PSG Survey: Alternative Funding for Specialty Drugs not Viable Long Term

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Renee Rayburg talks about how paying for specialty drugs continues to be a top concern for both health plans and employers.

Health plans and employers surveyed by Pharmaceutical Strategies Group (PSG) don’t believe alternative funding options for specialty drugs are sustainable. Overall, respondents expressed a lack of confidence that these methods can works long term, with nearly 70% rating them not at all or slightly sustainable, according to the annual Trends in Specialty Drug Benefits report from PSG.

This type of funding — which matches patients with funds from foundations, manufacturer patient programs, grants, public charities, and government programs — can offset high specialty drug costs. Of those surveyed, 12% currently use alternative funding and another 21% are considering it. Among employers, 4% use alternative funding models and 14% of employers are considering their use. Among health plans 7% of health plans use alternative funding models, and 33% of health plans are exploring their use.

Renee Rayburg

Renee Rayburg

But as more people begin to use these funds, the dollars are getting stretched, which leads many to believe this is not a long-term solution to rising cost of specialty medications, Renee Rayburg, vice president, specialty clinical consulting at PSG, said in an interview.

“There are some who have the opinion that using this funding may be shady,” she said. “People are cautious, and I think that plays into it to like how sustainable these programs are. There is a finite number of dollars, whether you’re the payer, manufacturer, or health plan.”

Pharmaceutical companies, for example, are starting to pull back on their patient assistance and copay coupons, putting limits if PBMs and plans have programs that end up shifting more costs to patients. But 70% of the plans and employers surveyed by PSG said copay assistance were needed to help patients afford these medications.

Related: Patients Often Lose in the Battle between Pharma and PBMs

PSG, in its report, defined specialty drugs as those that are highly complex, costly and require specialty handling or administration. Specialty medicines continue to be a concern and a challenge for plans and employers. Patients who use specialty medications made up about 5.5% of commercially insured member populations in 2021, up from 4.8% in 2020, according to the PSG survey. But they account for 55% of medication spending in the United States, according to IQVIA.

Rebates remain an important cost-management strategy. Among respondents, 94% received rebates under the pharmacy benefit, and 39% received rebates under the medical benefit. Health plans were much more likely than employers to receive rebates under the medical benefit (66% versus 27%)

Of those surveyed, 12% of respondents report using value-based contracting for specialty drugs, with health plans more likely to participate in these programs. But some respondents said barriers to adoption include the need for additional evidence, difficulty agreeing on and tracking outcomes, and lack of resources/buy-in.

“Value-based contracting is complex,” Rayburg said. “Sometimes it’s difficult to collect the data and how do you prove the drug is not working? Unless you have like a true measurable marker, like a lab value, sometimes it’s subjective.”

Additionally, she said, respondents said there was a lack of resources to collecting data. “With the low volume of patients for whom the contracts could apply, they rely on external sources of guidance.”

Value-based contracting, however, will become more important with more gene therapies on the horizon. Rayburg expects 10 or more new cell and gene therapies to be reviewed in 2023.

Many respondents indicated that the affordability of gene therapies will be a moderate or major challenge in the next two to three years. And 24% of respondents have had a gene therapy patient; 81% expect affordability of gene therapies to be a moderate or major challenge in the next two to three years.

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