Midwest Business Group on Health Releases Annual Employer Survey on Specialty Pharmacy

Today the Midwest Business Group on Health (MBGH) released the results of its fourth annual survey on specialty drug management finding employers are considering unconventional strategies to manage double-digit cost increases while shifting more cost to employees.

Although the vast majority of employers (88%) still rely on traditional plan designs (co-pays and coinsurance), many are ready to focus on new and novel approaches to managing specialty drugs costs.

Survey results indicate a significant number of employers (68%) are considering using a narrow network to manage patients, while less than 10% offer one. In addition, with 16% carving out their specialty drug benefit, 63% are considering moving towards this strategy. The biggest trend, however, is cost shifting. Over half of employers are considering shifting more costs to employees with 18% already doing so. In addition, 43% of the employers who shifted costs over the last three years, increased them by 50% in 2014.

Additional findings are included in the news release and supporting slides which can be found on MBGH’s website.

Pare and Klepper Commentary -- Specialty drugs: What good is a treatment if it's out of reach?

A commentary by Carolyn Pare, president and CEO of the Minnesota Health Action Group, and Brian Klepper, CEO of the National Business Coalition on Health, was published on Tuesday in the Star Tribune.

The article can be accessed here.

A breakthrough is defined as a sudden, dramatic and important discovery or development. It’s hard to dispute that medical breakthroughs have changed the course of life as we know it. But what good are these breakthroughs if the people who need them can’t afford them? Such is the case with prescription drugs and, in particular, specialty pharmacy.

In the coming years, drug manufacturers will unleash an unprecedented raft of new drugs into the marketplace; some will improve the treatment of common medical problems like high cholesterol and diabetes, while others (those referred to as “specialty” drugs) will be used to treat complex conditions like multiple sclerosis, hepatitis C and cancer. The good news: These “precision therapies” provide new and, in some cases, better treatment options. The bad news: The price tag for such prescription drugs in the U.S. is breathtaking — even scandalous.

Drug companies argue that new products are harder to develop and manufacture, which justifies the additional cost. But U.S. pricing is often three to 10 times that in other developed nations. Is that really acceptable?

Human-resource and benefits leaders from 17 companies who are members of the Minnesota Health Action Group are mobilizing around the specialty-drug-pricing issue by joining a Specialty Pharmacy Care Delivery Learning Network sponsored and led by the Action Group. The goal is to effect market-based change in an informed, united way so Minnesotans can receive the right therapies, in the right place, at the right price and at the right time.

Why should employers care about specialty pharmacy and, furthermore, why should they give their precious time to help drive change? Quite simply, because if they don’t, they will eventually end up paying the price. Don’t believe us? Consider the following:

• The hepatitis C drug Sovaldi made headlines last year when a course of treatment was pegged at $84,000 in the United States, crushing previous cost and use records. The same drug is priced at $900 in Egypt and $51,000 in France.

• U.S. costs for a powerful new cholesterol management drug, PCSK9, are expected to be $7,000 to $12,000 per patient per year, compared with about $1,000 on average for conventional drug therapies. Given the number of patients who might benefit, the market for this one drug could easily reach $100 billion per year, or about 1/33 of what we currently spend on all U.S. health care. All this for a maintenance drug that comes with annual lifelong, recurring costs.

• By 2018, the cost for hundreds of specialty drugs that are flooding the pipeline is expected to account for more than half of the total U.S. drug spend, up from 25 percent in 2006. Spending on this category is growing almost 20 times as fast as non-specialty-drug spending.

Unless something changes, in a few years, we’ll spend more on specialty than nobrian-specialty drugs or, for that matter, on doctors. The likelihood that this trend could financially overwhelm health care purchasers is real.

It’s hard to know how employers and unions will cope with the new pricing. Purchasers should consider a couple of key questions. First, what new measurable value will each new drug bring? This is hardly cynical; one recent study found that cancer drugs approved by the U.S. Food and Drug Administration over the past decade lengthened life by only 2.1 months, on average. Courses of many of these drugs cost more than $100,000. As consumers, we want to know what tangible value we can expect from a purchase. But in health care, that value has proved elusive.
Second, what is the pricing tied to? What makes it more expensive to buy these drugs in the U.S.? Why, exactly, is Gilenya, a multiple-sclerosis drug, almost six times as costly here as it is in Spain?

The battle over specialty-drug pricing could come down to a standoff between drug manufacturers and purchasers. In the past, drug companies have had reason to believe employers and unions were too preoccupied with other matters to take action against specialty-drug costs.

Minnesota Health Action Group members are here to say “enough is enough.” All Minnesota employers should get informed on this issue and join us as we strive to hold drug manufacturers and sellers accountable for rational pricing practices. It’s time, yet again, for business to lead the way in health care innovation.

Benefits managers and financial officers from employers, unions and governmental agencies have been watching their specialty-drug spend and calculating. It’s possible that excessive specialty-drug costs could capsize their benefit plans, making it untenable to maintain good health coverage without severely compromising other important benefits. Just as worrisome, these costs will exacerbate their health care cost burden and cannibalize profits.

Is it possible that, in manufacturers’ zeal for ever-greater profits, specialty-drug pricing could be the straw that breaks the tolerance of the nation’s health care purchasers for excessive health care pricing? If so, maybe health care will finally change.

Runaway Drug Prices

On May 5, The New York Times Editorial Board published this commentary, Runaway Drug Prices, examining the industry's arbitrary price increases and a lack of pricing transparency.

Kaiser Family Foundation: American’s opinion of the health care law closely divided

The Kaiser Health Tracking Poll for April found public opinion of the Affordable Care Act (ACA) continues to be almost evenly split, with 43 percent reporting a favorable view and 42 percent reporting an unfavorable view.

Among the key findings, when asked what the next health care priority should be for the White House and Congress, 76 percent of Americans responded "making sure that high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer, are affordable to those who need them."

ConsumerAffairs: Rising cost of drugs gets new scrutiny

Mark Huffman, a writer for ConsumerAffairs, recently penned an article on the increased scrutiny by health care policymakers on the high price of medication.

At a time when health care is more accessible, many consumers are finding the drugs that are being prescribed are prohibitively expensive. Even generic drugs, which are cheaper than their name brand equivalents, often aren't that much cheaper.

Read the full article here.

“It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for millions of Americans who rely on prescriptions to manage their health needs. We’ve got to get to the bottom of these enormous price increases."

Senator Bernie Sanders (I-VT)

Biosimilars: What employers need to know

Earlier this month, Novartis’ Zarxio was the first biosimilar product approved in the United States, ushering in a new era for the drug industry, consumers and third parties who manage medical and drug benefits.

Given the confusion over the U.S. Food and Drug Administration’s approval process and specialty-related product availability, Cheryl Larson, vice president for the Midwest Business Group on Health, and Randy Vogenberg, principal for The Institute for Integrated Healthcare, wrote an article on questions employers should be asking related to biosimilars.

So what’s an employer to do?
1. Have a conversation with your pharmacy benefit management organization and/or health plan regarding their coverage approach or policy related to biosimilars. If you have questions about how biosimilars are different, ask them.

2. Review your vendor contract and coverage of specialty drugs to determine the impact on current or future plan costs to your organization.

3. Review your own plans’ drug use patterns and if this type of approval would make a cost savings difference to your members.

4. Determine if this will make any difference on annual cost trend for the plan versus just the unit cost of a particular drug for an individual medical condition like cancer-related anemia.

5. Continue to advocate for full cost transparency on all specialty drug products by your vendors.

The full article published in Employee Benefit News can be found here. 

Additionally, MBGH offers free tools and resources to help plan sponsors stay current on issues related to specialty pharmacy drugs, benefit design and contracting strategies at www.specialtyrxtoolkit.com.

Federal action on specialty drug costs sought by Medicaid directors

The National Association of Medicaid Directors is urging House and Senate leaders to take "immediate federal action" to address specialty drugs' high prices. The directors in the letter said lawmakers have failed to address the cost and reimbursement issues associated with high-cost specialty drugs. “Federal thinking on Medicaid financing must reflect” the reality of specialty drug costs, the directors said. “Simply put, the federal Medicaid statute is not designed to allow states to respond to this new pricing approach for pharmaceuticals.”

You can read the full article via Bloomberg BNA here.

Health Affairs October Issue Focuses on Specialty Drugs

The October issue of Health Affairs - released today - takes on the topic of specialty drugs, highlighting a number of studies that look at the high costs associated with the increasingly prevalent use of these pharmaceuticals.

Check out the contents of the October issue online.

New NBCH Action Brief: Specialty Pharmacy

NBCH is pleased to continue this series of Action Briefs developed to support the critical role purchasers and purchaser-led coalitions play as change agents in improving health and health care in employee populations and the community at large. Each Action Brief centers on a specific topic of interest highlighting why employers should care; using eValue8™ data to better explain the role of health plans around the issue; and providing action steps and strategies employers can take to improve health and health care delivery.

View the newest Action Brief - January 2014: Specialty Pharmacy

Most commonly used in the treatment of chronic or life threatening conditions such as rheumatoid arthritis and cancer, specialty drugs represent the fastest growing sector of pharmacy spending today. Although specialty medications currently account for only 1% of all prescriptions, they represent about 20% of today's drug costs. Industry experts predict that by 2020, specialty drug spend will more than quadruple, reaching approximately $402 billion a year and presenting tremendous cost challenges for employers.

Check out the whole series of briefs archived at Publications-NBCH Action Briefs.

New Study Finds CER May Help Lower Costs of Specialty Pharmaceuticals

Specialty pharmaceuticals are complex to manufacture and distribute, often difficult to administer, may require special patient monitoring and are a rapidly growing share of the costs to health plans. But for some patients, these pharmaceuticals hold promise for treating many serious diseases. A new Health Affairs brief outlines the key challenges around their use.

New specialty Rx online tool and research released

The Midwest Business Group on Health released a new online toolkit to support employers in better understanding and managing specialty pharmacy benefits. Additionally, they made available new research onemployers' views on biologics and specialty pharmacy finding that 49 percent said they have an above average understanding of specialty pharmacy. This is a significant increase over a similar 2011 survey where 78 percent claimed to have a low to moderate understanding of this challenging benefit.

“With costs estimated to make up 40 percent of an employer’s total pharmacy spend by 2020, it’s essential that they focus their attention on managing this benefit – doing nothing is no longer an option,” said Cheryl Larson, MBGH vice president. “Since employers primarily fund health care benefits for employees, their understanding of specialty drugs and related costs will be a key factor in resolving current challenges.”

Additional details including key findings can be found here.