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Controlling Specialty Pharmacy Drug Costs: A 4-Step Approach

By Tracey Lewis | Dec 6, 2017

Specialty drugs are having a profound impact on health care and associated costs in the U.S. Specialty drugs, sometimes called "biologics," are used to treat complex, chronic conditions, such as cancer, multiple sclerosis and rheumatoid arthritis. Advances in specialty drug therapies are providing potentially life-saving treatments, but they can come with a prohibitive price tag.

Innovative treatments and cures for rare and complex diseases are being developed at a rapid pace. In 1990, there were only 10 specialty pharmacy drugs on the market, according to Pew Charitable Trusts. However, just 27 years later, we have more than 300 specialty drugs available on the U.S. market with 700 more in development.

Specialty drugs account for less than 1 percent of all prescriptions, but represented 35 percent of total U.S. drug spending, a Segal Consulting report explained.

How can funds best control costs while maintaining access to the specialty drugs members require for chronic or life-threatening diseases?

Challenges to Specialty Drug Management

According to an IMS Health study on specialty drug utilization, there are several reasons behind rising costs. Unlike traditional drugs, specialty drugs are often covered under the pharmacy benefit and the medical benefit. Some are self-administered, such as a pill or an injection. Others are administered by a clinician — such as IV-infused drugs. Specialty drugs are given in a variety of locations, such as the member's home, infusion suite or an outpatient clinic. These variables impact the member's care and the total cost associated with medication treatment.

Specialty drug spending reached $150.8 billion in 2015, the IMS Health report explained. Annual specialty drug costs nearly doubled in the past five years, with a forecasted increase of 17 percent between 2016 and 2018.

On average, member coinsurance amounts for specialty drugs were 37 percent to 38 percent under medical and pharmacy benefits in 2016, according to the Pharmacy Benefit Management Institute (PBMI). So how can funds ensure access to these ground-breaking drugs without breaking the bank?

Consider a Holistic Approach

There's no single specialty pharmacy management tool to provide improved member health outcomes and control costs. However, by looking holistically, funds can make comprehensive and well-informed decisions. Aspects of a holistic approach include:

  • Member focus – Keep the member's best health at the focus of decision-making. Make sure condition-specific care management and support programs are available. Programs like these help members stick to medication therapy, which is a real challenge with some specialty drugs.
  • Drug level assessments - Every specialty medication should be evaluated individually to determine which benefit it's covered under, how it fits into the clinical program, where the site of care will be and the appropriate formulary placement strategy.
  • Clinical management – Preferred drugs should have the strongest clinical outcomes and are cost-effective. Therapies should show an impact across a continuum of care. The goal of clinical management programs is to assure members use the right drug for the right indication, including the dosage and length of therapy for their given disease. Management techniques include the use of clinical pathways and edits, such as prior authorization and step therapy, under pharmacy and medical benefits.
  • Site of care guidance – Hospital outpatient facilities tend to be more expensive. Consider implementing programs that steer members to appropriate, cost-effective sites, such as the member's home or an ambulatory infusion suite.
  • Specialty pharmacy network – A focused or limited specialty pharmacy network under both benefits can help reduce costs. Specialty pharmacies often offer a variety of education and support programs geared to the member's specific health condition.

Funds have the capacity to educate members and to encourage plans to better control health care costs. The investment in these options is worth the effort.

Tracey Lewis, journalist and author focuses primarily on B2B health care, financial services and other internal corporate communications. Author of a best-selling pop-culture book published by Random House Books, and a trained oral historian, Tracey also enjoys delving into music, arts and film content. Skilled in SEO optimization and digital storytelling, she knows how to collaborate with communications, policy, research, legal and designer teams to create and execute cohesive content strategies.