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Member cost sharing is one of the mainstays in pharmacy benefit management. In the state of Delaware, however, a new law puts a $150 cap on specialty-drug copays, which will have insurers relying more heavily on other interventions to manage spending.
The law signed by Governor Jack Markell will go into effect in 2014 and limits patient out-of-pocket costs to $150 per specialty-tier drug, per month. Another provision also allows members to request access when a specialty drug is not included in a health plan’s formulary.
A group of stakeholders including patient advocates, Highmark Blue Cross Blue Shield of Delaware and drug manufacturer Pfizer researched the policy and its effect on patient access prior to the governor signing the law.
“It’s not all about the cost share that you’re putting on the member,” said Sarah Marche, director of pharmaceutical contracting for Highmark. “It’s got to be about what we do behind the scenes.”
Specifically, clinical management and prior authorization are among the strategies managed care plans rely on for costly specialty drugs. Clinical teams determine the right dose of the right drug for the right patient, based on FDA approvals, to ensure appropriate utilization.
“After you’ve decided that the patient is appropriate clinically, you have to have aggressive pricing from your specialty pharmacies or the physicians that use the product,” Marche said.
Highmark has the advantage of covering a large population with 5.3 million members and therefore can negotiate for optimal pricing on specialty drugs. Marche says Highmark uses an exclusive specialty pharmacy that can provide better pricing because of the plan’s high volume.
Specialty drugs are often first-in-class therapies that treat serious diseases, such as multiple sclerosis and cancer, and are delivered through infusion or injection.
For plans, managing the site of drug delivery can also translate to cost control. Plans often find price variation among infusion suites, hospitals and physician offices, with the physician office being the least costly site and the hospital being the most costly. More favorable reimbursement for providers can incentivize them to deliver the drugs in their offices rather than send patients to higher cost sites.
With hundreds of specialty agents in the drug pipeline and their utilization certain to grow, plans must also consider how their current strategies will apply in the future.
According to ICORE Healthcare, a subsidiary of Magellan Pharmacy Solutions in its 2012 trend report, the quantitative annual spend for specialty drugs is $255 million per 1 million lives. And the annual cost trend is expected to continue at an estimated 15% growth rate. Similarly, pharmacy benefit manager Express Scripts projects that spending will increase to account for more than half of all pharmacy-related costs by 2019.
“Specialty is now about 20% of our drug spend, and it’s only increasing,” Marche said. “It’s a low volume of claims, but they’re very high-cost claims.”
Marche says Highmark will focus on clinical management and pricing because cost shifting to the member will only cause added medical costs downstream with increased hospitalizations, for example.
Although less than 2% of the population needs specialty drugs, the segment currently accounts for 24.5% of total spending nationwide, according to Express Scripts. In 2012, FDA approved 22 new specialty drugs, many of which cost more than $10,000 for a 1-month course of treatment.
“We’re talking drugs that cost $10,000 or $15,000 a month,” Marche said. “Sometimes I feel like it’s a race on who can come out with the most expensive drug.”
This article was originally published in Managed Healthcare Executive, September 2013.