When Cigna officials explained their acquisition of Express Scripts earlier this year, they said the primary driver of the deal was the push to control the sharp rise in specialty drug costs.
“Specialty drugs are definitely a driver of prescription drug costs, which in turn is driving overall medical costs,” said Sherry Welliver, Pharm.D., principal at Mercer, during a recent panel discussion sponsored by Mercer Select Intelligence. They were discussing the challenges group health plans face regarding prescription drug costs.
Despite a flurry of potential state and federal legislative activity around controlling high prescription drug costs, healthcare administrators have relatively few means at their disposal to do much about those costs. Their best opportunity: specialty drugs.
Curtailing specialty drug costs offers plan sponsors a major opportunity in part because it gets covered under both medical and pharmacy benefits. The pharmacy benefit side has seen a trend of double-digit increases since 2007, according to Welliver’s statistics, while costs under the medical benefit side have risen 55% since 2011.
Despite their heavy cost, however, specialty drugs don’t actually benefit very much of a plan’s population. According to Welliver, at an average of $4,000 a month for a 30-day supply, experts see the specialty drug category accounting for half the total drug spend in the United States by 2020, at which point 1% to 2% of the population is expected to use them.
For plan sponsors looking to cut specialty drug costs, the most obvious options involve curtailing the availability of expensive prescriptions and monitoring the channel through which patients receive them. “Often the biggest opportunities to manage specialty are by adding utilization management programs like prior authorization and site-of-care initiatives within medical benefits,” suggests Welliver.
While the outright exclusion of expensive therapies might seem like a simple solution, however, Welliver prefers approaches that aim toward more generic-centric formularies or rely on aggressive clinical programs to curb irresponsible prescribing practices.
One reason for her caution stems from the fact that, although very few workers actually use the benefits, large majorities rate health and drug benefits as very important for recruitment and retention. “We don’t recommend an overall exclusion of specialty drugs, because it could be considered significant benefit takeaway by your employees, and it may also increase costs for medical services and absenteeism,” says Welliver.
She also points out that simply changing the delivery channel can make a substantial difference in price, especially when it moves the cost from the medical benefit to the pharmacy benefit. Welliver points out that administering specialty drugs in an outpatient hospital setting can cost a plan more than twice as much as administering them in a physician’s office or a patient’s home.