- Posted by Chris Elvidge
- On July 13, 2018
A primary challenge for employers and employees that has escalated in 2018 (and will continue into the future) is managing specialty drug costs in pharmacy benefit plans. Rising costs of specialty drugs is not a new trend, but the burden of covering these medications has become increasingly difficult and they will be a primary driver of rising insurance premiums in the future for employers, and ultimately employees and their families.
Specialty drugs treat complex medical conditions and are especially costly. While only 1% of people require these drugs, they make up about 33% of the cost of prescription benefit plans. These already onerous costs are expected to rise to about 50% of total prescription drug costs over the next two to three years. All signs point to specialty drug costs continuing to rise over the next five years, with specialty medications being the major driver of cost in the marketplace for years to come. There’s a heavy pipeline of specialty drugs, which are either in development or are about to get FDA approval. Expect more products to come to market that are dramatically more expensive as compared to non-specialty drugs. These are wonderful advancements in oncology and cancer treatments, psoriatic arthritis, hemophilia, and blood and liver disease conditions that in some cases are considered cures, but ultimately the costs these breakthrough drugs are particularly devastating to the economical balance of health insurance premiums and costs.
Some thoughts and strategies for cost containment:
Sometimes the extra cost of drugs can be shouldered by the employee. If a prescription costs $300, then it might be okay to have a co-insurance that holds the insured responsible for an amount. This helps with ‘consumerism’. The idea that if a member can see the cost of a drug, they will make the responsible decision based on cost and quality for what is the most appropriate. Perhaps there is a less expensive alternative. But with specialty drugs, co-insurance cost becomes a huge financial burden for plan members—one that is often unaffordable.
The good news is that the pharmacy benefit managers (PBMs) are developing more robust specialty drug management strategies to help control costs. However, there is no one program that is going to solve an employer’s problems. Some common strategies, including preauthorization, closed formularies, limited specialty networks, and case management reviews are just a few ways to help control and streamline pharmacy expenditures.
However, the best advice is to continue to leverage your Kistler Tiffany Benefits resources for advice, assistance, and consultation on how to best manage your programs. Lean on your experts.