
- 13% decrease in including vendor management guarantees in contracts
Although employers are more focused on specialty drug management than in the past, they are still relying on third-party vendors to manage this challenging benefit. This is of significant concern given the PBM price transparency issues and ongoing cost increases from the middleman (e.g. PBM, health plan, distributor, wholesaler).
Employers must identify and implement new financial risk models and health management strategies specific to specialty drugs to get the most value for their health care dollar. This might require re-evaluating their entire benefit design strategy to determine where gaps exist in plan performance and clinical outcomes. Download a pdf of the Employer Checklist for Designing Specialty Drug Benefits to get started.
Most employers recognize the importance of implementing key tactics to effectively manage specialty drug costs. MBGH Survey results cited the 5 top cost and patient outcomes strategies as follows:
There is also increasing use of cost-shifting by employers as a way to address the higher costs of specialty drugs. Today, more progressive employers are focused on a multi-faceted approach that adopts new strategies to effectively manage costs and patient outcomes. Below is an overview of the overarching elements for inclusion in a comprehensive plan design:
- Identification of those with high-cost chronic conditions who have poor drug adherence and PBM or other vendor programs to help improve compliance
- Clinical coverage rules, such as prior authorization and step therapy to ensure appropriate utilization for conditions such as MS and RA
- Coverage requirements that eliminate redundancy and conflicts across medical and pharmacy benefits – e.g. high out-of-pocket costs for oral medication in the pharmacy plan can motivate the patient to seek treatment in the medical plan thus increasing total plan sponsor cost – see next section on Medical vs Pharmacy Benefit
- Coordinated care/case managenet that is also integrated with other programs to avoid duplication
- Aggressive negotiation of financial and non-financial contract terms with the PBM to capitalize on today’s buyer’s market
- Proactive clinical management programs to ensure optimal pricing, appropriate use and avoidance of high-cost hospitalizations
- Drug channel management that ensures specialty drugs are dispensed through the most cost-effective and efficient pharmacy delivery channel — retail, mail order or specialty pharmacy
- Benefit communication materials delivered in coordination with specified date from company as plan sponsor to its employees/members
- Use of value-based benefit strategies – e.g. for drug and treatment adherence and to incent people to the lowest cost site of care for drug administration
While employers are developing or modifying existing plan design coverage options, they should also consider the following emerging technologies and trends to help them prepare for the future.
- Use of biosimilars and other drugs – Biosimilars are being developed to serve as lower cost options to biologic drugs, but are not identical replacements for specialty products
- Coverage for individualized drug therapy – This therapy ensure that drugs work in the people that use them by supporting the personal biological or genetic make-up of each patient and how it impacts the effectiveness and dose of the drug used
- Increased use of vaccinations for both prevention and chronic condition management
- Use of comparative effectiveness research – Offering clinical comparisons between drugs, treatments and other devices to make more knowledgeable choices among options within the same drug category
- Increases in the number of expensive specialty drugs in the same disease category
- Use of gene therapy to treat disease – An experimental technique using genes/DNA to treat or prevent disease that would allow doctors to treat a disorder by inserting a gene into a patient’s cells instead of using drugs or surgery.