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The Importance Of Specialty Medication Management

January 03, 2013 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Navitus Clinical Journal, Vol. 9 – January 2013

Approximately one to five percent of the population uses specialty medications. Nonetheless, spending for specialty medications has increased between 15 and 20% for the last several years and is expected to represent up to 40% of an employer’s total medical spend by 2020. Controlling specialty medication cost is therefore a critical focus area for plan sponsors. With more and more specialty drugs coming down the pipeline, it will be increasingly important for plan sponsors to manage this area of their drug spend.

Managing this highly complex area involves coordination among multiple parties, including plan sponsor, pharmacy benefit manager (PBM), medical administrator, specialty pharmacy and the patient.

Benefits of Specialty Drug Control
Growth in specialty spending is expected to outpace non-specialty spending due to:

  1. High proportion of newly approved drugs in the specialty market
  2. Complex and expensive manufacturing processes
  3. Limited competition within specialty medication therapy classes

It is clear that plan sponsors can benefit from managing specialty costs. While specialty medications may represent a low percentage of the drugs purchased by the plan sponsor’s members, the cost of these medications represents much more than the actual percentage of medications purchased.

In addition to cost control, helping members adhere to their regimens with specialty medications is essential, as high adherence rates have been shown to reduce hospitalizations, promote better health outcomes and lower overall health care costs.

Ways to Manage Specialty Medications

1. Implement a Mandatory Program

We recommend that plan sponsors implement a SpecialtyRx program as mandatory for members with specialty needs. Specialty programs coordinate personalized support for patients impacted by chronic and complex diseases, such as rheumatoid arthritis, multiple sclerosis and cancer. Such diseases often require complicated medication regimens that include specialty medications. By mandating use of a specialty pharmacy vendor, plan sponsors reap the benefits of reduced drug discounts with specialty pharmacy partners (versus the typically higher retail pharmacy pricing), superior clinical oversight, and individual member case management

2. Incorporate a Split-Fill Program

A  Specialty Split-Fill Program reduces days’ supply to 15-day intervals for qualifying high-cost specialty medications that typically have high discontinuation rates within the first three months of therapy. This prevents unnecessary dispensing of two weeks of therapy, should therapy be discontinued within the first half of the first three months of a prescription. This program also allows specialty pharmacy to initiate earlier clinical interventions due to medication side effects that require dose modification or therapy discontinuation. According to the May 2012 issue of Managed Care, a health plan with about 500,000 members saved approximately $300,000 in its first year with a split-fill program.

3. Know your Specialty Costs Through Pharmacy & Medical

Plan sponsors should equip themselves with information about their specialty drug spend and track specialty costs not only through their PBM but through their medical vendor as well. Less than 20% of health plans and employers currently receive reporting from their PBMs or other health care vendors on medical specialty utilization. Given that plan sponsors identified specialty drug costs as one of their two most important outcomes for specialty management, and that 50% or more of the specialty spend resides on the medical side, this gap represents a critical area of opportunity.

4. Managed Specialty Programs relieve clients of the burden of managing their specialty populations and assume this responsibility through a comprehensive, patient-centric program that offers:

  • Built-in utilization management edits (e.g., prior authorization, step therapy) to ensure members use lower cost specialty products, where appropriate.
  • Continually negotiated lower discounts with specialty pharmacies.
  • Price increase protection built into rebate contracts for specialty drugs, where available, to account for price inflation; that is, when certain products increase in price, rebates for those products automatically increase as well.
  • Continual monitoring of new drugs entering the pipeline. Their Pharmacy & Therapeutics Committee will continue to monitor and evaluate specialty drugs, including any biosimilars being released. Biosimilars are products that are chemically similar to other products; very few have received FDA approval at this point. We expect biosimilars will be significantly less expensive than their specialty brand medication alternatives and will play a bigger role in controlling specialty trend in the future.

As an example, a plan sponsor’s employee has a very expensive specialty medication. This specialty drug utilization represents less than 2% of total utilization, but accounts for, on average, half of the plan sponosor’s drug spend. The previous discount for the drug was under 20% off the average wholesale price. After its transition to a managed specialty program, the discount for this drug rose to 47% off the average wholesale price, providing a savings of more than $140,000 in the first three quarters.

How to Begin to Control Specialty

If you do not currently use a mandatory program, talk to your provider today to implement the program. Plan sponsors can reap the benefits of  preferred pricing via a specialty pharmacy, and their members can benefit from the one-on-one specialized care from the case managers available through  specialty pharmacy vendors.

Be proactive and take control of this sector of your plan’s drug spend. By maintaining a tightly managed specialty program, not only will plan sponsors benefit from reduced costs, but their members will also benefit from improved overall health.

Is PBM Spread Pricing Increasing The Cost of Your Self-Funded Employee Health Plan?

December 28, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Terrance Killilea, Pharm.D. and Scott Haas, 12.08.11

Pharmacy benefit managers (PBMs) are contractors hired by health plans to administer health plan pharmacy benefits, and PBMs that practice spread pricing, charge plan sponsors (employers) more for prescription drugs than what’s actually paid to the pharmacy.

Spread pricing is largely unknown to employers and those who pay health bills. The practice is occasionally understood by some participants in the health system (health plans, brokers), but often not acted upon due to relationships. Spread pricing has a significant impact on health plan costs. For example, when a PBM pays a pharmacy a minor amount (say $6) for a prescription, but charges the employer and patient a much higher price (say $30). This higher amount is reflected in both the co-pay and the billing to the employer.

Clearly, this has an impact on the cost of a self-funded program, but it also impacts the premiums of fully insured programs through experience. Health plans providing fully insured coverage, where spread pricing is occurring, either do not know about spread pricing or know about it and share in the revenue. This revenue sharing often amounts to a per prescription fee paid to the health plan by the PBM. This arrangement occurs in both self-funded and fully insured situations. Regardless of the setting, spread pricing increases the cost of prescription claims above the actual cost paid to the pharmacy.

Health plans often use terms such as “transparency” or “pass-through” to explain pricing, but this does not address the actual issue of spread pricing. Elimination of spread pricing lowers claim costs for patients and plan sponsors, increases the affordability of medications, and is likely to improve overall health outcomes.

Until recently, spread pricing did not affect members of a health benefit plan. When a PBM reported a claim cost of $45, paid the pharmacy $12, and charged the member a $10 co-pay, the member was not affected by the higher claim cost. The plan, however, experienced a charge of $33 more than what was actually paid to the pharmacy. In this type of copayment  design, it’s the plan sponsor (employer) who bears the increased cost of spread pricing. 

Now, with increasing frequency, employers are establishing high deductible health plans (HDHP). An estimated 18 million Americans were covered under this type of plan in 2010*. A HDHP typically has an annual deductible of at least $1,200 for individual coverage and all expenses (except some preventive visits), including pharmacy costs, go toward the deductible. In the most common claim scenario, it’s the prescription drug cost that accumulates to satisfy the member’s deductible and out-of-pocket expenses. In some families, the prescription cost is the primary source of medical care cost, particularly in plans where maintenance check-ups and other wellness services have no co-pay or out-of-pocket exposure.

Spread pricing results in higher consumer costs. It is not unusual for generic prescription charges to be $30-$50 above the actual claim cost.** But more important, may be the affect on compliance and cost of care. While not being specifically studied, it’s reasonable to believe that compliance diminishes as the cost of prescriptions increase by 400% or more. The impact of multiple members of a family, on multiple medications, can be dramatic. The effect of high patient prescription costs on decreased adherence to therapy was the subject of a 2010 Wall Street Journal article.*** Spread pricing was not mentioned as a factor.

If higher medication costs lead to lower compliance, it’s likely to be more significant in patients with multiple or complex disease states. While the extent of lower compliance is variable, higher cost results in lower affordability and is likely to affect disease outcome. This is particularly true in situations where members are paying all of the drug cost, such as in a HDHP.

According to a recent Consumer Reports poll, 48% of adults have taken steps to save money due to the economy. Included among the actions taken were:

  • Putting off a doctor’s visit (21%)
  • Delaying a medical procedure (17%)
  • Taking risks to save on medications (28%), including;
    • Not filling a prescription (16%)
    • Taking an expired medication (13%)
    • Sharing a prescription with someone else (4%).

When one considers that a complex patient with hypertension, hyperlipidemia, and type-2 diabetes can be effectively treated with generic drugs cumulatively costing less than $300 per year, substantial compliance and successful treatment is likely. The likelihood of compliance decreases, however, when spread pricing drives the cost of that same therapy up to $2,000.

Finally, prescription cost increases due to spread pricing, places members and their families above the deductible ceiling quicker. Thus, the cost of therapy impacts the plan sponsor sooner, and negates the fiscal value of a HDHP. While this may not have a direct impact on care, it certainly increases net costs to plan sponsors, in spite of the establishment of a HDHP.

While spread pricing has been a common practice in the PBM marketplace for years, the impact on member costs and member quality of care is now greater. It’s advisable for all plan sponsors to assess the extent of spread pricing that is occurring in their pharmacy benefit and examine methods to eliminate it.

Footnotes

  • *American Association of Preferred Provider Organizations. APPO 2010 study of consumer-directed health plans.
  • **Based on competitive claim analysis where a transparent PBM has reported actual costs paid to pharmacies. There is no reason to believe that a larger PBM would be paying the pharmacy more than the smaller PBM for which the actual claim price is known.
  • *** http://online.wsj.com/article/SB10001424052748703927504575540510224649150.html

About the Authors

Dr. Killilea and Mr. Haas both work in the Portland, OR office of Wells Fargo Insurance Services USA, Inc.  Terrance Killilea, Pharm.D. is Vice President, Integrated Healthcare Metrics -Clinical and Fiscal Integration.  Scott Haas is Vice President, Integrated Healthcare Metrics.

Almost Half of Americans Took a Prescription Drug in Past Month

September 03, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News

www.Medtipster.com Source: Health Blog – Wall Street Journal Blogs, By Katherine Hobson – 9.02.10

The government today released some new stats on prescription-drug use through 2008. The headline finding: Over the previous decade, the proportion of Americans (of all ages) reporting they took a prescription drug in the past month rose to 48% from 44%.

Some other key findings:

The percentage of people reporting the use of multiple prescription drugs in the last month also rose, to 31% for two or more prescriptions and 11% (a near-doubling of the previous 6%)) for five or more drugs.

As you’d expect, prescription-drug use varied by age, with about 20% of kids under 12 and 90% of older Americans (defined as age 60 and over — sorry, Mom!) reporting the use of at least one drug in the past month.

Among the 60-plus crowd, more than 76% used at least two drugs in the past month and 37% used at least five. Of that finding — which stems, of course, from the fact that older folks often have multiple diseases — the report says that “excessive prescribing or polypharmacy is also an acknowledged safety risk for older Americans, and a continuing challenge that may contribute to adverse drug events, medication compliance issues and increased health-care costs.”

The type of drugs used most often were asthma meds for kids, central nervous system stimulants (such as those used to treat ADHD) for teens, antidepressants for the middle-aged and cholesterol-lowering drugs for older people.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the trade association for drug makers, said in a statement that “as we learn more about disease, prescription medicines are justifiably playing an increasingly important role.” The group noted that many patients still lack access to needed medications, and that in many cases early interventions and improved compliance would improve health outcomes. “The best solution for all patients is to strike the right medical balance between proper and effective use of prescription medicines and other therapies and interventions,” it said.

A few months back, the pharmacy-benefits manager Medco issued its own figures for prescription-drug use and spending, covering 2009. It reported that use among adults held fairly steady, edging up slightly among those over 65 and dropping a bit for those aged 50-64 — but use among those 19 and under rose by 5%.

CVS Caremark Research Illustrates How Innovative Pharmacy Benefit Plan Design Optimizes Generic Utilization

March 11, 2010 By: Jason A. Klein Category: Free Prescriptions, Medicine Advice, Medtipster, Prescription News, Prescription Savings

Medtipster Source: CVS Caremark (NYSE: CVS), 10/13/2009, http://info.cvscaremark.com/newsroom

This is an old release from November 2009, BUT I really liked it and have been meaning to post it for some time now.  The message of the CVS Caremark release and the study is: We as an industry need to advise benefit payors to focus on changing consumer utilization behavior rather than  shifting cost. This study took 15,000 people, gave them a $0.00 copay on generic medications. What happened? Overall plan costs decreased due to a GDR (generic dispensing rate) increase and therapy compliance/adherence increased in key classes (antihyperlipidemics, antihypertensives, antidiabetics). WOW…who would have thought that by giving away the cow, you could pay for the milk…

WOONSOCKET, R.I., Oct. 13 /PRNewswire/ — CVS Caremark (NYSE: CVS) presented data at the Academy of Managed Care Pharmacy (AMCP) Annual Educational Conference, which illustrates how innovative pharmacy benefit plan design can impact generic utilization. The study further underscores how pharmacy benefit managers (PBMs) can work with plan sponsors to manage costs and improve health outcomes by working to change plan participant behavior through increased engagement. The study found that implementing a $0 copay structure for generic medications can be an effective strategy to increase generic dispensing, with the generic dispensing rate (GDR) increasing to 60.8 percent (a 4.2 percent increase) during the study period.

“Our 2009 Benefit Planning Survey found that clients are more interested in identifying opportunities to change plan participant behavior, rather than shift costs,” said Jack Bruner, Executive Vice President, CVS Caremark. “The data presented at AMCP illustrates an example of how we can work with our plan sponsors to change and optimize participant behavior in order to achieve increased generic utilization. These types of partnerships enable us to effectively reduce costs for both our client and their plan participants without compromising quality or access.”

In addition to an improvement in GDR during the study period, the analysis found that the average participant cost share for generic medications decreased almost 10 percent (9.4 percent decrease). In addition, the average plan cost per 30 days of therapy also exhibited a slight decline, despite the reduction in generic copayment rates. Prevalence of use in three key preventative drug classes also increased significantly (participants on cholesterol lowering therapy increased 13 percent, on antihypertensive therapy increased seven percent and on diabetic therapy increased nine percent) as a proportion of eligible patients.

“While some plan designs work to drive generic utilization by increasing brand medication copayments, this study demonstrates that lowering the generic copayment can also be an effective strategy to increase GDR,” said Mr. Bruner. “In addition, the data indicates that lowering the generic copayment may also be associated with an increase in participants taking key preventative drugs, which could positively impact adherence and overall health outcomes.”

The study was designed to evaluate the results of plan design changes, including implementation of a $0 copay for generic medications, on the GDR, plan participant cost and impact of plan participant behavior changes on health outcomes. During the study period, participants were allowed to fill prescriptions for generic medications at a preferred retail pharmacy network at a zero dollar copay. The study included 15,000 plan participants covered by a self-funded employer group who were continuously enrolled under the benefit for the duration of the study period (12/1/2007 through 7/31/2009). 

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