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The Biggest Ways to Reduce Specialty Drug Costs


Managed Healthcare Executive’s Managed Care Pharmacy Survey identifies different ways specialty pharmacy stakeholders believe they can reduce industry costs moving forward.

Pills on currency

How can the healthcare industry better curb skyrocketing drug costs? Especially when it comes to specialty pharmacy offerings?

Dan Renick, RPh, MS, president of Precision Value & Health, says this small percentage of the drug market, catering to those with rare diseases or various types of cancers, represent some of the most expensive drugs on the market.

“Ninety percent of pharmaceuticals that people use are lower-cost generic drugs,” he explains. “But 1% to 2% of the population, with very rare orphan diseases or cancers, require drugs that are very costly-it burdens the system and it burdens patients with a lot of out-of-pocket costs.”

With the Commonwealth Fund suggesting that specialty pharmacy is expected to account for 40% of total drug spend by 2020, payers, providers, and patients are looking for ways to reduce costs. And when specialty pharmacy stakeholders, including providers, consultants, health plans, and pharmacy benefit managers (PBMs), were surveyed about the biggest opportunities to reduce specialty pharmacy costs in the 2019 Managed Healthcare Executive (MHE) Managed Care Pharmacy Survey, respondents said performance-based contracts with drug manufacturers (26.9%) and governmental pricing regulation (23.4%) could lead the way.

Related article: Managed Care Pharamcy Survey 2019

“As the current era of digital technology evolves, it is well-evidenced from these survey results that our nation’s key healthcare stakeholders recognize the critical value of enhancing communication with the prescribing community at the point of patient care,” says MHE Editorial Advisor David Calabrese, RPh, MHP, senior vice president and chief pharmacy officer for OptumRx. “Our industry is poised to adopt and deploy tools and resources to improve the timing, efficiency and quality of service provided to patients.”

Calabrese suggests several industry tools provide greater transparency for providers into comparative drug prices, enhance utilization management programs, and provide patient-specific clinical intervention opportunities at the point of prescribing. Calabrese notes these available tools not only offers the potential to reduce pharmacy costs but also increases the likelihood for longer-term improvement in patient outcomes and total cost of care.

“If we want to conserve costs wherever possible and expand access to these drugs, we need to be able to identify who will truly benefit from these treatments,” says Renick. “Utilization management can get some backlash in the marketplace because it feels like insurance companies are just trying to keep people from getting on expensive drugs. But these kinds of strategies help match patients with appropriate treatments based on data and evidence. If we can better understand how to more effectively and appropriately manage high-cost specialty drugs, we can not only help curb some of these skyrocketing costs, but we can keep patients from treatments that often have terrible side effects that aren’t going to help them.”

If, and only if, the industry gets to a point where it can better identify who is an appropriate candidate for specific drugs can performance-based contract, the top choice for survey respondents, be successfully implemented, Renick adds.

“If I’m a drug manufacturer, and I’m entertaining these kinds of outcomes-based contracts, I naturally want the most appropriate patients to be prescribed this drug-the patients who will actually be helped by it-so that contract can be successful,” Renick says. “Too often, one of the big sticking points for performance-based contracts is not being able to get hands on data that can help stratify which patients will be helped by it. And, if a drug is prescribed to patients who won’t be helped by it, that’s going to skew the overall results about that drug’s effectiveness.”

And it is here, at the intersection of utilization management and performance-based contracts, Renick argues, where government can help lead the way to reducing specialty pharmacy costs.

“We’ve got a marketplace with rules that were developed two or three decades ago,” he says. “So, an effort at the government level to make sure roadblocks that were developed for 20 years ago aren’t stopping us from making progress right now. But, in addition, there needs to be an industry-wide effort to get our hands on the right data elements that will help us to understand how a patient responded to a treatment and offer a line of sight clear enough for all parties to say, ‘We can be in a contractual agreement because we all agree that this is the data that will tell us whether or not it’s appropriate.’ Those two things can get us to the point where we can better spend pharmaceutical money and make sure that patients are getting the drugs that they need the most.”

Kayt Sukel is a science and health writer based outside Houston.

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