Midwest Business Group on Health
Biologics and Specialty Pharmacy:
Employer Challenges
& Opportunities
National Business Coalition on Health
11/13/12
Specialty Pharmacy (SP) Landscape
 Generics do not exist today
• One exception – a generic for Hemophilia
 Biosimilars are a copy of a biologic drug…
• But they are not identical
• FDA approval pathway still under development
• Only a few biosimilars are likely to be available with cost
savings at about 20% less
 Biobetters represent improvements to the original product
• Typically offering an easier route of administration or less
frequent dosing
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Economic Impacts to Employers
 Specialty drugs are the fastest growing segment of overall
pharmacy benefits spend
 Costs are growing at 2x the rate of traditional drugs with cost
drivers including:
 Aging population with chronic conditions
 High cost per unit – $6,000 to $1M per year
 Increasing number of FDA approved drugs
 Fast growing pipeline – over 800 drugs
 Special storage, handling and administration requirements
 Role of diagnostics and related tests and services
 Three drugs account for more than half of all SP spending
 Cancer – Arthritis – Multiple Sclerosis
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Economic Impacts to Employers
 Specialty drugs that work for one person may not work for
another
 Resulting in the potential of multiple Rx fills
 Need for related diagnostics/devices/testing
 Costs account for about 17% of the average employer’s overall
pharmacy costs and this number is rising fast
 By 2020 it’s anticipated that 40% of the pharmacy drug spend
will be attributed to biologics/specialty pharmacy
 Approximately 50% of specialty drug spend occurs in the medical
benefit making it difficult to track and manage
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Midwest Business Group on Health
National Employer Initiative on
Specialty Pharmacy Benefits
2012
Establishing an Employer View
MBGH Project Background
 MBGH board of directors cites biologic/specialty pharmacy
as #1 priority since 2010
 Coalition sees significant growth in SP products and related
cost impacts to employers
 Partner with Randy Vogenberg, PhD, Institute for Integrated
Healthcare to develop multi-year employer research project
 Conduct national employer surveys; multiple, national
educational programs and seek out feedback from employers
across the country
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Addressing Employer Needs
Work Stream 1 – 2011 to 2012
2011
 Established Employer Advisory Councils – Chicago & Baltimore
 Conducted National Employer Baseline Survey
 Conducted Educational Outreach with employer group testing
2012
 Developing Employer Toolkit
 Conducting 2nd National Employer Survey with expansion of
survey research
 Next steps…..implementing Future Work Streams through 2013
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National Employer Initiative
on Specialty Pharmacy
2012 Employer Survey
2012 Employer Survey
 MBGH partners with 15 NBCH sister coalitions from across
the country
 More than 100 employers participate in the survey
 Population Size:
 40% - 1,000-5,000
 20% - Over 25,000
 15% - 10,000-15,000
 Industry Sector:
 40% Manufacturing; 15% Education; 15% Government
 90% of respondents are self-insured
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Employer – HR/Benefits
Level of understanding of SP
2011: 78% - Low to Moderate
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2012: 54% - Above Average
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Employer – Executive Leadership’s
Level of understanding of SP
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Medical & pharmacy claims costs
paid in 2011 (or most recent plan year)
Total combined medical & pharmacy
claims costs paid in 2011
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Per employee medical & pharmacy
claims costs paid in 2011
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Percentage of medical costs paid for SP
drugs and related services
2011 Survey: 70% of Employers indicated “Don’t know”
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Percentage of prescription drug costs paid
for SP drugs and related services
2011 Survey: 40% of Employers indicated “Don’t know”
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Increase of SP Costs Over Past 3 Years
2011 Survey: 29% of Employers indicated “Don’t know”
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Three top disease states incurring the
greatest SP costs
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Employer level of involvement in working
with SP benefits
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Description of SP plan design
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Description of SP plan design
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Types of incentives used to encourage…
(waived co-pays; co-insurance)
Yes
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No
Don’t know
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Type of reports employer receives
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2012 Employer Survey
Strategies & Tactics for SP
Management
Top three for tactics for managing SP
1. Case management
2. Prior authorization
3. Drug utilization
Effectiveness of top outcomes for
disease/case management support
1.
2.
3.
Treatment compliance
Medication adherence
Management of chronic conditions
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Primary service providers for SP
benefits and services
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Most importance factors when contracting
with SP service provider
• 83%
Cost of services
• 77%
Overall importance
• 64%
Medication adherence
• 55%
Care management support
• 52%
Cost transparency model
• 52%
Trend management
• 48%
Step therapy edits for claims approval
• 46%
Prior authorization for claims approval
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Working with SP service provider
Top outcomes used to
evaluate SP service
providers
Types of performance
guarantees included
in SP contracts
1. Cost management
2. Overall performance
3. Patient management
• 68%
• 53%
• 47%
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Guaranteed rebates
Accurate processing
Cost management
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Providers of targeted communications to
increase awareness of SP programs
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Targeted communications
Effectiveness of strategies to
improve use of SP for past few
years
52%
Pharmacy networks
54%
Benefits coverage
options
52%
Utilization
management
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Types of communication
vehicles
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Employer lessons learned –
design, management, vendor partnering
 Work closely with PBM to identify trends early … develop
appropriate action plan to manage cost and utilization
 Specialty is an ever increasing cost and component of total
medical spend … there’s a need for strict guidelines, protocol and
prior authorizations is very important
 Need high quality vendor to coordinate with regular drug
program
 Make certain that the provider has robust reporting tools to drill
down into the data
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Employer lessons learned –
management of at-risk population
 Step therapy and prior authorization
 Communicate the cost and special needs around specialty
drugs
 Get and use as much data as possible
 Consistency is important
 Communication is key; provide incentive in wellness
program for active disease management program
participation
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Biologics & Specialty Pharmacy
National Employer Initiative
2012 Employer Toolkit
Employer Specialty Pharmacy Toolkit
• Launch Winter 2012
• Developed with input from employer advisors, feedback from
educational program participants and staff expertise
• Toolkit includes resources, best practices and employer case
studies
• Key areas include:
– Understanding Specialty Pharmacy Benefits and tools for
the C-Suite
– Innovation in Benefit Plan Design and Service Partner
Contracting
– Managing At-Risk Populations; Communications and
Resources
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Section 1: Specialty Pharmacy 101
www.specialtyrxtoolkit.com
Insert home page here
•
•
•
•
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Understanding the Basics
Specialty pharmacy landscape
– No single definition for
specialty drugs
– Market view: Who are the key
stakeholders?
– Delivery, distribution &
dispensing
– Generics & other biologic drugs
The Employer as Key Stakeholder
– From the research: the
employers’ perspective
– The value proposition
Future Trends & Impacts on
Employers
List of Recommendations
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Section 1: Specialty Pharmacy 101
www.specialtyrxtoolkit.com
Insert inside page here
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• Edit Economics of specialty
pharmacy
• Shifting Rx marketplace
• Current trends & cost drivers
• Future growth trends
• Dose forms & Diagnostics
• Education for C-Suite
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Sections 2 & 3
Planning & Contracting
• Innovation in Benefit Plan
Design and Service Partner
Contracting
• Employer as the plan
sponsor
• Vendor contract language
• Plan design best practices
Managing At-Risk Populations;
Communications and Resources
• Employer health care
management priorities
• Employee satisfaction
• Benefit design and its
management
• Communicating with covered
population
• PBM RFP Checklist
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Biologics & Specialty Pharmacy
National Employer Initiative
Future Work Streams
Project Work Streams
Address market need
to understand
employer perspective
and claims experience
in the use of specialty
pharmacy drugs and
services.
Conduct employer
pilot programs to
test value-based
benefit design
concepts and
measure their
effectiveness.
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Research and
develop innovative
value-based benefit
design coverage
approaches.
Work Stream 1
2011 to 2012
Work Stream 2
2012 to 2013
Work Stream 3
2012 to 2014
Work Stream 4
2012-2014
Deliver
education on
outcomes to all
key stakeholders,
including
reporting,
presentations
and publications.
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Biologics & Specialty Pharmacy
National Employer Initiative
Stakeholder Meeting
July 2012
Stakeholder Representation
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What did the employers say?
• Health Care Reform:
– Government may put controls in place if prices stay where
they are or go up
– Need to look at what other environmental changes they
need to work through
– Not dropping coverage but need to look at benefit design
for SP
• Don’t assume that employers know what they’re doing –we
need to trust the vendors– but not sure we can
• So many variables…..Co-insurance; max out-of-pocket-hit
after two doses; physician mark-up; can’t track via j-codes
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Top trends in the next 2 to 5 years
• Specialty meds becoming the main driver of overall cost trend
• Required use of specialty pharmacies with intensive case
management
• Mandatory specialty pharmacy utilization driven by benefit
design
• More dosage forms (e.g. oral and IV) within therapeutic
categories
• More Biogenerics; Biosimilars
• Continued mergers and acquisitions of specialty pharmacies
and PBM’s
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Top trends in the next 2 to 5 years
• Continued increase in power and influence of employer groups/
coalitions
• Vendors going at risk to drive outcomes, clinical utility and quality
of life measures
• Incremental increase in treatment populations as oral dosage
forms replace injectables in some therapeutic classes
• Increase in state level regulatory mandates for specialty benefit
designs that are at parity with non-specialty benefits.
• Greater interoperability of systems to improve communications
across transitions of care
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MBGH Initiative Summary
• Critically important to address knowledge gaps currently
among most stakeholders in marketplace
• Innovation and performance is desired but lacking in market
today—an important area to inspire action
• Market change or shifts will continue into 2015 while
technology growth escalates over next 2-5 years
– Doing nothing is no longer an option
• Employer resources to empower all stakeholders is essential
• Ongoing stakeholder collaboration is critical to success
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Project Contacts
Cheryl Larson, Vice President
Midwest Business Group on Health
clarson@mbgh.org
www.mbgh.org
MBGH is one of the nation's leading not-for-profit business coalitions of private and
public employers. Members are represented by human resources/health benefits
professions for approximately 110 large self-insured public and private employers, who
represent over 3 million lives and spend more than $3 billion on health care benefits
annually.
F. Randy Vogenberg, PhD, Principal
Institute for Integrated Healthcare, Sharon, MA
Strategic Pharmaceutical Advisor, Business Group Pharmaceutical Collaborative
randy@vogenberg.com
The Institute for Integrated Healthcare, an organization that provides integrated
pharmaceutical benefits consulting and education to self-insured employers and
business coalitions.
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