Specialty drugs have revolutionized the treatment of patients with life-threatening conditions. Many patients suffering from hemophilia, cancer, rheumatoid arthritis, or rare conditions such as Gaucher disease and severe combined immunodeficiency disease are able to live fuller lives and survive longer because of these drugs.
While these high-tech medications have vastly improved the prognosis for a good number of these patients, they come at a high price, costing anywhere from $6,000 to $350,000 or more annually.
Specialty drugs, many of which come from the biotech industry and have complex handling or administration requirements, accounted for nearly 10 percent of total pharmacy spending in 2005, rising from 8.5 percent in 2004 for Medco's clients alone. Spending on specialty drugs increased 16.9 percent during 2005, making it the largest driver of drug trends and surpassing even lipid-lowering medications as the fastest growing sector of prescription drug spending. This surge in specialty drug spending is a growing concern for employers grappling with these costs.
Adding to this difficult financial forecast is the fact that the number of patients taking these medications is poised to grow substantially, with many of the newer drugs targeting more prevalent conditions such as certain types of psoriasis, asthma, and rheumatoid arthritis, and many of the drugs on the market receiving approval for use to treat additional conditions.
As the potential specialty population grows, so do plan costs -- placing an enormous burden on employers and making it essential that plans monitor and manage this important investment in the health and welfare of their plan members.
MANAGING SPECIALTY COSTS
All businesses, regardless of size, can benefit from a number of specialty management tools that are effective in managing specialty drug use and costs. In fact, 85 percent of Systemed's clients, which have between 1,000 and 15,000 employees, are employing a pharmacy benefit management approach to address the growth in specialty drug spending.
A specialty management strategy should include many of the traditional pharmacy benefit tools such as utilization and formulary management. But they must balance that with the high-touch care needed by patients with complex conditions to ensure compliance and prevent complications that will lead to higher overall medical costs. Specialty pharmacies offer a high degree of clinical service to help improve patient outcomes with pharmacists and nurses playing an active role in patient care and education.
The benefit plan needs to be designed to ensure that coverage and co-pays are well coordinated, because gaps here can make the drugs too costly for patients and jeopardize compliance. Between the clinical and plan design efforts, the emphasis is to make sure patients are complying with treatment and avoiding hospitalizations that can escalate health care costs well beyond the price of the drugs. Managing the cost and utilization of these products can be accomplished by tailoring traditional pharmacy management approaches to this special population.
For instance, there is a growing number of conditions for which competing drugs are available, providing the opportunity to use formulary management techniques to influence product selection and lower plan costs. Incentive formularies that place more costeffective medications on a lower tier, requiring a lower co-pay or co-insurance level from the employee, encourage members to use the lower-net-cost drug.
Step therapy also should be considered for those medications where lower-cost alternatives are available. For example, one of the newer specialty drugs for the treatment of psoriasis is an important advance for a small number of patients with severe conditions who have not responded to other traditional therapies. However, there are many more patients for whom traditional treatments, that include both topical creams and oral medications, work perfectly well. A step-therapy rule, which requires physicians to consider the lowercost alternatives before prescribing the specialty medication, prevents over-prescribing of the specialty drug, a choice that can cost thousands of dollars less than the specialty drug.
Specialty pharmacy can provide more robust management tools through the pharmacy benefit as opposed to major medical plans in which the utilization and cost of these drugs are often not as strictly managed, and the resulting costs are passed on to employers.When these drugs are covered by major medical plans, there can be substantial inefficiencies and unnecessary cost for employers.
Physician "buy and bill" reimbursement practices are a good example. Doctors buy a specialty drug, mark it up and charge an additional office visit fee when administering these drugs. Beyond the fees and markups, doctors lack the buying power of specialty pharmacies to obtain the best price for the product. Adjudicating specialty claims under major medical plans costs as much as 30 percent more than if they were covered under the pharmacy benefit.
Additionally, some specialty programs can manage duration of the drug and generate savings. For instance, Medco's clients saw a 21.4 percent decline in total spending on hepatitis C treatments during 2005 due in part to initiatives to manage the duration of treatments, since clinical guidelines indicate that in certain patients, using the drugs beyond 12 months shows no benefit and adds unnecessary costs for members and employers.Without greater control on both utilization and purchasing price, health plan sponsors could find that they can no longer afford to provide specialty medications to the patients who need it the most.
Managing the distribution channel is another important factor in reducing costs. Savings opportunities in this area go beyond just product discounts and include costs associated with storage and delivery, related supplies such as syringes and infusion devices, as well as patient care services.
The specialty benefit manager should provide employers with a clear picture of their specialty drug landscape by supplying detailed reports of their spending and where savings can be generated.
While it is important to manage how and where specialty drugs are purchased and used, plan sponsors need to manage risk when it comes to specialty pharmacy costs. Even an employer with 500 or 1,000 employees can face huge medical costs if only a few patients -- a case of odd luck -- end up requiring expensive specialty treatments. The drug costs can put an employer's health plan at risk and then leave the business at a competitive disadvantage of trying to retain employees. It is advisable for employers to protect themselves from catastrophic costs by purchasing stop-loss coverage, which caps spending, or other forms of risk management tools.
PATIENT SUPPORT
The advantages of using a specialty pharmacy benefit management approach do not stop with how the drugs and reimbursement are managed. It must also be extremely patient focused with round-the-clock call centers, clinicians who instruct patients, and integrated patient records to help coordinate care and improve patient compliance with treatment. Nurses and pharmacists play a central role in educating patients about the use of these drugs, whether they are injected or need special equipment to use. Counseling is crucial in helping patients manage co-morbidities and the side effects of drugs. Nurses and pharmacists reaching out to patients during the course of treatment also provide opportunities to answer questions and catch warning signs when a treatment is ineffective. Additionally, this oversight can identify and remedy problems that may be impeding care.
Complex conditions require a coordinated care system with a focus on the patient's overall health, not just the administration of a particular drug. In rheumatoid arthritis patients, a lack of such care can lead to the need for joint replacement surgery and also will require physical therapy and disability payments.
In another example, poor compliance with hepatitis treatment can be fatal or lead to a liver transplant, the cost of which is astronomical.
THE TIME IS NOW
Delivering savings in health care is crucial to employers. Specialty pharmacy can help address a portion of the overall health plan costs, especially as these drugs become more widely used.
Grouping this benefit into prescription coverage could work to the advantage of saving on overall health plan costs, since the counseling and coordination of care can help avoid hospitalizations as well as other unnecessary expenses.
Plan sponsors need to consider the advantages of specialty pharmacy care and management of this fast-growing sector before getting overwhelmed by the costs of specialty medications.
