Cost Saving Strategies That Will Lower Your Specialty Drug Spend
Specialty drugs cause sticker shock – which is no surprise considering their cost made up half of the $603 billion dollars spent on prescription drugs in 2021 – despite making up only 2% of all prescription medications filled.
There have been major innovations in the specialty drug market throughout the last decade. In 2021, 72 novel active substances launched in the US, with more than half made specifically for rare diseases. This year, we will see even more advancements, including introductions of biosimilar drugs (medicines that are structurally similar to the original drug) that will replace many of the market’s leading biologic medications.
This is great news for patients, but more options can lead to more confusion when navigating an already complex healthcare landscape.
Self-funded employers are always on the hook for portions of the medications employees and their dependents take. If you want the best for your employees – making their health and well-being a high priority is necessary. Unfortunately, life-changing, and sometimes lifesaving medications do not come cheap, and their price can be dependent on how and where the patient gets them.
When looking at your bottom line, these drugs can skyrocket your health-related expenses.
Below you will find examples of medical conditions that can be treated with specialty medications – depending on their severity – along with strategies your organization can implement to help bring costs of these drugs down.
Cost Saving Strategies for Conditions That May Require Specialty Drug Treatment
Inflammatory Conditions
Inflammatory conditions cause the immune system to attack its body’s own tissues, causing inflammation.
Common inflammatory conditions include:
Inflammatory Bowel Diseases (IBD)
Rheumatoid arthritis
Asthma
Lupus
Psoriasis
Biologic drugs – drugs that come from living sources like sugars, proteins, or DNA – are specialty drugs used to treat these and other inflammatory/autoimmune conditions.
It’s important to note the above conditions do not require the use of biologic drugs for management and can be treated with lower-tier medication – depending on the type and severity of the condition.
Humira is a popular drug used for conditions like Crohn’s disease, ulcerative colitis, plaque psoriasis, and many types of arthritis, including juvenile idiopathic, psoriatic and rheumatoid. The brand has captivated the market – and kept prices high – because its manufacturer, AbbVie, has held on to patents that eliminated any competition. However, in 2023, at least 12 Humira biosimilars will enter the market. With competition expanding, Humira will need to compete against these lower cost alternatives in the market place.
Strategies to Maximize Cost Savings for Members with Inflammatory Conditions
Inflammatory conditions are painful, and employees suffering from them deserve to find relief. Because there is a wide variety of inflammatory conditions and only a few severe cases require specialty medication, the best strategy to reduce any specialty medication cost for these conditions is to educate plan users about biosimilar drug options.
Cancer
Because specialty drugs are the main treatment for cancer, it has become the top condition for specialty drug spend among employers – making up roughly 11% of all employer groups spend. For a single cancer diagnosis, it is not uncommon that upwards of 50% of the total claim cost is attributable to specialty drug therapies.
Five types of cancer account for 60% of all cancer costs:
Breast Cancer
Leukemia
Lung Cancer
Multiple Myeloma
Lymphoma
New oncology drugs had a median annual cost of $260,000 in 2022, up from $223,000 in 2021. This is the ninth consecutive year with oncology median annual costs rose above $100,000 – which was once thought to be the price ceiling for cancer drug costs.
Examples of cancer drugs that fall within the above price ranges include:
Lenvima (WAC price: $268,372) – used to treat types of thyroid, kidney, liver and endometrial cancers, and is commonly used in combination with other expensive medications that typically show up on the medical billing side.
Exkivity (WAC price: $325458) – used to treat non-small cell lung cancer
Piqray (WAC price: $266,019) – used in the treatment of certain breast cancer types
While not all cancer patients will receive a diagnosis that requires these medications, the examples above show why cancer drug therapy costs make up large chunks of employer group pharmacy spend.
Strategies to Decrease Spend on Cancer
Any cancer diagnosis is devastating. To help members of your organization limit risks that lead to cancer and the costs associated with its treatment, you can:
Encourage employees to have timely preventive screenings to identify cancer early
Promote lifestyle changes that will reduce risk of cancer by educating employees on:
Benefits of a healthy diet
Dangers of tobacco use and resources to help smokers quit
How to reduce environmental toxin exposure
Benefits of exercise
Dangers of sun exposure
Should a cancer diagnosis arise, making your employees aware of the options they have will significantly reduce cost for both you and the patient.
Educate members on all available medical and prescription drug channels where they can seek the best care at the lowest plan cost
Show members where they can find centers of excellence in-network
Avoid the risk of costly, ineffective treatments by educating members on resources available for cancer support that is offered by the plan
Cost Saving Strategies for Conditions That May Require Specialty Drug Treatment: Key Takeaways
Utilizing these strategies can lead to a significant decrease in prescription drug spend. The main takeaways are:
Educate and encourage employees to use the most cost-effective treatment(s)
Help employees reduce their risk for ailments that are commonly be treated with specialty drugs
Encourage employees to talk with their providers about generic or over the counter treatment for less severe conditions
Create a formulary management plan and decide what prescriptions you want to cover and include what conditions are eligible for prescription coverage
Monitor specialty mediation spend on medical
Work with your pharmacy benefit consultant or broker partner to ensure any prescription drug contract analysis is properly negotiated so you’re confident your plan encapsulates market-competitive drug pricing and is up to date on current pharmacy trends
The first three strategies can be completed through the creation of a health task force or promotion around the workplace. However, the last three are a bit more complex, and may require a deep dive into your pharmacy benefit manager contract.
Lowering Prescription Drug Spend for Employers
CaravusRx Certified Pharmacy Benefits Specialists are experts at finding cost savings hidden in PBM contracts and have helped organizations realize millions in pharmacy benefit savings. Check out a real client’s analysis here.
If you’d like us to take the work of deep diving into your pharmacy benefit manager contract off your plate, contact us for a complimentary pharmacy benefit manager analysis today!
Sources: Springbuk; Healthline.com, CNBC.com; NBC.com; GoodRx.com, cdc.gov, nsc.org, Ibid, InnovativeRx