Helping Self-Funded Employers Curb Costs of Specialty Medicines:

Brokers Align with Specialty PBMs and Specialty-focused Pharmaceutical Management Companies

By Dea Belazi
Self-funded employers face unique challenges when determining how to manage and administer specialty drugs for their plan population, especially with high costs that are still accelerating. In response, brokers can point employers to leading pharmacy benefit managers (PBMs) and specialty-focused pharmaceutical management companies that have the expertise to recommend and navigate key strategies, such as an integrated process with manufacturer’s discounts, formulary rebate management and aggressive discounts that can save clients’ money for vital medications.

These benefits intermediaries can also play an integral role in advocating for patients seeking assistance that reduces medication costs as well as negotiating on a payer’s behalf for prescription rates.

A look inside the specialty drug market
Specialty pharmaceuticals represent the fastest-growing segment of the pharmaceutical industry, dominating new drug development while capturing the attention of payers, providers and consumers seeking effective treatment options to address the complex health challenges associated with chronic or rare diseases.

The specialty niche in pharmacy is approximately 30% of all prescriptions sold. By 2020, growth trajectories in specialty spending are estimated to quadruple, resulting in $400 billion annually, while specialty medications are expected to account for over 50% of prescription drug costs in the next two years.

Medications in specialty pharmacy range from oral to cutting-edge injectable and biologic products, including medications that are infused at the hospital and physician office. Both pharmacy and medical benefits are growing areas that require proactive management.

Diseases treated range from cancer, multiple sclerosis and rheumatoid arthritis to rare genetic conditions. Given the complexity of these treatment regimens, the typically high cost of these drugs (at $1,000 or more per month) and the volatile regulatory climate impacting the pharmacy benefit management industry, there are growing pressures from both public and private sectors to provide an even greater level of specialty drug expertise to the management of these drugs.

It’s important to grasp the complexity of this market, its impact on costs and understand that specialty drugs are often more intricate than traditional medications because of the narrow therapeutic window and cost.

Shift toward value-based pharmacy management
Value-based pharmacy management—paying for medications based on outcomes— is the new focus, prompting manufacturers and payers to track real-world outcomes associated with specialty products to ensure positive outcomes and efficiency.

This means that intermediaries, like PBMs and specialty-focused pharmaceutical management companies, will play an increasingly critical role in getting patients the drugs they need at a price they can afford, relying on their vast resources to negotiate on behalf of insurers and customers. The key is to demonstrate specialized expertise and deliver value throughout the care continuum.

These intermediaries are extremely effective at incentivizing the use of generic drugs over costly branded drugs. In the United States, nearly 90% of all prescriptions written today are for inexpensive generic drugs, in large part thanks to the sophisticated formulary techniques introduced by intermediaries. Intermediaries serve patients and payers alike, delivering transparency and collaborating with clients, patients and payers to save money and reduce costs. They help stakeholders navigate the complex world of drug pricing and high-cost specialty drugs, and they create effective solutions that curb costs.

The challenge has been a fragmented market that serves smaller patient populations, creating more individualized therapies that are, by definition, higher cost and that render patient compliance more difficult to ensure. To combat this, PBMs and other intermediaries have been pushing for greater pricing transparency, going beyond the limitations of what a PBM offers to further protect healthcare consumers. This is of growing and urgent importance, given the anticipated economic fall-out of the COVID-19 pandemic.

Gain bargaining power
Perhaps their greatest strength is that PBMs provide bargaining power and strive to negotiate lower prices with drug makers to save seniors and other patients approximately 50% a year on their prescription drug and related medical costs.

A majority of rebates and discounts are passed back to patients, according to insurance executives. In fact, rebates reduce costs for patients and insurers. In the absence of these cash flows, it is more likely that drug costs for patients and insurers would go up rather than down.

The shift toward personalized medicine demands a much more clinically oriented model of pharmaceutical delivery and pressures PBMs to deliver greater value-based services, such as testing, patient engagement and compliance-monitoring tools. Significantly, the growth in specialty pharmacy as a percentage of all drugs—and with far greater costs per prescription—will only exacerbate the shift and growth in drug costs.

Improving on the PBM model: specialty-focused pharmaceutical management
Rather than adding a layer of bureaucracy to patient care, intermediaries like specialty-focused pharmaceutical management companies represent a significant resource in a common goal: getting the right medication to the right patient at the right time, and at an affordable price.

The need for higher value-added and service-oriented PBMs that leverage communications, telemedicine and analytical technologies is becoming increasingly important. What’s more, the current healthcare environment is forcing both PBMs and payers to reexamine their business models, opening a window for emerging players and the development of niches—like a specialty-focused pharmaceutical management company.

A company with this level of expertise offers the same capabilities as a PBM but with the addition of more critical capabilities, such as drug access and understanding, clinical programs for patients, claims processing, patient engagement tools, programs and strategies, and assistance programs like grants and copay assistance.

A number of stakeholders stand to benefit from this level of expertise, including large self-insured employers.

Benefits of innovative specialty pharmacy programs
Given the complexity of specialty drugs, patients require active clinical management, considerable education and sophisticated logistical support for administering and optimizing the therapeutic outcomes of these drugs. Specialty and other high-cost medications are often misused and underutilized without specialty pharmacy management programs, support systems and monitoring tools in place.

A specialty-focused pharmaceutical management company helps to reduce prescription drug costs and improves quality for patients, employers, unions, and government programs by:
· Engaging patients to make better health decisions and maximize the use of their benefits
· Supporting healthcare providers through evidence-based care
· Improving patient adherence to their treatment plans and supporting patient safety
· Assisting physicians in managing increasingly complex medication regimens and patient populations
· Focusing on clinical outcomes, their corresponding economic savings, and value-based pricing
· Offering lower-cost pharmacy plans that offer convenient access and extra discounts at certain pharmacies
· Providing lower-cost home delivery of medications for patients with chronic conditions
· Negotiating rebates and discounts from drug manufacturers and pharmacies
· Leveraging competition to reduce the cost of specialty medications and improve adherence
· Encouraging the use of generics, biosimilars, and more affordable brand medications
· Managing specialty medications billed under both the pharmacy and the medical benefits
Look for an innovative specialty pharmacy program that has been developed as specialized solutions to the biggest driver of pharmacy drug spend today and into the future. It should be available on a standalone basis or as part of a full-service PBM option and serve as a high-touch service model that includes: patient and/or caregiver education and training by care coordination teams, beginning on day one; assistance for patients with high deductibles/co-insurance/copay costs by utilizing patient assistance programs and other drug savings programs; and coordination and collaboration with the patient, physician, pharmacist and payer throughout the patient’s course of therapy.

While specialty drugs—such as limited distribution products—are a huge driver of drug spending for employer groups, the right programs offer a proven approach to saving clients money by offering an integrated process with manufacturer’s discounts, formulary rebate management and aggressive discounts through its specialty pharmacy network.

In terms of pricing, the program should utilize an extensive network of specialty, long-term care and retail pharmacies, along with manufacturer’s discounts and rebates, to provide the best price possible.

As the prices of specialty drugs continue to rise in the United States, brokers can play a key role in helping clients find ways to make these medications more affordable. Going well beyond the limitations of a PBM, a specialty-focused pharmaceutical management company represents a more innovative way to work with specialty pharmacies and manage drug benefits, lower costs and improve the quality of healthcare.

Dea Belazi, PharmD, MPH, has more than 20 years of experience in the healthcare industry, mostly developing and managing pharmacy benefit management companies. He is president and CEO of AscellaHealth, a national PBM with almost 2 million lives under management. He was part of the development of PerformRx as well as Future Scripts. Dea holds a PharmD from the University of RI and completed his dissertation work at Brown University and later completed an MPH from Johns Hopkins University and a postdoc health outcomes research fellowship at Thomas Jefferson University.