The Employer’s View of Specialty Pharmacy Spending: Cost Containment is a Must
Specialty pharmacies realize that costs are soaring for specialized medications, placing a continued burden on patients, payers, and manufacturers. Employers around the United States are feeling the impact.
According to a November 2015 employer survey report released by Towers Watson, “The cost and utilization issues regarding specialty pharmacy in particular are a top pain point for employers.” Citing 2014 data from Truven Health, a Towers Watson pharmacy leader noted that pharmacy represents about 20% of employer-sponsored medical benefits costs.
However, Towers Watson data indicates that specialty pharmacy, which is utilized by only about 5% of covered employees, will account for 50% of total drug spending by 2018, and specialty pharmacy alone is “projected to represent between 10% and 15% of total health plan cost for 2016 and beyond.”
As a result, employers are struggling to justify the high usage of specialty drugs and to identify the true costs that these therapies represent for their companies. Therefore, more than half of the 487 large U.S. employers surveyed reported that they are adding restrictions for these medications, including requiring prior authorization and allowing limited quantities based on clinical evidence of improved patient outcomes. In addition, according to the Towers Watson survey, “Nearly 40% of employers already exclude compound drugs, [and that] is expected to grow to over 60% by 2018.”
So how can employers work to manage these high costs and ensure that their staff receive quality healthcare?
- As more and more specialty medications get approved for use in the market, there will be additional “biosimilars,” like generic drugs, that will be more affordable options while providing the same medicinal impact. For now, these options may be limited but soon, patients may be able to choose something other than the high-priced name brand drug.
- Employers can also work to identify total costs for specialty pharmacy by evaluating the pharmacy and medical spending together to get a true representation of what their employee health plans are costing. As long as employers keep tight reigns on staff outcomes, therapy management, and cost allocation, they can appropriately plan and anticipate future needs in their health care plans.
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