Industry Voices—The case against excluding specialty coverage

Employers who provide health benefits are under significant pressure to ensure their employees continue to get access to the medications they need while effectively managing the growing impact of specialty medications.

Pharmacy benefit managers, like CVS Caremark, can and do lower overall specialty costs for our payers by leveraging competition within a therapy class. In fact, formulary competition through preferred placement has been critical to managing costs while ensuring members have access to clinically appropriate medications.

However, developments in the specialty market have continued to drive up costs. Specialty treatments are coming to market for conditions previously treated by lower-cost non-specialty drugs.  Meanwhile, gene therapies for previously untreatable conditions are being launched with price tags in the hundreds of thousands—if not millions—of dollars. Rising costs have led to some payers considering a far harsher—and riskier—approach: excluding coverage for entire therapeutic categories or a broad range of specialty medications. However, this has both an immediate, short-term impact on the patient and the potential for greater regulation of employer-sponsored insurance. 

For instance, rare diseases and orphan conditions often have very limited treatment options. And while the treatments are usually expensive—partly because of the small number of people impacted—excluding coverage for them could leave those patients without access to needed care. This can lead to their condition worsening as well as severe adverse events including visits to emergency rooms and hospitalizations.

Gene therapies may be another class payers consider whether to cover or not given their high price tags. But they treat—and, in some instances, have the potential to cure—conditions like hemophilia and Duchenne Muscular Dystrophy, which previously had no therapy options available, or were incurable and required lifelong care. So, it is important not only to consider the patient impact of excluding coverage but also to balance their price tags with the cumulative cost of lifelong care.

Pharmacy benefit management is fundamentally a balancing act between access and cost management and excluding entire therapy classes or conditions is not acceptable. Not only is it the wrong thing to do for patients, but it also has potential long-term impacts for payers. The obvious ones are higher downstream costs from the condition not being well managed, the development of comorbidities, and adverse events.

Less obvious perhaps, is the potential for greater government oversight of employers and private payers. In the years before the Affordable Care Act was passed, many plans dropped coverage for costly but needed services like maternity care or emergency room visits. This left patients with a choice between unaffordable costs or skipping care. The federal government now mandates ten Essential Health Benefits that all health benefit plans must include. This is in addition to more than 1,900 state-level statutes which already mandate certain types of coverage. Excluding coverage broadly risks repeating history and forcing regulators to mandate the most costly coverage options, without consideration for clinically appropriate disease management.

Coverage and exclusion decisions for certain therapy classes that are not rooted in clinical rigor, particularly when there are not clinically equivalent alternatives available, could lead to a new round of scrutiny and more regulation that limit the ability of plan sponsors to implement effective benefit plan designs.

The reality is that new costly specialty therapies will continue to come to market and that patients with complex, chronic conditions need appropriate access to them. CVS Caremark is committed to working with clients to find sustainable ways to cover these treatments by developing innovative strategies designed to help them stay ahead of marketplace developments. One option is to combine coverage for all specialty medications—including those currently covered in the medical benefit—under the pharmacy benefit, which has more robust, transparent utilization management tools available. Doing so can enable payers to more effectively manage costs by ensuring appropriate utilization.

Other options include stop-loss policies, which act as financial protection for the payer in the event of a large and unanticipated medical cost. Installment payment plans that allow plan sponsors to pay for costly therapies over several years can also help mitigate the impact of an immediate, large cost. Value-based contracting where costs are aligned with clinical outcomes and effectiveness can also be an effective tool particularly for therapy classes such as oncology, or for gene therapies whose durability has yet to be demonstrated.

Whichever options payers choose to implement, we cannot lose sight of our goal: maintaining the balance between cost control and appropriate access to needed therapies. For employers who are concerned—with good reason— about the high costs of specialty medications, deserve a partner who works with them to make treatments accessible and affordable.

Sree Chaguturu, M.D., is the chief medical officer for CVS Caremark.