Survey: Site of care, biosimilars key for employers to lower drug prices

Woman paying for a prescription at a pharmacy
A survey of employers found that companies are pushing to change where drugs are administered as one of the strategies to lower costs. (Getty/Tom Merton)

Employers are trying to offset the high cost of specialty drugs by influencing where those drugs are delivered and exploring how to leverage biosimilars, according to a recent survey.

The survey of 610 U.S. employers conducted by advisory firm Willis Towers Watson found that employers expect healthcare costs to go up by 4.9% in 2020, compared with 4% this year.

One of the biggest drivers of employer costs remains inflated prices for specialty drugs that treat a range of ailments from cancer to arthritis.

“Relentless healthcare price increases continue to crowd out other benefits, making affordability a challenge for many workers,” said Julie Stone, managing director of Willis Towers Watson’s specialty practices, in a statement.

With those specialty drug costs unlikely to go down in the near future, employers shared the creative ways they plan to manage costs through 2021.

This year, 21% of employers are trying to influence the site of care for delivering specialty drugs, which could dramatically affect prices as it is cheaper to deliver drugs in a patient’s home or physician’s office as opposed to a hospital. But 55% of employers expect to adopt this reform through 2021, the survey found.

A February report by Magellan Rx Management, the pharmacy benefit management arm of Magellan Health, found that spending on drugs administered in hospitals was two to three times as much as on those administered by a doctor.

Currently, nearly half (49%) of the employers surveyed added that they are addressing use of specialty drug costs through the medical benefit. Another 85% of employers plan to use this approach in 2021.

The medical benefit is traditionally used to cover drugs injected or infused by a provider. However, it traditionally does not have the same formulary management tools as the pharmacy benefit, such as prior authorization or step therapy.

Employers are also enthusiastic about the prospect of biosimilars, which are cheaper drugs that resemble high-cost specialty products.

The survey found 30% of employers have created incentives and requirements to promote the use of biosimilars in their formulary or plan design, and another 39% of employers plan to explore this strategy in the next two years.

While the FDA has approved nearly 20 biosimilars, few have reached the market in the U.S. due to legal battles with makers of brand-name specialty drugs.

Employers are also considering several value-based designs to rein in costs. For instance, 35% of employers by 2021 plan to increase out-of-pocket costs for the most commonly overused or sometimes unnecessary services.

On the other hand, 46% of employers plan by 2021 to slash out-of-pocket costs for more valuable services that provide a more positive health outcome, the survey found.

“With greater access to accurate and transparent data, employers can create value-based designs that make a smaller dent in employees’ wallets and a big impact on their health,” said Stone.