By now most prescription drug plan sponsors have seen the growing impact of specialty drugs on their health plan’s benefit budget.  Reducing prescription drug costs requires a strategic and tactical plan to tackle the problem. Specialty drugs continue to blow the roof off of prescription drug cost trend estimates.Specialty#3  2014 saw specialty trends at 27% with 2015 expected to be similar. Currently, most projections have specialty reaching 50% of a plan’s total drug spend by 2018!

But at WBC ( we know that’s only half the story. These quoted drug trends for specialty are what resides in the pharmacy benefit that is monitored and/or managed by a PBM. The trend reports they deliver reflect this portion. The additional spend on specialty (estimated at up to 55% of total specialty spending) occurs in the plan sponsors’ medical plan, buried in a CMS 1500 claims form, and over which, most plans receive little information. This component of specialty utilization does not receive the benefit of prior authorization controls, quantity limits, preferred pricing discounts, rebates and other cost management control initiatives that can be applied in the pharmacy benefit. Plan sponsors usually have no idea what their plan’s true PMPM costs are for total specialty drugs.  And there is no good news in the works regarding future cost trends. Specialty drugs have grown from $55 billion in sales in 2005 and is expected to claim $1.7 TRILLION in sales by 2030! Pharmaceutical manufacturers have channeled huge resources to the specialty drug pipeline with approximately 700 drugs currently in development.

So with all of these costs expected, what can a pharmacy benefit plan sponsor do? Here’s our tips for a total specialty management plan:

  1. Diagnose. Identify total specialty spend from both pharmacy and medical (as the old adage says “you can’t manage what you don’t measure”).
  2. Control Utilization. This means applying customized formulary management to make sure that the right drug is being used to treat the right patient.
  3. Prior Authorization and Quantity Limits. Part of utilization management designed to reduce ineffective treatment and waste.
  4. Control Distribution Channel. Evaluate and define exclusive pharmacy distribution when practical.
  5. Pricing, Discount Guarantees & Rebates. Negotiated with your PBM and other pharmacy providers. To this day many plan sponsors and their consultants do not even discuss the details of specialty pricing during the PBM vendor procurement and contracting process. Huge mistake and needs to be near the top of the agenda!
  6. Plan Design. Cost sharing and use of a 5-tier copay structure. Also a strategy for copay coupons and patient assistance programs.
  7. Case Management. Specialty patients require high-touch involvement. Medication therapy management is critical to improve compliance. RA patients, for example, where Humira, Embrel, Cimzia or Simponi have been prescribed, average 2X the compliance rates when managed through a specialty pharmacy vs. regular retail.
  8. Reimbursement Modification. New reimbursements for physicians must be implemented  to incentivize them to lower cost, clinically appropriate alternatives drug therapies while keeping them financially whole.

As new specialty  drug therapies get introduced (Hep C, cholesterol reduction, diabetes, etc.) plan sponsors will need to be more vigilant than ever in their fight to bring life-altering disease treatment to their members while trying to curb the unsustainable cost trends represented by loosely-managed specialty drug benefits.

Feel free to contact us with any questions or for more information on managing your specialty drug costs at