Specialty drugs make up 30-40% of plan spending. Specialty drugs are often expensive, but critical to treat the condition for which they are prescribed. In addition to being high cost, specialty medications often require special handling, administration or monitoring, or they are injectables that are self-administered. They’re often associated with rare and/or complex diseases, and they’re often biologics, created to mimic compounds found in the human body.
Diseases associated with specialty pharmaceuticals include Crohn’s, arthritis, psoriasis, asthma, cancers, multiple sclerosis, cystic fibrosis, Gaucher’s disease, pulmonary hypertension, infertility, HIV/AIDS, hemophilia, Hepatitis C, and other chronic conditions.
What Does the Specialty Pharmacy Universe Look Like?
When it comes to specialty pharmacy (SP) services, there are typically two models: The PBM-owned specialty pharmacy and the passive specialty pharmacy/PBM.
Most of the industry for specialty medications follows the first model, the PBM-owned specialty pharmacy. This is the model used by the three largest PBMs that represent 80% of the market. They are publicly traded companies, and they often make decisions with their shareholders’ interests in mind. Patient satisfaction is high as well as compliance because these organizations make money when prescriptions are filled. However they are not good at identifying less expensive alternatives or checking to see if therapies are discontinued before sending refills.
The passive specialty pharmacy/PBM model is used by a lot of smaller PBMs and specialty pharmacies. Their biggest disadvantage is that they’re often limited because they don’t have integration, and they don’t have a good way to scale their volume. Patient satisfaction is lower as there is less communication between the PBM and the pharmacy. The low volume leads to less aggressive pricing for the payor.
A new third model has been developed by Araya with one of our preferred vendors. We refer to this as the integrated specialty pharmacy and PBM model. This model allows us to take advantage of boutique capabilities, price transparency, and incentives that align with the patient and payer. The client is charged the pharmacy cost plus a higher dispensing fee to cover patient support, clinical oversight, handling and shipping. Clinical protocols are developed in conjunction between Araya and the SP to assure a high level of patient and prescriber satisfaction. Araya’s admin fee-only model ensures that the most economical therapy will be chosen after safety and efficacy have been considered.
Compliance with Standards of Care is Vital
You’ve likely heard a friend, coworker, or neighbor talk about how a medication was declined by their insurance. When looking around to select the appropriate PBM for your needs, it’s important to make sure that the PBM determines coverage based on standards of care from respected clinical organizations and not by which medication or regimen will generate the greatest revenue.
With the PBM-owned specialty pharmacy, there is an incentive to follow standards, because in this instance, compliance brings higher sales. Contrast this to the passive model. There’s no incentive to follow standards, contact members or providers, or validate continuation therapy. With the integrated model, compliance and standards are jointly developed. The partnership focuses on patient care as well as reducing client costs.
One Way Specialty Drug Costs Can Be Reduced
We determined that 28% of individuals started on specialty medications do not continue the therapy. Sometimes this can be due to a severe reaction. Other times, it could be that the medication isn’t effective.
Our program limits the supply of medication dispensed on new therapies of specialty medications to 14 days. By limiting the initial fill, not only do we help ensure that the patient is getting the correct treatment for their needs, but we also save half the cost associated with discontinuing the therapy. Again, our transparent model aligns incentives. PBMS that generate revenue from the sale of the prescription are unlikely to adopt programs that reduce the unit quantity of the prescription.
Other Important Considerations with Specialty Pharmaceuticals
There are four other ways that PBMS work to ensure that specialty pharmaceuticals are managed well: ensuring appropriate utilization, correct sourcing, looking at alternate funding, and alignment of incentives.
When it comes to ensuring appropriate utilization, it means that PBMs need to ensure that the patient has followed all accepted clinical protocols – there’s often a failure rate just because the patient didn’t follow the correct procedure. This also means ensuring that the dosing and duration of the prescription will be the most effective for the individual. Finally, in addition to limiting those first fills, monitoring for compliance, patient tolerance, and the effectiveness of the medication is vital to success.
Your PBM should be acting aggressively when it comes to contracting with pharmaceutical companies for the best prices. Finally, they should also be willing to cover alternative providers, including 340B and international providers.
Another important consideration when selecting the PBM and specialty pharmaceutical provider best for your needs is whether they offer alternate funding sources including copay assistance and patient assistance.
Finally, it is best if your PBM aligns its incentives with patients. A pass-through, transparent PBM does this quite well. Since transparent PBMs charge a flat rate for transactions to make their profits rather than rely on drug rebates and discounts, those savings pass on to plan sponsors.
Do you have questions about how we can help you with your specialty drug needs? Contact us.
