Employers are Concerned about Specialty Drug Costs


Wendy Barnes and Mark Campbell of RxBenefits discuss the company’s survey, which finds employers are curious about solutions to manage both specialty drug spend and the potential volatility that comes with employees who may be diagnosed with cancer and other high-dollar conditions.

Specialty drug costs is a large and growing component of prescription drug costs and remain among the biggest pain points of small- and midsize employers surveyed by RxBenefits. Over the last three years, specialty drugs have been about 50% of drug spend for the company’s clients, Wendy Barnes, CEO of RxBenefits, said in an interview for Formulary Watch.

Wendy Barnes

Wendy Barnes

RxBenefits calls itself a pharmacy benefits optimizer. The company acts as a consultant for self-funded and small- and mid-size employers, giving them the purchasing power of larger companies. RxBenefits goes to the market on behalf of its clients, Barnes said. “We aggregate the services of the larger PBMs in terms of network and rebates, the things that really lend themselves to large scale,” she said.

The specialty drug component, Barnes said, has really changed dramatically in the last 10 years. “Employers think about how they are going to manage this effectively over time as dollars shift from medical to prescription that isn't necessarily offsetting costs on the medical side,” she said. “We consistently see growing concern over specialty drug costs and the growth of specialty spend,” she said. “That is a risk to employers, particularly smaller employers for whom one of these claims can be the difference between meeting their budget financial objectives for a year versus not.”

Specialty drug spending per member per year (PMPY) has increased by 14.2% in 2021 compared with 2020, according to the most recent Artemetrx State of Specialty Spend and Trend Report. Developed by Pharmaceutical Strategies Group (PSG), the sixth-annual report uses integrated pharmacy and medical claims data to provide a view specialty spend and trend.

The specialty drug spend across both the medical and pharmacy benefits in 2021 averaged $1,295, an average increase of $161 compared with $1,134 in the prior year. Utilization is driving the specialty trend, executives from PSG said, and they said as new, costly therapies for higher prevalence diseases such as new migraines and asthma are introduced, the double-digit trend will likely continue.

Related: Spending on Specialty Drugs Maintains Double-Digit Growth

Most of the trend in costs was in two conditions: anti-inflammatory and dermatological agents. “But most of the volatility is in the other categories, including cancer and some of the newer orphan drugs,” Barnes said. “We’re probably going to continue to see increases in utilization around anti-inflammatory and dermatological conditions because there’s an extraordinary amount of advertising that goes into those two therapeutic categories."

The survey revealed other pain points for employers, including lack of price and contract transparency, drug cost transparency, and lack of visibility into benefit utilization. Employers are more curious now about alternative funding or other options for prescription coverage and for their employees, Barnes said. “These run the gamut from copay assistance programs, patient assistance programs, to even offshore sourcing of drugs,” she said. “There's a lot of misinformation in the market around these programs and employers in partnership with their brokers are just looking for a source of truth.”

Mark Campbell

Mark Campbell

Employers want to understand the true costs of medications and the tools available to access care for their employees at the most practical, affordable cost, added Mark Campbell, vice president at RxBenefits. “Employers want to know what kind of solutions are available to them to manage both the trend and the potential volatility that can come from having a member on your plan that has a new condition that’s going to cost 100,000 or $200,000, a year or more.”

Campbell said another factor driving the specialty trend is that many of the newer therapies are going to be persistent with higher life-time costs. Novartis’ Gleevec (imatinib) was the first of these type of therapies, he said. Gleevec was approved in 2001 to treat patients with chronic myelogenous leukemia (CML), a rare form of cancer that affects certain types of white blood cells. The therapy transformed the treatment of cancer and established that cancers can be targeted to the specific genes involved.

“These drugs work and they are a benefit to people, but they are very expensive and the lifetime cost is much more protracted than what we’re accustomed to on the past,” he said.

Related Videos
Related Content
© 2024 MJH Life Sciences

All rights reserved.