Mark Banach,
Director of Operations and Client Service
July 27, 2018

When the school nurse calls to inform me that my daughter has to go home because of a fever and sore throat, I don’t panic. Rest, fever-reducer & plenty of fluids usually solves the problem. One hundred years ago, without the standard vaccinations and treatments we have today, the same call would cause panic and fear in my household. Science has come a long way with vaccines and antibiotics in the last century. And more recently, the specialty drug segment has been growing exponentially. The good news is these new drugs are curing diseases that, in some cases, just 5 years ago were debilitating or life ending. With this exponential growth comes increased costs leading to some bad financial outcomes for employers and individuals. The question becomes, how do we balance the good with the skyrocketing cost (ugly) of specialty drugs as they are expected to be up to 50% of a group’s Rx spend?

 

Specialty drugs are in their own category because they generally require special handling, administration, or monitoring. Often, they are injectables or infused through an IV. There are hundreds of drugs in this category, and a large number in the FDA pipeline for approval. These drugs are making a significant difference in the quality of life for patients suffering from cancer, multiple sclerosis, autoimmune diseases and other chronic conditions.

 

One example of a recent specialty drug is Harvoni for Hepatitis C. Historically, this condition was chronic with no cure, sometimes requiring a liver transplant for treatment. With the development of Harvoni and similar drugs, this is a now a curable condition in up to 95% of cases. But these drugs are not your average medicines; they can cost up to $90,000 for a 12- week treatment plan. Another example is Humira used for rheumatoid arthritis and a variety of other conditions. This prescription can cost over $5,000 a month.

 

Specialty prescription costs, however, are not only showing up as pharmacy costs. Specialty medicines can be billed and administered through your medical plan under certain “J” codes (physicians and hospitals bill services using CPT codes). These expenses are much harder to track and identify.  Also, frequently unknown to the patient, the costs to the plan can vary significantly depending on the site of service. Sites of service include outpatient facilities, infusion centers, and the most convenient and least costly, home infusion. One example of this is the drug Remicade that can be delivered in a variety of settings. One client had a member receiving an injection approximately every 6 weeks in a hospital setting for almost $12,000 per injection. If they elected a home site of service, the cost would have been one-tenth of that.

 

What can we do to control costs?

 

At Group Alternatives we have been actively implementing various solutions for our clients that balance both the cost and outcomes. First, insurance plans should require Prior Authorization for these treatments to make sure the prescribed drug is the correct and most effective treatment for the underlying disease. In some cases, these specialty medications only are effective with certain genetic markers. Also, adherence with these medicines is critical and additional care should be taken to make sure all instructions are followed carefully. Limiting new scripts to less than 30 days helps make sure the medicine can be tolerated and helps control waste. We’ve also implemented strategies to discover the “J” codes we referenced to optimize the delivery of these injectables. Other strategies include mandatory specialty vendors or carve-outs, site of care optimization, and limiting new, unproven drugs as they come to market.

 

At Group Alternatives, we provide solutions based on each group’s specific data and medical utilization. Using analytics, we are able to see the Good, the Bad and the Ugly of each group’s expenses, including Specialty Rx. While our title harkens to the vintage Clint Eastwood Western, we can bring much more ‘Good’ to each employer’s unique set of circumstances—we have solutions that work for all.

© 2015 | Group Alternatives, Inc.

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