By Cole Wilson, AVP Pharmacy Services, Carolinas HealthCare System
As medicine advances and we create treatments for an ever-growing list of conditions, the number of specialty drugs used to treat these conditions has expanded at an equally rapid pace. In 1990 there were approximately 10 drugs on the market that met the definition of “specialty drugs.” By 2015, there were approximately 300 specialty drugs available in the US, with an additional 700 in development.
Specialty drugs are pharmaceutical therapies that are either high cost, high complexity and/or high touch. One example, available only through specialty pharmacy (SP), is interferon beta-1a (Avonex), a treatment for multiple sclerosis that requires a refrigerated chain of distribution and can cost around $17,000 a year.
Most pharmacies share a standard business model of generating a small amount of profit on large sales volume against thousands of different products. Specialty pharmacies however, generally sell a handful of extremely high margin products and often invest a portion of sales into R&D for other drugs, or to fund the free distribution of a small portion of production. You may be starting to see what this all means for employers and healthcare costs associated with specialty pharmacy.
Recent research has discovered that employers are challenged by several aspects of specialty pharmacy, with the cost of specialty drug treatment topping the list. And rightfully so. Chronic conditions that continue over a lifetime can generate specialty treatment costs of well over $100,000 per year. A common adage used when referring to SP is that 1 percent of the population drives 30 percent of the drug costs, meaning that smaller organizations who employ just one or two employees requiring specialty treatment can get hit hard by specialty drug costs.
There are ways employers can manage the rising costs of specialty drugs, though none have been uniformly adopted by the wider business community because the method that’s best for each employer generally depends on the unique characteristics of individual businesses. Management methods are generally informed by the size of the organization, with businesses between 100 and 4,999 employees feeling the tightest pinch from the expensive medications.
The most effective approaches to managing increased cost associated with SP should be integrated and multifaceted to cover all bases. Here are a few ideas identified in a recent survey of employers conducted by the International Society of Certified Employee Benefit Specialists:
Understand the interface between specialty drug coverage and pharmacy benefits. Different types of drugs, where they’re administered and where the prescription is filled all influence drug cost and coverage. Employers seeking to play an active role in specialty drug management should have a thorough understanding of the basics.
Offer an integrated specialty pharmacy management solution. Site of care, administration, specialty drug coverage and care management all impact health outcomes and the total cost associated with each specialty drug. An integrated approach includes all aspects of control available across pharmacy and medical benefits. This helps ensure employees get timely treatment, the correct drug, in the right place, and receive coverage for the benefit.
Ensure reporting for medical and pharmacy benefits are complete and coordinated. Lack of comprehensive, consistent specialty drug reporting across both benefits often results in uninformed decision making. Simply shifting costs between benefits means they’re not being well managed.
Ensure clinical management is at the core of specialty pharmaceutical management. If not aligned with clinical best practices, management strategies can suffer. Find or create strategies centered on drugs with documented clinical and “real-world” outcomes. Sometimes drugs with a higher price tag can result in lower overall costs because they provide better health results.
Evaluate specialty pharmaceutical channels and sites of care to ensure clinical appropriateness. After evaluating a drug’s clinical applications, consider the cost/benefit of the location the drug is administered and where the prescription is filled. There are many methods available to direct prescribers and employees toward lower costs pharmacies and clinically appropriate sites of care.
Provide care management as part of a comprehensive management strategy. Care management programs are hugely important for those living with chronic conditions that can be treated only with specialty drugs. Outreach from health plan case managers or care management specialists from specialty pharmacies is a great example of effective care management. Medication adherence is greatly improved when employees use these resources.
How does your organization handle specialty pharmacy benefit administration?
