Specialty pharmacies: The payer’s dilemma

Although specialty drug costs continue to climb, that is not the only challenge bending the industry. Healthcare stakeholders face an explosive burst of new drugs, some within the same category; a trend toward value-based care; and an emphasis on patient education to ensure compliance and eliminate waste.

In addition, payers in particular, are weighing the benefits of using their own resources to develop a specialty pharmacy or contracting outside for services.

Retail prices for more than 100 widely used specialty prescription drugs surged skyward by nearly 11% in 2013, surpassing the median income of an American family, according to a new AARP Public Policy Institute (PPI) report.

The report also found that specialty drug prices are considerably higher than other drug prices. In 2013, the average annual cost for specialty prescription drugs was 18 times higher than the cost of branded prescription drugs and 189 times higher than the cost of generics.

According to UnitedHealth Group, growth in specialty pharmacy spending could quadruple by 2020, reaching $400 billion or 9.1% of national healthcare spending in the United States.

Forecasting specialty pharmacy trends

Bill Wolfe, vice president and head of Aetna’s pharmacy business, sees some existing drug trends continue, while new ones will gain importance. Trends in higher costs for specialty pharmacy have been well recorded, he says, along with an increase in specialty pharmacy as a percent of overall spend, more than 30% between 2014 and 2015.

WolfeOne new trend focuses on launches of specialty pharmacy products in the same category, such as Gilead’s Sovaldi and Harvoni and AbbVie’s Viekira Pak and Technivie for hepatitis C and Sanofi/Regeneron’s Praluent and Amgen’s Repatha in the PCSK9 space for treating high LDL cholesterol.

Wolfe foresees that oncology will most likely be the next category ripe for competition with multiple launches.

Specialty pharmacy, Wolfe says, was previously a single launch of an exclusive drug in a category.

Aetna chose Harvoni and Sovaldi, both from Gilead, as preferred hepatitis C therapies for commercial customers but requires preauthorization. The insurer drives their use through rebates.

Like Aetna, CVS/Caremark made both Gilead products exclusive options for patients with hepatitis C, while Express Scripts chose to go with AbbVie’s Viekira Pak for patients with genotype 1 hepatitis C who use the PBM’s national preferred formulary.

“This new strategy could provide an opportunity to leverage cost containment due to competition, driving additional discounts and rebates,” Wolfe says.

Next: Pipeline for new medications

Pipeline developments

ShanahanRebecca Shanahan, CEO of Avella, a national accredited specialty pharmacy headquartered in Phoenix, says the industry will continue to see a strong pipeline for new medications, including 221 for oncology currently in phase 2 testing. She anticipates that bringing these new drugs to the marketplace will present challenges for providers, payers and patients.

“Specialty pharmacies will need to actively advance their clinical and operational capabilities and effectively manage these new diagnostics and medications,” she says. “Payers will need to create networks of trusted specialty pharmacy partners that have access to these key medications and understand the complexities of the diagnostics, lab values, clinical policies, plan design, disease and therapy progression ... to successfully and efficiently drive the continuum of care.”

Despite the tremendous innovation and medication approvals, Shanahan also notes that drug costs continue to grow, patient support remains discontinuous and/or uncoordinated, integration and data insights are scarce, operational inefficiencies are prevalent and communication is poor.

“We believe that specialty pharmacies are in the unique and opportunistic position to connect the stakeholders at every link of the value chain,” she says. “Through our ongoing, meaningful interactions with patients, payers, manufacturers and healthcare providers, we are able to serve as an integrator of services and catalyst for improving communication and outcomes.”

She also emphasizes the need to support patients in navigating prior authorization and securing financial assistance.

Like Shanahan, Wolfe stresses the need to work with patients-especially in ensuring they understand the specialty drugs they are taking and the importance of remaining compliant.

He anticipates that in 2016, Aetna will move in the same direction as it has this year and continue to weigh value against the impact of cost.

Next: In house or out

In house or out

Aetna has its own specialty pharmacy, which Wolfe says provides quite a few advantages-especially the ability to integrate total care of a patient.

He says that the oversight of both medical and pharmacy benefits enables Aetna to move toward value- and outcomes-based results-especially because 60% of the specialty drugs used by Aetna fall under the medical benefit.

“If a high-dollar drug works and/or is a cure, this provides an opportunity to structure reimbursement for value over the life of a patient and reduce global medical costs,” Wolfe says. “We also have access to all patient data, enabling a holistic view of each patient, and can interact with providers. With all the pieces of value-based care, we can drive appropriate utilization and contain the total cost of care.”

Another way Aetna manages the cost of specialty medications is to provide only a partial fill during an initial prescription, rather than a 30-day supply, in case a patient has side effects or the drug is not helpful. The insurer also ensures that a patient receives care at the most efficient site. Nurses and pharmacists are available 24/7 to assist with any problems.

Aetna takes advantage of patient assistance programs offered by many manufacturers and also works closely with these companies to find an appropriate alternative to a costly medication if a patient has a high deductible and cannot afford the specialty drug.

Shanahan, on the other hand, touts the advantages of an external specialty pharmacy. Recognizing a surge in the development of new specialty therapies and their exorbitant price tags, she says that by partnering with experienced, external specialty pharmacies, payers can proactively select pharmacies that are successfully managing compliance to formulary and clinical policy, reducing medication waste, improving adherence, ensuring cost-effective therapy management and delivering outstanding customer service.  

“Experienced external specialty pharmacies have successfully implemented virtual partnerships with a cross-section of medical subspecialists and their offices to ensure that patients are supported to achieve prompt and continuous care,” Shanahan says. “Carefully selected network pharmacies, along with ongoing metrics of success, allow payers to provide outstanding specialty pharmacy care for their members without needing to build or acquire a specialty pharmacy, thereby avoiding the associated contracting and infrastructure costs.”

KellyTom Kelly, CEO of HealthSmart, which provides health plan solutions to self-funded employers, says that only health plans with at least a half a million members should even consider creating a specialty pharmacy in house to bring any value; however, he isn’t surprised that many larger insurers still bid out the process because of the competitiveness of the business.

Using an external specialty pharmacy eliminates the need for an insurer/employer to build its own network and retail facilities and instead, enables insurers to reap the benefits of drug warehousing and distribution, along with real-time bidding to lower drug costs, Kelly says.

Mari Edlin is a frequent contributor to Managed Healthcare Executive. She is based in Sonoma, California.