In the past 5 years, there has been a large increase in the number of employers focused on effective ways to manage the rising cost of specialty drugs. At the same time, employers have been working hard to comply with the Affordable Care Act (ACA) and are cognizant of the expected excise tax. As these trends collide, employers have become concerned about their ability to continue to offer health benefits that will maintain a healthy and productive workforce.
In 2010, the Midwest Business Group on Health and the Institute for Integrated Healthcare began a multiyear research project intended to help employers more effectively manage the cost of specialty drugs, which have been cited as a top benefits priority by Midwest Business Group on Health employer members. (This initial effort was known until recently as the National Employer Initiative on Specialty Pharmacy.)
Although many employers and employer coalitions had initially identified this area as a priority, initial survey results showed that they had little understanding of, and appreciation for, what specialty drugs represented in terms of health benefits coverage. Therefore, much of the project work became focused on education and awareness of the various issues surrounding the availability of specialty drugs in the marketplace, as well as coverage by medical or pharmacy benefit designs.
The initial effort has now evolved into the National Employer Initiative on Biologics & Specialty Drugs (NEIBSD), an employer-led project whose goals include helping purchasers understand the landscape, emerging issues, and related stakeholders; addressing key challenges and identifying innovative approaches; and supporting at-risk populations through communications. These efforts have been undertaken by the Midwest Business Group on Health’s sister coalitions, all of which are members of the National Business Coalition on Health. Demonstration pilots are being conducted with members of 6 large employer coalitions to determine the effectiveness of different benefit coverage approaches in managing costs and patient outcomes. Additional demonstration pilots are being developed as part of the expansion into 2016.
A no-cost online toolkit (www.specialtyrxtoolkit.com) provides a source for continuing subject-matter education, as well as assistance in plan design efforts and addressing transparency and accountability in contracting with health plans, pharmacy benefit managers (PBMs), and specialty pharmacies. As drug pipeline, management, and benefit issues occur, updates will be made to the website, including format improvement and links to other sources of information of interest to employer plan sponsors.
NEIBSD continues to be led by an advisory board of health benefits professionals from large self-insured companies. A multistakeholder group of medical and pharmacy benefits professionals provides assistance and expertise to help tie real-world challenges, opportunities, and solutions to the project. The Annual National Survey continues to be instrumental in benchmarking employer challenges and opportunities, while providing directional support that results in tools and targeted education for employee benefit professionals.
In addition, various supplemental resources are being tested to support employer cost-management efforts. These include a checklist to assess PBM product/service offerings, gaps in accountability, and transparency in contracting; a checklist to assess lower-cost, site-of-care facility options; and a communications strategy (brochure and reinforcement articles) to improve consumer understanding of biologic/specialty drugs and the role they may play in the future, and to address important information on adherence, benefits, and related support. In the near future, these supplemental resources will be available on the project website at no cost to members of National Business Coalition on Health coalitions; eventually, they will be available to all employers.
Of key importance are current activities of the multistakeholder group, which is comprised of employers, coalitions, PBMs, health plans, specialty pharmacies, consultants, and pharmaceutical manufacturers. The group has identified several benefits-related approaches that could be part of a collaboration project. The multistakeholder collaboration is managing stakeholder and employer efforts to implement 1 of 2 possible strategies—driving patients to lower-cost, site-of-care options or helping employers more effectively integrate their medical and pharmacy benefits.
The Fourth Annual National Survey
The Fourth Annual National Survey was conducted from December 2014 through February 2015. More than 80 employers, representing 1.5 million employees, responded to the online survey posted on SurveyMonkey. Many industries were represented, with the top 3 groups including manufacturing (22%), technology and science (10%), and government, financial services, and healthcare (9% each). Although employers of all sizes were represented in the survey, the average number of employees was 19,800.
Based on the survey results, employers currently express readiness for change as well as a desire for new and novel approaches to managing biologics and specialty drugs.
Overall, 96% of employers “strongly agree” or “agree” that they are concerned about the increasing costs of specialty drugs, and 95% are concerned about the number of specialty drugs in the pipeline. New and innovative solutions are needed, according to 90% of respondents.
An encouraging trend is that market-leading employers are taking proactive approaches to more effectively manage pharmacy benefits. Although 88% of employers still rely on traditional plans (copays and coinsurance) and mainstream tactics, such as prior authorization and step therapy, many have implemented or would consider new and novel approaches to managing the costs of specialty drugs. In fact, 68% are considering using a narrow network that would assume the risk, but only 7% currently do so. Only 16% have defined their specialty drug benefit, whereas 63% are considering implementing this strategy.
One of the greatest trends is cost-shifting. More than 50% of the employers are considering shifting more costs to employees, and 18% are already doing so (Figure 1).
In addition, 43% of employers who shifted costs to their covered population in the past 3 years increased the costs by more than 50% in 2014 (Table).
Additional findings of the survey are:
- 40% of employers include vendor performance guarantees in their contract, and 51% are willing to consider them
- Although only 3% of employers do not have a drug formulary, 46% would consider a formulary as a way to manage costs, by basing the employee out-of-pocket cost on “lifestyle or convenience drugs” (covered at 50% cost-sharing) and “business-preserving and life-threatening drugs” (covered at minimal cost-sharing to encourage adherence)
- The 3 most effective cost-management strategies that have been implemented are (1) coordinated information on disease therapies, (2) defined contracting terms or coverage for claims reimbursement, and (3) daily supply limitations and messaging
- Most employers (63%) do not offer health plan design elements to drive people to the lowest-cost site of care for infusions, and few offer incentives for strategies such as adherence to drugs, adherence to treatment, or using lower-cost care facilities
- The 3 most effective patient outcome strategies are (1) alternative risk financing/actuarial design, (2) restricted coverage under the medical benefit, and (3) exclusive or limited networks by setting of care
- Oncology benefit design strategies indicate that 37% of employers use an integrated PBM through their health plan, and 25% require use of a specialty pharmacy for such medications. Only 21% offer a physician-based model with a prior authorization list, whereas 17% receive independent PBM reports from the health plan on integrated use. Currently, no employer is offering oncology carve out or a narrow formulary that includes preferred oncology drugs.
For the fifth consecutive year that the Midwest Business Group on Health has been tracking trends regionally, then nationally, “Managing specialty/biologic drugs” has been ranked among the top “high” or “medium” priorities in the annual survey conducted by the Midwest Business Group on Health.
Other high and medium priorities for 2015 are “Avoiding the 2018 excise tax” and “Reducing/managing health benefits costs” (Figure 2).
Since 2010, NEIBSD has moved from an educational and awareness effort to facilitating real market change by channeling engaged employers to learn with and benchmark from each other as plan sponsors to continue driving needed collaborative innovation. A comparison of early survey results with the 2015 results demonstrates significant improvement in some areas but significant gaps in others, where additional work with employers is needed to achieve meaningful change in the post-ACA environment.
With most of the burden for total cost of care being on self-insured employers, managing specialty drugs has become and continues to be one of their greatest challenges, despite initial collaborations with outside vendors. Without strong guidance, peer collaboration, and honest dialogue to address the high cost of biologics and specialty drugs, as well as healthcare industry practices that contribute to these costs, employers could be at risk for exiting the healthcare system entirely. No one in the employer health benefits arena wants the cost of specialty drugs to be the “straw that breaks the camel’s back.” All stakeholders should focus on ways to better align their individual goals, finding truly innovative solutions to reduce and better manage costs that are appropriate for biologic drugs, and work collaboratively for the benefit of the plan member or patient. In the end, today’s employer recognizes that doing nothing is no longer an option.
The authors wish to thank Margaret Rehayem, Member Services Director, for her assistance and support in project and survey data activities, and Larry Boress, President of the Midwest Business Group on Health, for his general input and support of the project.
Author Disclosure Statement
Ms Larson and Dr Vogenberg have no conflicts of interest to report.
Ms Larson is Vice President, Midwest Business Group on Health, Chicago, IL; Dr Vogenberg is Principal, Institute for Integrated Healthcare, and Partner, Access Market Intelligence, Greenville, SC.