How employers can manage the skyrocketing cost of specialty drugs

The number of specialty drugs continues to grow. At the end of 2016, there were 700 specialty drugs in development, compared to the 10 that were in development in 1990. Continue reading to learn more.


In the past two decades, the number of specialty medications — which treat rare and complex diseases such as multiple sclerosis, pulmonary arterial hypertension, hepatitis C, HIV, cystic fibrosis, some types of cancer and hemophilia — has grown exponentially. In 1990, there were only 10 specialty drugs on the market. By 2015, that number had increased to 300 medications, and by the end of 2016 there were approximately 700 more specialty drugs in development.

These medications are usually very high cost, with some new biologic medications costing more than $750,000 a year. Why are the costs so high? There are a number of factors, including the facts that distribution networks are limited, these medications are complicated to develop and distribute, and there are few, if any, generic alternatives for these drugs.

See also: 6 ways to mitigate specialty drug costs

The Pew Charitable Trusts found that although only 1% to 2% of Americans use specialty medications, they account for approximately 38% of total drug spending in the U.S.

So, how can employers better gain control over the cost of specialty medications? Because there are hundreds of specialty medications, there’s no single strategy for cost management that can be applied universally. To build an effective cost management strategy, employers need to first analyze employee use of specialty medications. The best strategy will approach specialty medication management by disease class and drug by drug.

However, there are key building blocks of a strategy that will both manage costs and ensure that employees have access to the medications they need. Here are six things employers can do.

Assess benefit plan design structure. Employers should consider how they are incenting employees to spend their benefit dollars appropriately and wisely. A multi-tiered medication formulary where employees pay less out of pocket for generic drugs and lower cost medications and more for costly medications is one approach that’s proven effective. To help employees afford these higher out-of-pocket costs, employers can promote manufacturer copay savings programs, which many drug makers offer.

Think about utilization management. This can include requiring prior authorization for high-cost specialty medications and step therapies (employees must start with lower cost therapies and can move up to more costly ones if those are not effective).

Consider a custom pharmacy network design. By narrowing the network of pharmacies that fill specialty medication prescriptions, employers can negotiate a better unit price. A freestanding specialty pharmacy or a pharmacy benefits manager can provide savings by optimizing discounts for both employers and employees.

Offer second opinion and other support services for rare and complex diseases. A newly diagnosed rare or complex disease patient will see, on average, seven different specialists over the course of eight years before getting a true diagnosis and appropriate treatment path. These programs aim to reduce that burden and ensure success with that treatment once it’s identified. A second opinion from a top specialist in the field provides an expert assessment of the diagnosis and recommendations on the most effective treatment protocol. This not only helps manage costs, it lowers the risk of misdiagnosis and inappropriate treatment. Additional case management services can include one-to-one counseling and, when the drug regimen requires, in-home nursing services to help patients better manage their disease and improve outcomes.

See also: How employers can increase employee use of second opinions

Offer site of care choices. Where specialty drugs are administered can have a significant impact on what they cost. Medications administered in an outpatient clinic at a hospital can cost five times as much as those that are injected or infused in a physician’s office or at the patient’s home. Offering services such as home infusion or injection delivered by nurses or incenting patients with lower copays when they receive their medications at their physician’s office can lower overall specialty drug costs.

Educate employees. When an employee or covered family member is diagnosed with a rare or complex condition that will require a higher level of care and the use of specialty medications, employers can connect employees with case managers or similar services that provide education about the condition and the medication, such as how to manage side effects or what alternative medications are available, which can increase employee adherence with the medication regimen.

SOURCE: Varn, M (8 August 2018) "How employers can manage the skyrocketing cost of specialty drugs" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/specialty-pharmaceuticals-and-how-employers-can-manage-cost


Employers take steps to address opioid crisis

By addressing opioid misuse, employers could in turn have more productive workers and lower healthcare costs. Continue reading to learn more.


President Donald Trump declared the nation's opioid crisis a "public health emergency" last month, underscoring employer concerns about this growing epidemic.

The opioid crisis cost the U.S. economy $95 billion in 2016, and preliminary data for 2017 predict the cost will increase, according to a new analysis from Altarum, a health care research and consulting firm. Addressing opioid misuse could lead to more productive workers and lower health care costs.

U.S. employers are increasingly seeking ways to reduce the abuse of prescription opioids, according to new findings from the Washington, D.C.-based National Business Group on Health (NBGH), which represents large employers.

NBGH's Large Employers' 2018 Health Care Strategy and Plan Design Survey found that the vast majority of big employers (80 percent) are concerned about abuse of prescription opioids, with 53 percent stating that they are very concerned. Thirty percent have restrictions for prescription opioids, and 21 percent have programs to manage prescription opioid use.

The survey was conducted between May 22 and June 26, and reflects the strategies and plan offerings of 148 U.S. employers, two-thirds of which belong to the Fortune 500 or the Fortune Global 500.

"The opioid crisis is a growing concern among large employers, and with good reason," said Brian Marcotte, NBGH president and CEO. "The misuse and abuse of opioids could negatively impact employee productivity, workplace costs, the availability of labor, absenteeism and disability costs, workers' compensation claims, as well as overall medical expenses."

Given the widespread nature and expanding scope of the opioid crisis, some employers are working directly with their health plans and pharmacy benefit managers (PBMs) to address the issue, the survey showed. Those that are working to manage opioid use most often use the following strategies:

  • Limiting the quantity of pills on initial prescriptions for opioids.
  • Limiting coverage of opioids to a network of pharmacies and/or providers.
  • Expanding coverage of alternatives for pain management, such as physical therapy.
  • Providing training in the workplace to increase awareness and recognition of signs of opioid abuse.
  • Working with their health plans to encourage physicians to communicate about the dangers of opioids and to consider alternatives for pain management.

Apart from these measures, employers are:

  • Increasing communications and training for managers and employees to raise awareness of the issue.
  • Identifying people who may be at risk for addiction who could benefit from help.
  • Encouraging employees to take advantage of an employee assistance program, the health plan and other resources for help and treatment.

Different Pain Management Approaches

Janet Poppe, senior director for payer and employer relations at Pacira Pharmaceuticals, based in Parsippany-Troy Hills, N.J., advises using a multitherapy pain management strategy to minimize opioid use—especially following surgery, which she called "the gateway to the opioid epidemic."

"Opioid monotherapy is the current standard of care for postsurgical pain management," Poppe said on Nov. 14 at the National Alliance of Healthcare Purchaser Coalitions' 2017 annual conference, held in Arlington, Va. She cited research showing that:

  • 92 percent of postsurgical patients who receive opioids for acute pain report adverse side effects such as urinary retention or respiratory depression, the treatment of which can be costly.

In another study, more than 10 percent of patients who were prescribed an opioid within seven days of surgery were identified as long-term opioid users one year after surgery. Other research shows that 1 in 15 patients who receive an opioid post-surgery become chronic users.

Local anesthetics, anti-inflammatory drugs and nonopioids such as sodium-channel blockers are among the options available to address pain without the addictive and debilitating effects of opioids, Poppe said. "Using two or more nonopioid pain relievers that act on the body in different ways can produce a better result, at a lower cost, than using opioids."

"There is a need to generate widespread public awareness of the role that postsurgical opioids play in the larger public health crisis in the U.S.," Poppe noted. Health plan sponsors should work with their insurers or third-party administrators to alleviate the risks associated with opioid dependence by encouraging nonopioid pain-management approaches, she advised. Employers can:

  • Cover and demand opioid-free options for employees.
  • Ask provider networks what they are doing to reduce opioid use post-surgery.
  • Educate employees about discussing alternative pain strategies with their doctor. Pacira'sPlanAgainstPain website offers resources.
  • Change benefit designs to steer employees to surgeons and facilities using alternatives to opioids

"To stem widespread opioid abuse, state actors and employers must urge insurers to remove barriers to care, including prior authorization for medication-assisted treatment (MAT) and nonopioid treatments for pain management," Caleb H. Randall-Bodman, a senior analyst for public affairs with Forbes Tate Partners in Washington, D.C., said in an e-mail.

"Patients, especially those in great need, will take the most affordable and accessible treatment available. As such, the epidemic will not end until patients have access to 1) affordable, comprehensive pain management, and 2) comprehensive treatment for substance use disorders," said Randall-Bodman, who works with the American Medical Association's taskforce to reduce opioid abuse.

SOURCE: Miller, S (28 November 2017) "Employers take steps to address opioid crisis" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/steps-to-address-opioid-crisis.aspx


Amazon has just entered the drug-distribution business

Amazon is on top, knocking big competitors out one by one. Today, they take down pharmacies by offering online health-care services. See what Amazon has in store here.


Amazon.com Inc. agreed to buy the online pharmacy startup PillPack, jumping into the health-care business with a deal that will give the retail giant an immediate nationwide drug network.

The move represents a formidable threat to pharmacy chains including Walgreens Boots Alliance Inc., which earlier Thursday reported tepid U.S. same-store sales, and rival CVS Health Corp. Walgreens was down 10 percent at 10:18 a.m. in New York, while CVS shares shed 8.9 percent.

Terms of the deal weren’t disclosed. The transaction is expected to close in the second half of 2018, according to a statement from the companies.

The U.S. market for prescription medicine is huge. In 2016, U.S. consumers spent $328.6 billion on retail prescription drugs, according to the U.S. government. CVS reported prescription sales of $59.5 billion last year, and Walgreens sold $57.8 billion worth of drugs in its fiscal 2017.

PillPack has mail-order pharmacy licenses in all 50 U.S. states, which could allow Amazon to expand quickly. PillPack also has relationships with most major drug-benefit managers, including Express Scripts and CVS, and says it works with most Medicare Part D drug plans. Those ties will give Amazon access to much of the prescription drug market in the U.S.

PillPack sells pre-sorted packets of prescriptions drugs, delivering them to customers in their homes. The closely held firm has software that automates many routine pharmacy tasks, such as verifying when a refill is due, determining co-pays, and confirming insurance. That eliminates much of the manual work that pharmacists often are saddled with now.

The pact follows months of speculation about Amazon’s plans to get into the pharmacy or drug-distribution business. Despite the retailer’s vast reach, entering the market presented a daunting logistical challenge in terms of licensing and dealing with a range of private and government payers. Acquiring PillPack’s networks helps Amazon surmount those hurdles.

Michael Rea, chief executive officer of Rx Savings Solutions, said PillPack could transform the industry and that employers and health plans would benefit from the deal, which he called a “sign of the times.”

“This move signals just how big of a market opportunity there is to change the pharmacy landscape,” Rea said in an email.

Amazon has been disrupting businesses from electronics to household staples and even package delivery. Pharmacy and health-benefits companies have long fretted that they’d be next. Chief Executive Officer Jeff Bezos signaled his interest in health-care earlier this year when he teamed up with Berkshire Hathaway Inc.’s Warren Buffett and JPMorgan Chase & Co.’s Jamie Dimon to form a health-care company to manage the health plans of their more than 1 million employees.

The selloff in drugstore stocks was reminiscent of the food-industry swoon that resulted in June 2017 when Amazon said it was buying Whole Foods Market Inc. Kroger Co., the biggest U.S. supermarket chain, saw $2 billion in market value wiped out in one day. Big packaged food stocks also took a hit.

“When Amazon sneezes, everybody else catches a cold,” said Joseph Feldman, an analyst with Telsey Advisory. “And I think that that’s more likely than not what you’re going to see today.”’

Long time coming

Prescription drugs sales are largely intertwined with groceries and personal items like makeup and shampoo and Amazon already sells bulk packs of latex gloves, bed pads and syringes. It recently began selling medical devices and instruments, as well.

Bezos has been thinking about the drug business for nearly two decades; in 1999, Amazon purchased a stake in Drugstore.com. That effort ultimately failed and Walgreens purchased the money-losing startup in 2011 and ultimately shut it down.

Pharmacist TJ Parker and computer scientist Elliot Cohen founded PillPack in 2013 after meeting at a medical-technology program at the Massachusetts Institute of Technology. The company raised more than $118 million from brand-name investors including Accel, Sherpa Capital and New York rapper Nas’s Queensbridge Venture Partners.

A September 2016 funding round valued the Boston-based startup at around $360 million, according to venture-capital database PitchBook. In April, CNBC reported Walmart Inc. was in talks to buy the company for “under $1 billion,” citing unnamed sources.

Standing firm

For now, Walgreens indicated that it was in no hurry to find a deal to respond to Amazon, despite the damage to its stock. On an earnings conference call, Walgreens CEO Stefano Pessina faced multiple questions from analysts about the PillPack deal.

“It is a declaration of intent from Amazon,” said Pessina.

He said Walgreens knew that PillPack was for sale as “it had been for sale for a while,” but that the retailer wouldn’t do deals based on emotions or make moves that could destroy value. Pessina insisted that physical pharmacies would continue to be “very important.”

The slump in Walgreens shares weighed on the Dow Jones Industrial Average, which added the stock to its index of 30 companies this month, replacing General Electric Co.

SOURCE:
Langreth R and Tracer Z (29 June 2018) "Amazon has just entered the drug-distribution business" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/06/28/amazon-has-just-entered-the-drug-distribution-busi/


The Results Are In: These Are the Companies With the Most Influence Over Washington

 

300x200

Poll: Americans Aghast Over Drug Costs But Aren’t Holding Their Breath For A Fix

The recent school shootings in Florida and Maryland have focused attention on the National Rifle Association’s clout in state and federal lobbying activities. Yet more than the NRA or even Wall Street, it’s the pharmaceutical industry that Americans think has the most muscle when it comes to policymaking. A poll from the Kaiser Family Foundation found that 72 percent of people think the drug industry has too much influence in Washington —outweighing the 69 percent who feel that way about Wall Street or the 52 percent who think the NRA has too much power. Only the large-business community outranked drugmakers. (Kaiser Health News is an editorially independent program of the foundation.)

Drug prices are among the few areas of health policy where Americans seem to find consensus. Eighty percent of people said they think drug prices are too high, and both Democrats (65 percent) and Republicans (74 percent) agreed the industry has too much sway over lawmakers. Democrats were far more likely than Republicans — 73 vs. 21 percent — to say the NRA had too much influence. The monthly poll also looked at views about health care. Americans may be warming to the idea of a national health plan, such as the Medicare-for-all idea advocated by Sen. Bernie Sanders (I-Vt.). Overall, 59 percent said they supported it, and even more, 75 percent, said they would support it if it were one option among an array for Americans to choose.

Americans are far more concerned with lowering prescription drug prices, though they don’t trust the current administration to fix the problem. Fifty-two percent said lowering drug costs should be the top priority for President Donald Trump and Congress, but only 39 percent said they were confident that a solution would be delivered. “There’s more action happening on the state level; what we are finding is they’re not seeing the same action on the federal level,” said Ashley Kirzinger, a senior survey analyst for KFF’s public opinion and survey research team. “They’re holding the president accountable as well as leaders of their own party.”

Overall, at least three-quarters of people don’t think Democrats and Republicans in Congress, as well as the Trump administration, are doing enough to bring costs down. Twenty-one percent reported that they didn’t trust either party to lower prices, up from 12 percent in 2016. And, unlike other health-related policy questions such as repealing the Affordable Care Act or creating a national health plan, the poll does not find a partisan divide on this perception.

Passing legislation to lower drug prices was at the top of the list of the public’s priorities, making it more important than infrastructure, solving the opioid epidemic, immigration reform, repealing the ACA or building a border wall. Looking ahead to the 2018 midterm elections, 7 percent reported that creating a national health plan was the “single most important factor” for how they would vote in 2018. However, 7 in 10 said it is an important consideration, and 22 percent said it is not an important factor at all.

The poll found that support for the federal health law fell this month, from February’s all-time high of 54 percent to 50 percent in March. Opposition moved up slightly from 42 to 43 percent. The poll was conducted March 8-13 among 1,212 adults. The margin of sampling error is +/-3 percentage points. KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation .

—khn.org