Midwest Business Group on Health
Managing the Rising Costs of
Specialty Pharmacy
January 29, 2014
Midwest Business Group on Health
Celebrating 34 Years of Advancing Value in
Health Benefits Management
• Founded in 1980 as a 501(c) (3) not-for-profit employer
coalition by a group of large Midwest employers
• Members consist of over 120 large self-insured public and
private employers – Boeing, Ford, Kraft, OfficeMax, Procter &
Gamble, State of Illinois
• Members are represented by senior human resources/health
benefits professionals
• Members annually spend more than $4 billion on health care
for over 4 million lives
• Founding member of the National Business Coalition on Health
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Midwest Business Group on Health
Project Background
National Employer Initiative on Specialty
Pharmacy
 2009 to 2013 – MBGH Board cites specialty
drug costs as #1 priority
• 2009 – Collaborate with F. Randy Vogenberg,
PhD, RPh, Principal, Institute for Integrated
Healthcare
 2011 to 2013 – Partner with 16 NBCH sister
coalitions to conduct national employer survey
 2012 launch online employer toolkit – ongoing
development
 2014 – Partner with 6 sister-coalitions on
employer demonstration pilots
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National Employer Initiative on
Specialty Pharmacy
Employer Specialty Pharmacy Toolkit
www.specialtyrxtoolkit.com
Employer Specialty Pharmacy Toolkit
www.specialtyrxtoolkit.com
Developed with input from employer advisor committee, leading
industry experts and multi-stakeholder meetings
Toolkit includes:
• Section I: Understand the specialty pharmacy landscape,
emerging issues and related stakeholders
• Section II: Address key challenges and identify innovative
approaches to benefit plan design and vendor contracting
• Section III: Support at-risk population through communications
and resources
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Midwest Business Group on Health
Specialty Pharmacy 101
Advances in Biotechnology…
Biologic/Specialty Drugs
 Medications called “specialty drugs” – including biologics –
are made from variety of natural sources including human,
animal or micro-organisms
 Derived from a biotechnology process that can change the
course of a disease instead of just treating the symptoms
 Development of these drugs is a long, complex and costly
endeavor
• Average of 10-15 years to bring a
medicine to patients
• Average R&D investment today for each
drug is $1.2 B
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Copyright © 2014 MBGH
Source: PRDMA.org 2013 Report
Advances in Biotechnology
Biologic/Specialty Drugs
• Used to treat more than
100 life-threatening
diseases and complex
chronic conditions that
previously had no
therapeutic options
 Very effective in
decreasing debilitating
effects of a disease
• As of 2013, there are 907
biologic drugs in
development
338
2013 – In
development
by therapeutic
category
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Source: PRDMA.org 2013 Report
Shift from Small Molecules to Biologics
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Advances in Biotechnology…
How Specialty Drugs Work
• The Human Genome – A person’s gene tells their body to
produce all the enzymes, hormones, antibodies and other
proteins needed to make the body function
– Missing or defective genes impact the body’s proteins which
are needed to function property
– Today’s technology helps scientists determine which genes
or proteins are defective
• Greater understanding of how a disease works at the genetic
and molecular level allows researches to better predict how
certain drugs will affect specific subpopulations
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Source: PRDMA.org 2013 Report
Definitions
• Bioinformatics – Biological databases that include DNA
sequences to decipher the molecular pathways of disease to find
patterns in how genes respond to drugs
• Biomarkers – Every disease leaves a signature of molecular
“biomarkers” in our body
– Measuring these biomarkers can tell the state of our health
and how we might respond to treatment
– Biomarkers are the first step in developing personalized
medicine
• Molecular Targeting – Designing drugs that specifically attack
the molecular pathways that cause disease, without disrupting
the normal functions in our cells and tissues
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Source: PRDMA.org 2013 Report
Definitions
• Personalized Medicine — Sequencing of the human genome
producing a “map” of the human genes in DNA
– Allows for “targeted” therapies for people with specific gene
sequences
– Helps physicians choose the best treatments based on
individual genetic, lifestyle and environmental factors
– Researchers are currently developing genetic tests that can
tell if we are susceptible to certain diseases
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Source: PRDMA.org 2013 Report
Manufacturing Complexities
• Because most biologics are very complex molecules and can’t
be fully characterized by existing science – they are
characterized by their manufacturing process
• Considered very complex and sensitive, even slight changes in
temperatures or other factors impact the final product and
affect how these drugs work in patients
• Changes in the manufacturing
process or the facility where
the drug is developed may even
require clinical studies to
demonstrate safety, purity and
potency
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Source: PRDMA.org 2013 Report
Biologic Drug Classes
• Generics – With few exceptions, generic specialty drugs do
not exist today
• Biosimilars – “Copy” of a biologic drug, but due to the
complex nature of biologics are not identical – very few exist
• In order to reach market, the manufacturer must
demonstrate to the FDA that it is “highly similar”
to an existing FDA-licensed biologic product
• Although biosimilars may enhance competition
only a few will be available in the near future with
cost savings expected to be no more than 20%
• ACA is offering an abbreviated approval pathway
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Biologic Drug Classes
• Biogenerics – Follows the existing FDA drug regulatory
approval pathway for an identical drug
– Usually accomplished through clinical trials or
sophisticated computer modeling of the drug chemical
structure compared to the branded original product
• Biobetters – Instead of being a structural imitation of an
existing biologic product they are improvements to the
original product
– Also called “branded generics” – may offer easier route of
administration or less frequent dosing
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Key Stakeholders
• Purchaser – Provides their share of payment to the
Prescription Claims Administrator for the cost of the drug –
may be…..
– Patient (e.g. co-pay or co-insurance)
– Public or private employer
– Government (e.g. Medicare, Medicaid, Veteran's
Administration, Dept. of Defense)
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Key Stakeholders
• Manufacturer – Pharmaceutical companies conduct research
to develop and manufacture specialty products
– Sell the product for distribution to wholesalers or distributors as
well as physician, hospital and pharmacy dispensers
– May contract directly with other stakeholders
• Distributor – Wholesaler or medical distributor who sells and
distributes drugs that require special handling – e.g.
temperature, storage, transport
– Support, tracking, reporting, reimbursement and other services
that traditional drugs normally do not require
– May include support such as billing, nursing support, collection
and account management
– Provides broad-based distribution and accountability for
specialty drugs in the health care delivery system
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Key Stakeholders
• Provider – Clinicians or clinical settings such as physician/
prescriber, hospital out-patient, infusion center or home health
care that offer:
– Intensive patient supervision, education and follow-up
– Diagnostic testing to monitor dosage, effectiveness of drug
– May offer special handling and storage of drugs for administration to
patients
• Prescription Claims Administrator – Receives prescription
expense claims from Dispenser and reimburses them for cost of
drug – may be…
– PBM or Health Plan
– Accountable Care Organization/Patient-centered Medical Home
– Physician
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Key Stakeholders
• Dispenser – Fills prescriptions, files claims for
reimbursement with health plan, handles reporting
requirements, distribution of drugs to patients, followup, nursing support and assistance with benefits
investigation – includes:
– Pharmacy Benefits Manager (PBM) that has its own
specialty pharmacy
– Independent specialty pharmacy focused solely on
providing and supporting the use of specialty drugs
– Health plan with an internal specialty pharmacy
– Retail pharmacy that provides specialty drugs
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No Single Definition
• It’s not uncommon for different stakeholders to have different
definitions for biologic drugs:
– Centers for Medicare & Medicaid Services define specialty drugs
as those that cost more than $600
– Food & Drug Administration, employers, and other health care
stakeholders define it differently
When asked to
define specialty
drugs, PBMs and
specialty pharmacy
executives provided
a number of
responses
Copyright © 2014 MBGH
Distribution, Dispensing and Site of Care
• Distributors are held accountable for patient safety through a
Risk Evaluation and Mitigation Strategy (REMS)
– REMS is a distribution and care management restriction tool
required by the FDA for manufacturers to implement to ensure
that the benefits of taking a drug outweigh the risks
– Most REMS require that manufacturers offer providers and
patients with educational materials so they understand the risks
and safe use of a drug
– REMS also impacts the clinician, pharmacy or pharmacist by
limiting availability of certain drugs to an even smaller number of
pharmacies or physician offices, resulting in very few points of
access to some higher risk drugs
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Distribution, Dispensing and Site of Care
• Specialty pharmacies provide broad-based distribution of
specialty drugs in the health care delivery system
– They are accountable for patient safety and typically provide
intensive one-to-one patient education and follow-up support by a
pharmacist and/or nurse
– There are a limited number of specialty pharmacies in the U.S.
compared to the large number of retail pharmacies
– A specialty pharmacy typically provides more extensive care
management, counseling, case management and coordination of
care with other stakeholders involved in a patient’s treatment
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Distribution, Dispensing and Site of Care
• Specialty drugs are
administered in a variety
of ways, including
injection or intravenous
infusion by a clinician
who can monitor the
patient to ensure their
safety
• This typically takes place
in a traditional medical
setting but can also occur
in a non-traditional
setting – all are
considered “site-of-care”
Copyright © 2014 MBGH
Site of Care options can have a
direct impact on costs:
• Physician’s office ($$$)
• Hospital outpatient dept. ($$$$)
• Freestanding infusion center/clinic
($$ - $$$)
• Worksite medical center ($ - $$)
• Home – mobile infusion therapy
provider ($ - $$)
• Retail Clinic ($ - $$)
• Some drugs, including oral tablets,
injectables and inhalants can be
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Midwest Business Group on Health
Current Landscape
Market Trends
• Mergers and acquisitions among manufacturers and smaller
research organizations have led to rapidly accelerating drug
research
– Venture capitalists have shown an increased interest in investing
in this growing sector
• Manufacturers are directing their research and development
investments away from traditional drugs towards more
profitable specialty drugs
• Innovations in science has enhanced the medical profession’s
understanding of the disturbances of body functions caused by
disease and subsequent mechanisms to reduce or prevent it
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Cost Drivers
• Aging population and related increase in chronic diseases
means larger number of covered populations are eligible for
treatment
• Direct–to-consumer marketing encourages patients to bypass
more conservative treatments in order to receive the perceived
“newest and best”
• Rapidly growing research/development pipeline means number
of FDA-approved specialty drugs will continue to increase
– Bringing drug to market is more complex and expensive than
traditional drugs making for a higher cost per unit
• Current lack of generic substitutions means limited competition
• Specialty drugs target conditions that affect smaller patient
populations so costs are spread out over less individuals
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Top 10 Highest Revenue Producing Drugs
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Payers May Find Specialty Drug
Use Hard to Manage
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Midwest Business Group on Health
Employer Impacts
Most Large Employers Are Paying Attention
Employer Understanding of SP – MBGH Survey
2011
2012
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Employer Top Concerns
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Source: PBMI 2013 Survey
Economic Impacts to Employers
• High cost per unit – $6,000 to $100K per year or more
– Hemophelia can be $ 1M
• Fast growing with over 800 drugs in pipeline
• 25% of drugs in the R&D pipeline are considered specialty
• Nearly 50% of drugs in late-stage development are specialty
• In 2013 ESI forecasted:
• U.S. spending on specialty drugs is
projected to increase 67% by the end of
2015
• 3 of the 4 costliest prescription therapy
classes will be for specialty conditions
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Economic Impacts to Employers
 Specialty drugs account for more than 20% of the average
employer’s overall pharmacy costs
 Increase in number of diagnostic and genetic tests, lab
diagnostics and biomarkers required
 Site of care cost issues
 Three account for more than half of all
spend:

Cancer – Arthritis – Multiple Sclerosis
 Approximately 50%-60% of specialty drugs
are represented by the oncology category
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Economic Impacts to Employers
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Source: PRDMA.org 2013 Report
Challenges of Reimbursing Through
Medical vs. Pharmacy Benefit
 With over 50% of spend occurring in the medical benefit it is
difficult for employers to track and manage costs
 PBMs may not have access to data reports on what costs are
running through the medical plan making analysis of costs and
utilization a challenge
 Variations in drug classes and condition categories and route of
administration determines whether medical or pharmacy
benefit covers the drug:
 Pharmacy – Typically covers self-administered oral, injectable
and inhaled
 Medical – Typically covers injected or infused by doctor’s office,
hospital out patient center, free-standing infusion center or
mobile infusion at home
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Challenges of Reimbursing Through
Medical vs. Pharmacy Benefit
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2014MBGH
MBGH
Preliminary Results
3rd Annual National Employer Survey on
Specialty Pharmacy
Developed by employers for employers
2013 National Employer Survey
Demographics - Approximately 100 respondents
Industries represented:
• Manufacturing
• Government
• Retail
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34%
15%
14%
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Employer level of understanding of
specialty pharmacy benefits
2012
2013
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Employer level of involvement in working
with specialty pharmacy benefits
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Amount of time health benefits
professionals spend on….
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Priority of company’s business goals in
managing specialty pharmacy
1. Reducing inappropriate utilization
2. Reducing drug acquisition costs
3. Improving adherence/compliance
4. Reducing variability between the pharmacy and
medical plan design
5. Improving productivity
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Percentage of biologics/specialty pharmacy
costs paid through Pharmacy plan
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Percentage of biologics/specialty pharmacy
costs paid through Medical plan
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Increase of specialty pharmacy benefit
costs over the past 3 years
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Claims incurred through medical/pharmacy
plan by disease state
Medical
Pharmacy
Don’t know
HIV/AIDS
49%
57%
41%
Growth hormone deficiency
42%
56%
44%
Cancer (oncology and hematology)
83%
85%
12%
Multiple Sclerosis
69%
87%
13%
Arthritis
65%
85%
15%
Vaccines
61%
55%
24%
Transplant related medications
50%
61%
37%
Rare genetic diseases
20%
29%
71%
Immune disorders
44%
58%
42%
Infertility
51%
63%
37%
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Use of key components in plan design
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Effectiveness of cost management
strategies
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Effectiveness of cost management
strategies
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Use of cost sharing strategies by benefit
Medical
Pharmacy
Medical &
Pharm
Don’t
use
Don’t
know
Traditional pharm design w/
2-3 tiers and copays
17%
63%
20%
17%
0%
Traditional pharm design with
2-3 tiers and coinsurance
11%
50%
13%
37%
3%
Additional specialty tiers w/
copay
5%
35%
13%
60%
0%
Additional specialty tiers w/
coinsurance
3%
22%
3%
72%
3%
Coinsurance w/ min copay
3%
34%
9%
60%
0%
Coinsurance w/ max copay
3%
39%
8%
56%
0%
Coinsurance w/ max annual
out of pocket
16%
32%
14%
51%
0%
No tiers, no copays, no
coinsurance
6%
0%
0%
91%
3%
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Effectiveness of strategies to improve
specialty drug use
Very
Effective
Effective
Somewhat
Effective
Not
Effective
Have
not
done
Drug cost comparison
5%
20%
36%
8%
31%
Cost share incentive
2%
21%
27%
13%
37%
Pharmacy networks
8%
36%
38%
3%
15%
Protocols used for prior
approval
5%
54%
24%
7%
10%
Day’s supply/limitations
messaging
5%
37%
34%
7%
17%
Formulary explanation
0%
30%
33%
20%
17%
Utilization management
2%
41%
46%
2%
9%
Benefits coverage options
2%
24%
37%
2%
35%
Mailing/phone messages
0%
10%
37%
20%
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33%
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Prioritization of key tactics used for managing
specialty pharmacy benefits
1. Case management
2. Benefit coverage coordination for
Pharmacy & Medical
3. Drug utilization
4. Step therapy
5. Prior authorization for pharmacy
benefit
6. Cost sharing
7. Quantity approaches
8. Site of care options
9. Prior authorization for the medical
benefit
10. Combining medical & pharmacy data
11. Practice guidelines
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Specialty pharmacy coverage based on
Site of Care
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Maximum out-of-pocket per
specialty Rx fill
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Actions required for patient to receive
incentive
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Required use of an in-network specialty
pharmacy for covered population
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Number of fills at retail pharmacy before
required to used specialty pharmacy
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Types of specialty pharmacy claims
reports received
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Top priorities when contracting with a
specialty pharmacy provider
1. Care management support
2. Overall performance
3. Cost of vendor services
4. Account management
5. Cost transparency model
6. Medication adherence support
7. Trend management
8. Prior authorization for claims approval
9. Step therapy edits for claims approval
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Type of performance guarantees included in
specialty pharmacy contracts
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Effectiveness of case management on
outcomes
Very
Effective
Effective
Somewhat
Effective
Not
Effective
Don’t
know
Management of related
chronic conditions
11%
29%
34%
3%
23%
Medication adherence
18%
24%
27%
5%
26%
Treatment compliance
11%
29%
29%
3%
28%
Increase in productivity
5%
8%
29%
3%
55%
Reduction in
absenteeism
5%
8%
21%
5%
61%
Increase in quality of
life
11%
19%
27%
0%
43%
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Midwest Business Group on Health
Benefit Plan Design
Key Benefit Plan Design Elements
• Identify those with high-cost chronic conditions who have
poor drug adherence and PBM/vendor programs to improve
compliance
• Include clinical coverage rules, such as prior authorization
and step therapy to ensure appropriate utilization (e.g. to
conditions such as MS and RA)
• Ensure case/care management is coordinated or integrated
• Establish coverage requirements that eliminate redundancy
and conflicts across medical and pharmacy benefits
– e.g. high out-of-pocket costs for oral medication in the
pharmacy plan can motivate the patient to seek treatment in
the medical plan, thus increasing total plan sponsor cost
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Key Benefit Plan Design Elements
• Conduct aggressive negotiation of financial and non-financial
contract terms with the PBM to capitalize on today’s buyer’s
market
• Include proactive clinical management programs to ensure
optimal pricing, appropriate use and avoidance of high-cost
hospitalizations
• Integrate drug channel management strategies that ensures
specialty drugs are dispensed through the most cost-effective
and efficient pharmacy delivery channel — retail, mail order
or specialty pharmacy
• Offer employee benefit communication materials delivered in
coordination with specific date from company as plan sponsor
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Other Considerations
• Determine where data falls – under the pharmacy benefit
and/or the medical benefit
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Other Considerations
• Assess a drug tiering strategy for the medical benefit
• With some specialty drugs falling under the medical
benefit, employers should assess the value of a tiering
strategy to help manage costs
• Determine options and utilization for sites of care
• When trying to evaluate or assess plan design outcomes,
it is important to qualify drug use by site of care to
determine if other factors are impacting plan design
performance
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Other Considerations
• Implement a comprehensive utilization control strategy
• Site of care prior authorization
• Dose and quantity edits
• Prior authorization
• Step therapy
• Manage Provider Reimbursement
• Hospital-owned practices have increased over the past year
so it is important to link physician practices with their
parent organization to effectively evaluate plan design
outcomes and determine more consistent reimbursement
practices
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Cost Sharing : Medical vs. Pharmacy Parity
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Source: PBMI 2013 Survey
Midwest Business Group on Health
Employer Strategies & Working with Your
Pharmacy Vendor/PBM
Top Employer and Health Plan Goals
for Managing Specialty Pharmacy
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Source: PBMI 2013 Survey
Working with your Vendor
MBGH 2013 Survey – Vendors that support employers in
their management of specialty pharmacy –
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Best Practices in Vendor Programs
• Full transparency in contract
• Partial first fill for specialty drugs, like oncology
• Proactive clinical care management from specialty pharmacy
vendors
• Integrated case management from PBMs/health plans
• Collaborative care pathways and data exchange across
vendors and their networks
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Identifying and Comparing Vendors
Considerations
• Distribution Networks – Retail pharmacy chains, health
plans, pharmaceutical wholesalers, physician practices,
pharmacy benefit managers and independent specialty
pharmacies
• Must hold active professional licenses from state to ensure
medication safety and full compliance with drug regs at
state/federal level
• Medication Adherence and Support Services – In addition to
the drug dispensing, additional support is needed by patients
and should include oversight, counseling and communication
services
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Identifying and Comparing Vendors
Considerations
• Medical and Pharmacy Benefit – Related financial implications
of the benefit design should be spelled out to include at least the
following minimum elements:
• Cost of the drug by the unit/dose size and by the source of
dispensing (e.g. retail versus mail order)
• Drug reimbursement to the pharmacy related to the cost of the
drug itself, plus the cost of dispensing to the patient in accordance
with state or federal requirements
• Approach to patient cost sharing that will offset the final employer
cost of care required to treat the patient’s medical condition
• Address uneven out-of-pocket costs to the patient which creates
barriers to successful treatment and increases the total cost of care
paid by the employer through the medical and pharmacy benefit
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Identifying and Comparing Vendors
Considerations
• Determine Needs and Roles for each Type of Vendor – To ensure
effective care coordination or collaboration to achieve desired
program outcomes
• Case/Care Management – Roles for each should include:
• Health Plans – Case management services with the patient and
coordination with other key stakeholders such as the treating
physician, any specialists, local pharmacist, home care nurse,
family members…
• PBM – Care management services with the patient to assure
coordination of benefits with the health plan as well as
communicating with other key stakeholders
• Specialty Pharmacy – Patient and provider management or services
to assure optimal patient care outcomes with their prescription
drug treatment plan under the medical and/or pharmacy benefit81
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Identifying and Comparing Vendors
Considerations
• Claims Adjudication – For retail and mail order drug
distribution channels as well as compliance with contracted
pricing and drug utilization management or patient safety
oversight. Examples:
• Access and distribution channels
• Contract pricing compliance
• Provider and patient management
• DUR and REMS (FDA Risk Evaluation Management System)
• Formulary and rebate management
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Identifying and Comparing Vendors
Considerations
• Provider Compliance Across Various Clinical Settings –
Integration of medical and pharmacy data, where specialty drugs
are being used as well as prescribed. Since many specialty drugs
can be covered under medical benefits, don’t assume pharmacy
benefits is the sole source for assuring patient compliance with
drug therapies
• Physician profiling and network management where specialty drugs
are being used or dispensed to assure patients are receiving their
drugs to achieve optimal outcomes of care
• Performance tracking and outcomes to assure pharmacy benefit
plan performance to include:
• Patient outcomes of care, including use of specialty drugs
• Medical and pharmacy benefit providers who use specialty
drugs vs or bill for them
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Identifying and Comparing Vendors
Considerations
• Patient Compliance to Include –
• Care and case management coordination across both medical and
pharmacy benefits
• Sharing of information is critical to patient in both the medical and
pharmacy benefit coverage settings
• Program evidence of success or failure for the specialty vendor
through identification of key metrics that can assure success at the
macro or micro level of review as well as during an audit
• Quality improvement/continuous quality improvement (CQI)
measures in the dispensing operations
• Quality improvement/CQI measures in the patient or clinical
services operations
• Certification(s) or Recognition of Excellence in dispensing,
clinical services or IT functions that support delivery of optimal
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patient care outcomes
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Selecting Vendors
RFP Criteria
• Review formulary development and management
• Specify which drugs PBM will supply directly and those that must
be obtained from another source due to manufacturer/FDA
requirements – emphasis on orphan drugs and alternatives to
high cost drugs
• Document that specifically lists which drug classes will be
covered under the pharmacy plan and the medical plan
• Benefit design and utilization features including tiers, cost
sharing, copay/co-insurance approaches
• How the employer's benefits will be managed
• Network contracting, including oversight of prescribers and
pharmacists
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Selecting Vendors
RFP Criteria
• List of account services offered
• Description of how claims and payments are processed
• How drugs are distributed
• Drug utilization review, step therapy, quantity limits, prior
authorization and other edits and controls
• Availability of medication adherence programs
• Type and frequency of employer reports
• Patient support, education and communications with plan
members
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Contracting with PBMs
• Carve in – Some plan designs provide a one-stop and integrated
coverage option to include all drugs for covered members
• In this model, availability of drug data is generally good but fully
integrated data may still be limited depending on the vendor
• Carve out – A separate benefit that offers separate or carved out
pharmacy benefits coverage for plan members
• Beware of related barriers, administrative or care disruption issues
for those who require the use of a specialty drug
• Data on drug claims remains readily available and robust compared
to the many medical data sources
• Carving out remains a value proposition for drug benefit vendors,
offering the ability to crosswalk medical claims to enhance medical
data reporting on drug use in specialty categories
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Contracting with Specialty Pharmacies
• The top services provided by specialty pharmacies include
comprehensive patient management along with full-service
facilities
• 2012 Survey says – the most sought-after services include:
• Direct distribution of drugs to patients or physician
• Coordination of reimbursement and eligibility
• All day access to a health care professional
• Ensuring appropriate drug use
Source: Pharmacy Strategies Group (PSG) Report on Understanding Specialty
Pharmacy Management and Cost Control
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Midwest Business Group on Health
Employer Case Studies
Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
There is a tsunami in the distance called the specialty drug
pipeline and those who do not prepare now will
suffer great losses
Employer Experience:
• A visit to a drug store for an antibiotic for bronchitis
• Meet a co-worker there to get an Rx for HRT to ease hot flashes
• Both of them paid the same….
• Antibiotic is intended to restore normal functioning of a body
system that is essential to life
• HRT is used to ease the symptoms of a normal body process that
does not threaten life or the functioning of a body system
essential to life
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Designing Prescription Benefits With
Common Sense
Excerpt from www.specialtypharmacytoolkit.com
Today, employers must focus on preserving life or functioning of major
body systems essential to life:
• Medications that cure infections, reduce pain, lower cholesterol,
BP and maintain blood glucose provide great value to our
company
• Mediations that cure acne, toe nail fungus, impotence and hot
flashes may provide some value to consumers, but not to
employers
• Why should full coverage be provided for prescription medications
with multiple over-the-counter equivalents?
• Can we develop a benefit design based on shared value that
achieves intent and is accepted by employees with little or no
noise?
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
These are the tough questions we must ask ourselves, our leadership
and our employees.
• They called on those best trained to understand the pharmaceutical
maze…the PBM’s account manager and lead clinical pharmacist
• We must ask them to take off their PBM hats and walk with us
down a visionary path where the words “we can’t” get replaced
with “we could, if”. This can be accomplished for both self insured
and fully insured healthcare plans.
• They convinced their PBMs to work with them to develop a benefit
design that achieves the goals of their consumers and the company
and can be successfully marketed to their other customers
• (We want to work with) PBM’s who will recognize and appreciate
these efforts
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
• First, we must work with our PBM’s clinical pharmacist to identify
the classes of medications not primarily used to preserve life or
major body system functioning and thus of little or no value to the
employer as well as those that may achieve outcomes of some value
to the employer, but the same outcomes can also be achieved
through alternative means.
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
The decision was made to decrease member cost share for specific chronic
care medications at the same time as increasing cost share for convenience
medications – they divided medications into four groupings:
•
Lifestyle Enhancing: Medications used primarily to enhance one’s
ability to perform/achieve a lifestyle related activity/goal. These are
medications such as Viagra, Chantix, and Retin-A. All or the greatest
amount of cost for these medications would be assumed by the
consumer.
•
Convenience: Medications that produce outcomes not directly
associated with the preservation of life or the normal functioning of
body systems essential to life; or medications with one or more less
costly treatment alternative that results in similar clinical outcomes.
Examples include Nexium, Clarinex, Provera, Testosterone, Penlac,
and Ambien. The consumer and the employer at least share equally in
the total costs of these medications.
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytool.com
•
Life Preserving: Medications directly associated with the
preservation of life or functioning of body systems essential to life.
This is the largest of the groupings and includes medications for
treatment of conditions such as infections, pain, seizures, depression,
and cancer. Typically the employer would assume the greatest
amount of cost for these medications.
•
Business Preserving: Medications used to treat controllable
chronic health conditions resulting in the highest levels of lost work
time and long-term disability. This is typically the second largest
grouping and includes medications for treatment of conditions such
as hypertension, high cholesterol, diabetes, and asthma. These
medications would have the lowest level of consumer cost share or no
consumer cost.
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
Back to the Tsunami……
• It only takes a few incidences of diseases such as Cystic Fibrosis
treated with medications such as ~$830 per day Kalydeco for a cost
trend explosion.
• Over 50% of the medications currently in the pipeline are Specialty
Medications and over half of these are indicated for the treatment of
cancers. With cancer being one of the most feared diagnoses,
consumers are not going to easily tolerate traditional pharmaceutical
protocols such as step therapy.
• There will be demand to be immediately treated with the “best-inclass” medications and employee relations issues and litigations will
be abundant if they face barriers.
• Is the consumer at fault; absolutely not!
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
• These medicines work very well and help avoid costly
hospitalization when the right medications are prescribed for the
right patients, at the right dosage and times – the key
word is “right”
• Common Sense approaches include:
• Know current utilization of specialty drugs in the
pharmacy and medical benefits – especially those drugs
not self-administered, that often require intravenous
administration with medical monitoring
• Make sure the medical benefits administrator is doing
the job they were paid to do this, especially since there can
be excessive mark-ups on the costs of the specialty drugs
obtained through the medical benefit
• Site of care matters – best pricing is achieved when the
purchase and administration of the drug is part of a facility
contract
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
• Ensuring self-administered drugs come from a
specialty pharmacy; avoiding use of ongoing fills at regular
retail pharmacies – they offer…
• Highly trained pharmacists and nurses who provide
individualized case management specific to the type of
medication being used
• Frequent contact with patient and treating physician to
address barriers
• Prevent waste by monitoring the patient’s medication
inventory so that refills are only sent when needed
• Employees have indicated changing from a retail pharmacy to a
specialty pharmacy in terms of quality of care is like “night and
day”
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
• Allow one fill at the retail pharmacy; with a process in
place to educate the consumer of requirements helps to avoid
frustrating delays in treatment
• Drugs that are only effective in specific dosages for
patients with specific genetic markets that require
pharmacogenomic testing should be completed prior
to treatment
• PBM should make sure this happens
• Plan design should be updated to provide coverage
• Costs of these tests are far less that the cost of one-time
treatment with a drug that will never be effective for the
patient
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Designing Prescription Benefits With
Common Sense
www.specialtypharmacytoolkit.com
• Most important common sense.…
• Informing the consumer the real cost of their medications, how
much of the costs are being paid by the employer and how their
employer’s costs directly impact their personal costs
• Even when this information is available to the consumer (PBM
web site), they don’t typically look it up
• PBM should send at least bi-annual statements informing them
of their itemized costs as well as the employer or plan’s itemized
costs
• Consumer’s should be taught the relationship between increases
in the employer’s/plan’s costs to increases in their overall health
care costs that will be seen in future premiums, co-pays,
deductibles and co-insurance
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National Employer Initiative on
Specialty Pharmacy
Employer Demonstration Pilots
Employer Pilot Areas
1. Ensuring High-Quality Case/Care Management and
Coordination with Medical and Pharmacy Plan Vendors
2. Improving Treatment Adherence
3. Using Value-Based Benefit Design: Higher Value
Medications At Lower Cost Share (e.g. lowest cost for best
outcome)
4. Incentivizing Patients to Use Specialty Pharmacy
5. Using Limited Fill Supply Plan Design Options (e.g. 7-10 day
first fill on new prescription)
6. Using Step-Therapy Strategy to Improve Clinical Outcomes
and Medication Compliance
Copyright © 2014 MBGH
Consumer Communications
Initiative will be included with each pilot
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Employer Pilots
 Employer Pilots – 2014
–
Share outcomes and accomplishments
–
Identify employer best practices
–
Share employer innovation
–
Understand PBM/HP role and opportunities
 Employer Opportunities – 2014/15
•
–
Turn-key employer resources available to all employers
based on pilot initiative
–
Available late 2014 to early 2015
Research and pilot updates provided via employer online
toolkit
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Future Economic Trends and Impacts
to Employers
• Specialty drugs for treating conditions such as rheumatoid
arthritis, multiple sclerosis and cancers will continue to make
up approximately two-thirds of drug spend within the
pharmacy benefit over the several years
• Approximately one-third of drugs in the future pipeline
will be delivered in an oral tablet form
– May actually cost more than traditional specialty drugs
because they are considered new technology.
– Other new drugs will be used in combination with microtechnology delivery systems (e.g. similar to insulin pens
and transdermal patches used today)
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Future Economic Trends and Impacts
to Employers
• New specialty drugs will likely be developed using high
technology formulation and delivery systems such as
nanotechnology – manipulation of matter on an atomic
and molecular scale – and working with materials such as
drugs and devices
• Nanoparticles or implantable devices may be used to
treat specific types of cancer
• There will be an increase in the number of diagnostic
and genetic tests, laboratory diagnostics and
biomarkers
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Future Impact on Employers
Next 2 to 5 Years
• Specialty drugs will become the main driver of overall health
care benefit cost trends
• Mergers and acquisitions of specialty pharmacies and PBMs
will continue to occur
• There will be greater interoperability of systems to improve
communications across transitions of care
• Biologic products will begin to go off patent
• Biogenerics, biosimilars and biobetters will continue to
emerge and grow into the market
• Benefit designs will continue to drive mandatory specialty
pharmacy utilization.
• Intensive case management will be critical to successful and
cost-effective patient outcomes
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Future Impact on Employers
Next 2 to 5 Years
• Increases in drug use will be seen as oral dose forms replace
injectables in some therapeutic classes
• Market will continue to expand to include treatments of more
health conditions among an aging population with costs
continuing to escalate
• Employers and employer coalitions will continue to influence
this marketplace
• Employers will require PBMs and health plans to go at financial
risk for not meeting goals for improved outcomes, clinical utility
and quality of life measures
• An increase in state level regulatory mandates will be seen for
specialty benefit designs that are at parity with non-specialty
benefits
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Future Impact on Employers
Next 2 to 5 Years
• Specialty pharmacy market changes will continue into 2015
while technology growth escalates over the next 2-5 years
Doing nothing is no
longer an option
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Thank you!
Cheryl Larson
Vice President
Midwest Business Group on Health
clarson@mbgh.org
www.mbgh.org
F. Randy Vogenberg, PhD
Principal
Institute for Integrated Healthcare
randy@iih-online.com
MBGH’s Employer Communications Toolkit on Benefits
Literacy and Consumerism – www.mbgh.org/ctk
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