5 ways to manage specialty drug expenses

By 2018, specialty drug expenses will comprise 60% of all drug spend, 3 times more than 2014, according to Prime Therapeutics 2014 Report on prescription drug cost analysis.

This means using pharmacy benefit tools and member engagement strategies to manage them effectively is important, according to Peter Wickersham, senior vice president, integrated care and specialty at Prime.

“As pharmacy costs accelerate, appropriate and aggressive management of specialty drugs is the key to staying ahead,” Wickersham said.

Prime recommends 5 strategies for formulary managers:

• Actively manage specialty drugs under both benefits.

• Be aware of the pipeline for chronic conditions, such as Hep C. Develop strong Hep C utilization management programs to ensure the most cost-effective and appropriate therapy is used.

• Make generics the most attractive option and provide member service that makes it as easy as possible for patients to move to a generic.

• Aggressively manage the use of lower-cost or preferred formulary agents to yield savings.

• Assess using a formulary exclusion list for certain therapeutic classes with available alternatives.  

Net cost per prescription offers the clearest picture of where prescriptions costs start and how they compare among pharmacy benefit managers (PBM), according to Wickersham.

“Specialty drugs are the clear driver of the net ingredient cost increase,” he said.

According to the report, specialty net ingredient costs increased 14.4% , reaching an average cost of $3,150. Inflation was the main factor, but increased adoption of more expensive specialty treatments also played a role.

Despite higher ingredient costs for both brand-name and generic drugs, traditional drug costs decreased in aggregate-1.0% because of the continued shift toward generics and other less expensive traditional drugs, according to the report.

The report looked at changes in Prime Therapeutics’ drug costs, utilization and other key measures that affect pharmacy spending. Data from Jan. 1, 2013 to Dec. 31, 2013 was compared with data from the same period in 2012. Pharmacy trend data represented close to 145 million commercial claims processed in 2013. Claim counts were assigned based on days supply, and 90-day fills were converted to carry the same weight as 30-day retail fills. Medical trend data came from combined medical and pharmacy benefit data for 10.8 million commercial members.

In the past, many commonly used and low-cost drugs were excluded from specialty classifications. Today, these drugs are frequently being included, a redefinition that makes specialty drug trend appear lower. Given the extreme variability of specialty drug costs, the definition truly makes a difference. Prime’s defines specialty as “all drugs managed through our specialty program.” This is equivalent to approximately 0.4% of all commercial claims.