Drug vials This isn't just a blipon the the radar, or a dastardly plot by the pharma industry toincrease profits; it's an evolution of how drugs are used to treatpatients. (Photo: Shutterstock)

|

Ask any employer and they'll tell you the same thing: pharmacy spending is eating up a bigger portionof their health care budgets, specialty drugs in particular. In fact, lastyear Cigna saw drugs and biologics comprise 26 percent of medicalspending for Cigna, making it the top contributor to costs.

|

“That trend is expected to continue out into the future,” CignaVP of value-based partnerships Thomas Stambaugh told attendees at arecent webinar hosted by EBRI. “We expect that by 2020, pharma willbe 31 percent of our total cost.”

|

Related: Health plans differ greatly in their approach tospecialty drug use

|

This isn't just a blip on the the radar, or a dastardly plot bythe pharma industry to increase profits; it's an evolution of howdrugs are used to treat patients. “One of the things that you'reseeing is that we're moving from the traditional mass-market ofdrugs to biologics,” Stambaugh said. ”We're seeing moremass-customized, targeted therapies. Recently you've started to seevery hyper personalized therapies.”

|

More-targeted treatment are good for patients' outcomes, but notfor their (or their employer's) wallets. Specialty drugs can costthousands of dollar per dose, and while, as EBRI director of healthresearch and education Paul Fronstin noted that frequency ofadministration for such drugs may be lower, the one-time cost isnothing to sneeze at.

|

“We certainly see where that trend is going and how costincreases are outpacing everything else,” Fronstin said. “Specialtymedication costs are trending at double-digit rates. I don't wantto say it has plan sponsors panicked, but it certainly has theirattention and is going to be a factor in how they design theirhealth plans.”

|

Pharma and specialty drugs are among the top targets ofemployers attempting to rein in their health care spending. But arethe strategies their employing–namely, shifting more costs to worksvia consumer-directed and high-deductible health plans–doing moreharm than good?

|

A recent study conducted by EBRI attempted to quantify therelationship between health plan type, specialty drug adherence andworker productivity, and while the results were mixed, the analysisis an important first step in bringing attention to the growingissue.

|

The survey looked at five rare conditions that, despite aprevalence rate of just .1 percent to .2 percent each, account fora quarter of pharmacy spending: rheumatoid arthritis, Crohn'sdisease, ulcerative colitis, psoriasis and muscular sclerosis. Thecost of the specialty drugs used to treat these conditions rangedfrom 19 percent to 66 percent of total spending on eachcondition.

|

For each condition, researchers looked at average use ofspecialty drugs by plan type. For RA, for example, 49 percent ofout-of-pocket costs are spent on specialty drugs by a consumer withan HMO; for a consumer with a PPO or an HRA plan, this drops to 35percent; for an HDHP plan, it's 39 percent. “If you look at averageuse by plan type, there's not a whole lot of variation,” Fronstinnoted. “HDHPs use less, but it's not a whole lot less than PPOs andHMOs.”

|

A major caveat is that researchers had no way of knowing whetherparticipants had opted into their plan due to their medicalcondition or whether their employer offered only a limitedoption…“We're not able to control for the choice set of availablehealth choices,” Fronstin said. “They might be in an HDHP orlow-deductible because it was the only option available.”

|

So while it's still too early to say what impact health planchoice has on specialty drug adherence, there are still plenty ofother factors that employers and their benefits consultants can belooking at.

|

“When you're looking at specialty pharma costs, it's importantto look across pharma and medical to really get a full picture ofwhat you're spending.” Stambaugh says. Specialty drugs inparticular are typically given at a medical facility, and thedifferent site administration fees can vary significantly.

|

And even if plan type isn't a factor in adherence, theout-of-pocket costs still represent a significant financial burdenfor some, a factor that should be considered in plan design. “Wesee the phenomenon of patients hitting their deductible andout-of-pocket limits fairly early in the year,” Stambaugh says.“That's why the question is really around what do we do about thisaffordability crisis? Drug selection makes a big difference informulary design.”

|

Then, there's the role of the health care provider. “Part ofthis goes back to how we make sure the physician has the rightincentive to prescribe the most effective therapy,' Stambaugh says.“We're learning more about the importance of contractualrelationships with the treating provider. How we align outcomeincentives?”

|

A final factor to note, says Stambaugh, is for employers toconsider their own level of risk. “When you get into some of thesehigh cost therapies, we're making sure our clients are consideringa stop-loss benefit to really limit the impact of these lightningstrikes where one plan participant makes a major impact.”

|

Arm yourself with more knowledge to tackle drugcosts:

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Emily Payne

Emily Payne is director, content analytics for ALM's Business & Finance Markets and former managing editor for BenefitsPRO. A Wisconsin native, she has spent the past decade writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.