How to control the cost of specialty drugs while maintaining a high level of member care management Featured

8:00pm EDT August 26, 2010

Editor’s note: This is the second of a two-part series about pharmacy plans.

Specialty pharmaceuticals are complex drugs that often require special storage, handling, administration and consistent patient monitoring. They are also a very expensive part of an employer’s pharmacy plan, with many drugs costing $600 per month and more.

Specialty drugs are typically used by 1 to 2 percent of a given population, yet account for 15 to 20 percent of total drug spending, and those numbers are growing, according to Steven Marciniak, director of pharmacy for Priority Health.

“As new drugs come to the market and existing drugs have expanding indications for use, some estimates are that, within five years, utilization will grow to 5 percent of the population and account for 25 to 33 percent of total drug spending,” Marciniak says.

Smart Business spoke with Marciniak about how to control the cost and utilization of specialty drugs while maintaining a high level of member care management.

For what types of diseases are specialty drugs needed?

The most common conditions treated with specialty drugs tend to be auto-immune diseases such as rheumatoid arthritis and multiple sclerosis, and various cancers. Human growth hormone deficiency, hepatitis C and hemophilia are other leading cost drivers.

What kind of management strategies can be used to control cost and utilization of specialty drugs while maintaining a high level of member care management?

One area to focus on is benefit design. Many specialty drug classes have multiple drugs with similar safety and efficacy profiles, creating opportunities for formulary positioning and associated rebate opportunities. Appropriate benefit design is necessary to drive utilization to preferred products.

Current predominant two-tier benefit designs do not allow pharmacy plans to take advantage of the changing marketplace. However, by using a three-tier plan with managed specialty benefit (five tiers total), you can leverage manufacturer pricing and influence member utilization to the cost-effective products.

You should also look at distribution channels. Partnering with a preferred specialty vendor often delivers the most aggressive pricing, as opposed to using multiple vendors, and also streamlines administrative efficiencies and creates a level of consistency in provider communications, formulary management and member care.

Most specialty drugs have prior authorization criteria in place that helps to ‘capture’ specialty drug requests. Occasionally, a specialty drug is approved only for limited distribution, typically to allow the FDA greater monitoring and oversight.

What are some strategies for formulary management?

  • Preferred/nonpreferred drugs. Most therapeutic classes of specialty drugs have numerous drugs available. Your plan should designate preferred drug status to certain specialty classes and follow up with aggressive provider detailing to maximize market share of the preferred agents.
  • Step therapy. For example, Anti-TNF (tumor necrosis factor) drugs Enbrel and Humira are self-injectable drugs administered through the pharmacy benefit. Remicade is an office-based infusion administered under the medical benefit. All three drugs have common indications, notably rheumatoid arthritis and Crohn’s disease. Remicade has a variable dosing schedule and data show that patients using Remicade often have higher total costs than those using Enbrel or Humira. Instituting a step therapy requiring a self-injectable before Remicade has resulted in lower claim cost and higher rebates.
  • Rebate opportunities. Companies are continually working to identify opportunities to increase rebates through preferred formulary status and/or step therapies.

How do specialty drugs affect patient care?

Members using specialty drugs are, by nature, high cost, and potentially high risk. They require a very member-centric, high-touch approach to managing their care. Every month, health insurance plans should contact members using specialty medications to assess therapy and arrange delivery of the next month’s medication. These calls help to ensure high compliance rates and desired clinical outcomes.

The contact by the insurance company should accomplish three things. Patient assessments are based on the specific condition. Data is shared with a case management team, allowing a unique collaboration between the specialty pharmacy and the health plan. In addition, co-pay assistance is often available. Many manufacturers of specialty drugs have programs designed to support members who may have difficulty meeting their cost-share obligations. As part of the health plan’s outreach, members are asked if there has been any change in household finances that might affect the ability to pay. If that is the case, they are connected with manufacturer programs that waive or reduce co-pays. These programs are becoming more valuable as more high-deductible plans continue to be popular and can also help Medicare Part D members through coverage gaps.

Finally, specialty medications are expensive, not always easy to use and often have side effects related to the drug or the administration of the drug. If a member is noncompliant for any reason, not only is the drug cost wasted but there exists the likelihood of increased disease complications.

A health plan’s monthly contact with members has been proven to deliver higher member compliance. The burgeoning specialty drug pipeline presents a challenge but also an opportunity. All management levers need to be employed in order to ensure appropriate use and acceptable cost.

Steven Marciniak is director of pharmacy for Priority Health. Reach him at (248) 324-2820 or