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A Quarter of Public Sector Health Plan Spending Goes Toward Covering Specialty Drug Costs

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Because of expensive specialty drugs, pharmacy expenditures accounted for one-quarter of healthcare spending by public sector health plans, according to a new report by two public sector health plan groups.

© Kenishirotie - stock.adobe.com

drug spending © Kenishirotie - stock.adobe.com

Specialty drug prescriptions and costs are on the rise in the United States and accounted for over two-thirds of new FDA approvals in the past three years.

To understand how public health sector plans are tackling rising pharmaceutical costs, the Public Sector HealthCare Roundtable and the National Institute for Public Employee Healthcare Policy collaborated on the 2023 Specialty Drug Survey and published a report of their findings this week.

Researchers gathered data from 21 plan sponsors across 16 states representing over 157 health plans for the 2021-2022 plan year.

Around 21% of respondents said they were struggling with the effects of copay accumulators.

Other trend results include:

  • The total spend on drugs averaged 7% across plan sponsors.
  • The average increase in spending on specialty drugs was approximately 11% across plan sponsors.
  • On average, respondents stated that approximately 1% of their pharmacy claims were for specialty drugs.

Respondents are using the following strategies to mitigate costs:

  • 100% of respondents use prior authorization across some or all specialty categories.
  • 43% use a separate copay or coinsurance tier for specialty medications.
  • 63% of respondents have exclusive specialty drug distribution by their current vendor.

Other results show that pharmacy expenditures account for one-quarter of spending among public sector employers and plan sponsors, even though specialty medicines are only being used by 2% of public sector employees. By 2030, spending is expected to double.

Collectively, the organizations provide coverage for 5.4 million public service employees.

The Public Sector HealthCare Roundtable also recommends 10 legislative actions to decrease prices. Among other suggestions, they recommended that drug manufactures stop their over-reliance on patents that prevent an earlier introduction of biosimilars to the market. They also stated there should be more funding for public and private research efforts from entities such as the Institute for Clinical and Economic Review, a non-profit organization that studies the value of medical treatments and tests.

“It is crucial to recognize that while employers can take measures to mitigate the impact of rising specialty drug costs, they alone cannot solve the overarching problem,” the researchers write. “Without corresponding public policy actions, the burden on the affordability of these drugs for individuals, plan sponsors, and government agencies is poised to become a substantial and pressing challenge.”

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