Specialty drug costs will continue to grow and  dominate a plan sponsors’ drug spend if left unchecked (expected to grow from approx. 20-25% today to 45% of drug spend by 2030).  Surprisingly, as many as 50% of all Rx plan sponsors have not yet acted to implement a coordinated Specialty Drug Strategy(“SDS”). 

At WBC (wbcbaltimore.com) we’ve created a model program to help plan sponsors address this growing problem.

First, let’s define what we’re referring to as specialty drugs. These are infusion, injectable or oral medications that have:

  • High Cost ($600 or more per month or per dose; some treatments are >$1 million annually);
  • High Complexity (biotech process  of complex large molecules made from proteins);
  • High Touch (requires special handling and patient instruction).

They are used primarily to treat cancer, rheumatoid arthritis, MS, hemophilia and Hepatitis “C”, to name a few. Most of these conditions are impacting a relatively small patient population, but new biotech drug therapies are being developed to treat common chronic conditions such as diabetes and heart disease. What started as approx. 30 drugs in the 1990s has grown to over several hundred today with over 600 in the pipeline!

Challenges Faced by Plan Sponsors

First challenge, dealing with huge future cost increases. This will be due to dramatic increases in utilization and the ability for single-source manufacturers to set prices at whatever they want. The average “regular” Rx is approximately $700 annually; in specialty, it’s $18,000.

Second, there a big data collection challenges in order to understand true utilization. Only approx. 45% of a plan sponsors specialty drug spend is touched by their PBM.  The other 55% is processed through the medical plan benefit.  Very few plan sponsors can quote their total specialty drug PMPM cost.  As the wise old Rx sage once said “you can’t control what you can’t count.”

The last challenge of managing specialty drugs comes from the fact that this is a “high-touch” business. It requires knowing a lot about the patient and being able to assist with education, monitoring and compliance. Some plan sponsors worry that plan members or employees will object to this type of medication therapy management (“MTM”) as too intrusive.  

All of these challenges can be addressed  with the right strategic plan. When reviewing or negotiating your contract for PBM services, make sure that it includes a patient-centric approach with a real description of how specialty drugs will be managed. This should focus on the details on pricing discounts, waste control and management, distribution channels, education materials and monitoring services.

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