July DTR Analysis

July 1, 2005

July DTR Analysis

The specialty pharmaceutical category has left managed care executives scratching their heads over whether to keep it under the medical benefit or carve it out to the pharmacy benefit, according to industry experts.

“The medical plans know it is expensive, but strategies to address it are all over the board,” according to Tim Thomas, RPh, senior vice president, clinical services for HealthTrans. “There are many specialty providers that are talking and trying to influence the decision makers to carve out the specialty drugs to a specialty provider. This makes a lot of sense in some ways-better claims processing data, etc. However many physicians will resist this movement.”

Because plans do not know what to do with specialty drugs, fourth tier is rising in percentage use, according to Thomas.

The three-tiered benefit design has capped out, but this is not surprising, Thomas says. The three-tiered benefit has just about lived out its useful life,” he says. “A prescription benefit that educates the member about drug and therapeutic choices, will need to evolve. This is one of the main characteristics of consumer driven healthcare,” he says.

In 1991, Thomas designed a three-tiered benefit with a $5/$10/$15 copay. “The average cost of a brand prescription was close to $25. So the patient was paying about 50% to 55% of the cost of a third-tier drug. Now even with a $10/$25/$40 copay structure, a patient choosing a third tier drug like Nexium only pays about 25% to 30% of the total cost.”

It still surprises Thomas that the two-tiered benefit structure is used 64.5% of the time by health plans. “Executives will have to address this issue with their union plans as a two-tiered benefit with low copays is just not economically viable anymore,” he says.