Specialty medications call for specialized cost-control strategies

Of all the levers to pull in controlling health care costs, where does managing specialty medications fall as a priority for most employers? Considering these numbers and their impact on trend, it shouldn’t be very far down the list:

• Specialty medications are soon expected to account for 50% of pharmacy spend,¹ despite only 1%–2% of the population using them.²
• They result in a $79,000 average annual cost for treatment with one specialty medication.³
• They drive more than a quarter of UnitedHealthcare’s cost trend with National Accounts.⁴

While daunting for many employers that have employee populations with specialty pharmacy needs — now or in the future — these areas of focus by insurers and pharmacy benefit managers (PBM) are designed to help employers better manage trend:

1. Integration between medical and pharmacy benefits.
2. Site of care initiatives to ensure employees receive care in the most cost-effective and convenient locations.
3. Additional innovative techniques designed to lower costs and improve outcomes.

Integrating medical and pharmacy benefits

Since 53% of specialty medications on average fall under the pharmacy benefit and 47% fall under the medical benefit ⁵ — with the expectation based on the drug development pipeline that this ratio will continue — integration across both benefits becomes a priority.

"It’s very difficult to develop a strategy if you don't have a full picture of spend across both the pharmacy and medical benefits, especially considering treatment options for many top categories of drugs fall under both," says Paul Kiser, Senior Vice President of Client Relationships for OptumRx Commercial Markets.

UnitedHealthcare research shows that combining pharmacy benefits with medical plans is central to improving outcomes and containing costs. An integrated view helps employees make informed choices and allows the insurer and PBM to better engage with physicians to close gaps in care and provide patients with holistic support. In fact, integrated pharmacy solutions can realize incremental medical savings of up to $25 per member per month,⁶ 11% lower emergency room costs and 15% lower inpatient costs.⁷

Location, location, location: Site of care matters

Site of care is another key element of the cost-control strategy for specialty medications that require administration and monitoring by a health care professional. It’s important for an insurer and PBM to guide patients to the most appropriate site of care for administration of these medications. For some patients, their first treatment occurs in an outpatient hospital setting, but they may not need that type of administration setting going forward.

These patients can be directed to an alternative site of care — which can be a health care provider’s office, an infusion center or the patient’s home — where they can receive effective and convenient care, while also achieving lower costs. For example, costs for patients treated for inflammatory conditions can be reduced by $21,300 annually by receiving drug therapy in a lower-cost setting.⁸

Site of care also considers experience benefits. For example, patient satisfaction for receiving infusion treatment at home has averaged 97%.⁹

“Through our prior authorization program, we evaluate the level of care that's needed for individuals getting drugs in a higher-cost outpatient facility,” says Susan Maddux, UnitedHealthcare Chief Pharmacy Officer. “If it's safe to do so, we ask them to move to a lower-cost site of care — looking to better control costs for the employee and employer. We have this in place for more than 15 categories of medications, and every new medication is evaluated for site of care."

Innovative techniques to manage costs

As health care costs continue to rise, employers are looking to insurers for innovative, cost-effective solutions that maximize each dollar spent — without losing focus on outcomes and experiences. With that, UnitedHealthcare has developed the following innovative techniques to manage specialty medications:

1. Genetic testing to determine if a medication is suitable and effective. For several specialty medications, genetic testing is required. The provider can use the results to guide treatment strategies and help select the best medication, helping reduce the need for trial and error and eliminating costs for medications that may not be effective for that patient.
2. Value-based health care that ties reimbursement to efficacy. Unlike traditional fee-for-service models, value-based contracting ties payments to the outcomes achieved for select therapies, with the goal that the price is justified by the value delivered. With this method, coverage and reimbursement are based on real-world medical evidence that demonstrates the efficacy — or lack thereof — of a medication. If the expected therapeutic benefit isn’t achieved, there is often some level of remuneration to the carrier. The carrier, in turn, shares the rebate with its clients. If the drug does achieve expected outcomes, this process helps ensure future spend is on medications with proven results backed by real-world data.

To help ensure these strategies benefit employers in the long term, UnitedHealthcare monitors the pipeline of drugs seeking approval from the Food and Drug Administration.

"We start reviewing the pipeline in the pre-approval phase. When we understand what the likelihood of approval is and what would be the implications if a drug does get approved, we can start developing criteria well in advance of when the product hits the market," Maddux says.

For more information on managing costs associated with specialty medication, reach out to your broker, consultant or UnitedHealthcare representative.