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Sunday, 06 April 2014 20:39

Experts warn employers to prepare for high costs of specialty drugs

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As if employers didn’t have enough headaches in managing their employees’ health benefits, now they face an emerging trend that carries an enormous price tag: the growing number of specialty drugs to treat complex medical conditions.

While the new generation of genetic-based specialty drugs, known as biologics, bring major breakthroughs in treating people, their costs are daunting.

Just one in 100 members of Blue Cross Blue Shield of Michigan use a specialty drug, but the class of pharmaceuticals now accounts for 30 percent of what the insurer pays out in pharmacy claims for all drugs, said Hiral Patel, a clinical pharmacist at BCBS.

“It seems like every single drug that is coming out to treat a rare condition has a hefty price tag,” Patel said during the recent health benefits seminar held by Advantage Benefits Group in Grand Rapids.

Specialty drugs taken orally, by infusion or injected to treat complex conditions such as cancer, multiple sclerosis, rheumatoid arthritis, hepatitis, inflammation, Crohn’s disease or infertility collectively carry an average cost of $2,475 per month per medication. That compares to an average cost of $280 for a brand-name drug and $32 a month for a generic drug, according to Blue Cross Blue Shield of Michigan data.

Patel cited one drug for cystic fibrosis that costs $365,000 a year.

“You can say these drugs will not be on the Walmart $4 generic list,” he said.

The emergence of specialty drugs and their high cost, plus the projected high growth rate for their use, has implications for employers with self-funded health plans, Patel said. He cited a pair of unnamed self-funded employer groups administered by Blue Cross Blue Shield that spent 50 percent of their pharmaceutical costs in 2013 on just one or two employees, respectively, who were prescribed specialty drugs.

“There’s a lot of care that has to be given to these members,” Patel said.

As more specialty drugs come on the market and their usage grows, Patel urges employers to review their health plans. Employers should consider adding new tiers to their pharmacy benefits to get ahead of the trend. They also may want to look at whether to require pre-authorization for specialty drugs and whether a lower-cost traditional drug had been considered first for the patient, Patel said.

Blue Cross Blue Shield of Michigan requires prior authorization for 20 drugs classified as specialty.

Another consideration for employers, according to Patel, is setting up stop-loss coverage that kicks in when an individual employee’s annual pharmacy claims hit a certain dollar amount.

Blue Cross Blue Shield’s goal is not to deny members access to a specialty drug to treat a serious condition but to ensure employers can manage their pharmacy costs as the use of those pharmaceuticals significantly increases. The insurer says it also wants to ensure that specialty drugs such as human growth hormone are prescribed appropriately.

“We want to make sure members are trying cost-effective therapies before moving on to more expensive medications,” Patel said.

Pharmacy benefits should also steer employees who need a speciality drug to a specialty pharmacy that may charge less and offer care management, or to lower-cost infusion centers, he said.

Blue Cross Blue Shield limits specialty drugs to a 30-day supply, largely because of the side effects they cause. In instances when members are first put on a specialty drug, they often are initially limited to a 15-day supply and only pay half of the co-pay, Patel said. That reduces waste should the members experience a side effect and their doctor switches their medication before they exhaust the 30-day supply, he said.

“There’s a lot of money that’s going to be going into waste,” Patel said.

Nationally, spending in 2012 on traditional drugs declined while it grew at a double-digit rate for specialty drugs and accounted for nearly 20 percent of spending on drugs, according to a report from CVS Caremark.

Within pharmacy benefits alone, CVS Caremark projects spending on specialty drugs in the U.S. to grow from $47.9 billion in 2012 to an estimated $99.4 billion in 2016 and $200.9 billion by 2020, according to a 2013 report that looks at special drug trends.

About half of specialty drug costs are incurred in medical benefits, an area where spending is projected to grow from $39.2 billion in 2012 to $92.8 billion by 2016 and $200.9 billion in 2020.

“A small proportion of patients account for this drug spend, but their contribution to overall health care spend is substantial. Managing specialty pharmacy is critical not only to control drug costs, but to provide the best clinical management for these patients, reducing adverse events, and helping to manage overall spending,” states the 213 CVS Caremark trend report. “Because the drugs and the conditions they treat are complex, management can be more complicated, but we believe that, with guidance, every plan can identify and implement measures that will significantly improve their results.”

One of the drivers is the growing number of specialty drugs developed by pharmaceutical companies. In 2010, three specialty drugs were in the top 10 drugs in the U.S. as determined by the overall spending on them. CVS Caremark projects that to grow to seven out of 10 by 2016.

Of the 27 new drugs approved in 2013 by the U.S. Food and Drug Administration, 52 percent (14 new drugs) were specialty drugs. That compares with 25 percent in 2008.

In 2014, “the pace is expected to quicken ... with specialty drugs poised to account for up to 60 percent of new approvals,” states an annual report of medical cost trends published last June by the PricewaterhouseCoopers Health Research Institute.

Patel told attendees at the Advantage Benefits Group seminar not to expect much relief in the future with so-called “biosimilar” drugs, which are akin to generics for brand-named pharmaceuticals. Biosimilar drugs are not yet available in the U.S. and only a few will become available in the near future, Patel said.

Even when they do come out, projections are that biosimilars will only generate a cost savings of about 20 percent, he added. 

Read 5503 times Last modified on Tuesday, 08 April 2014 13:54

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