Specialty pharmacy requires special attention

Specialty Pharmacy, also called Medical Pharmacy, is a growing topic of concern for benefits managers and employers. They’re struggling with the best way to manage its cost and impact on employees and their family members. And figuring out the best way to do this may be just as complex as the conditions treated with specialty medications themselves.

What does "Specialty Pharmacy" mean?

• Specialty Pharmacy involves medications made by biotechnology processes. These medications treat the cause of the disease rather than the symptoms. They often require administration by a health care professional.
• The diseases targeted by specialty medications generally affect less than 2% of the population, but are chronic conditions. They're rarely cured and typically need multiple treatments for long periods of time - often for life.  Examples include Rheumatoid Arthritis, Multiple Sclerosis, Crohn's disease and Hemophilia.

Specialty medications are expensive. They often cost as much - or more - per month as other drugs cost per year. For example, a generic drug costs an average of $15 where a brand name drug averages $150. Specialty drugs cost closer to $1500. Though expensive, these specialty medications can limit the progression of a disease and provide improved health outcomes over time. They can also help effectively manage total health care costs over time, resulting in optimal productivity and quality of life.

Rare and complex needs

While these conditions are typically rare and affect less than 2% of the population, the number of medications currently being developed is significant. And, unlike traditional medications, there's no regulated development of generic or other cost-effective alternatives.

In addition, specialty medications typically require administration by a health care professional. This results in associated medical costs based on the administration of the drug and required laboratory tests that ensure the right dosage, assess therapy effectiveness and monitor the drugs for serious side effects.

What's a benefits manager to do?

So, what should benefits managers consider when evaluating benefit offerings and carriers?

1. Cost: Pharmacy and Medical
   1. Typically, specialty medications are covered under a plan's medical benefit, pharmacy benefit or both. If a business' benefits plans are with different carriers, it's important to look at all the cost components, such as drug administration and associated lab work. and to ensure that each carrier has the right incentives to drive efficiencies that aren't just related to medication costs. For instance, if the pharmacy benefits carrier is on the hook for the drug cost, but not the cost of administration by a physician or infusion center, it's critical to make sure that the administration isn't being shifted to a higher-cost setting.
   2. Physician contracts can drive medical costs for health plan sponsors. These contracts often include compensation for the administration of some specialty medications. Physicians also benefit from preferential pricing negotiated with drug manufacturers through the pharmacy benefit. When plans "mandate" that specialty medications be filled via a home delivery specialty pharmacy, it can result in renegotiation of physician fee schedules and loss of drug manufacturer pricing to physicians. When these medications are administered in an infusion center, the result is higher drug costs.
   3. Physician-administered claims for people with primary Medicare benefits are covered 80% by Medicare and 20% by the plan sponsor. Medicare Part B doesn't cover specialty medications dispensed by a pharmacy. For employers with retiree benefits, client liability will increase to cover the lack of coordination with Medicare.
   4. Productivity loss from employee absence or reduced work performance is rarely factored into the cost of medical and pharmacy benefits. Conditions treated with specialty medications are long-term or life-long, so one should consider how health plans or pharmacy benefit managers can show effectiveness in this area.  
2. Coordinated Health Advocacy or Coaching
   1. Within CIGNA's population, 60% of people taking specialty medications have at least one other chronic condition. For those with Rheumatoid Arthritis, that number rises to 83%. To augment care provided by treating physicians, many employers provide "disease management" or "health advocacy" programs. These programs give employees access to condition-related education and support.
   2. When pharmacy and medical benefits are provided by different carriers, it's possible that people end up receiving fragmented support. This is often in the form of having multiple health coaches providing support on different conditions. This results in multiple phone calls, potentially conflicting guidance, confusion and, ultimately, loss of engagement in health coaching and inefficient disease management.
3. One Stop, Consistent Service and Information
   1. Utilization Effectiveness - Getting prior authorization ensures that drugs are prescribed based on the diagnosed condition, in the right dose and for the right amount of time. Plus, it helps monitor for drug effectiveness, ensuring the medication is having the expected impact on the person's condition. When pharmacy and medical benefits are provided through different carriers, it's likely that the processes for each are different and may produce different results.
   2. Reporting - The true cost of managing complex conditions is the sum of drug costs, related laboratory costs, medication cost administration, associated hospitalizations and office visits, and impact on productivity. When pharmacy and medical benefits are provided by one company, benefits managers can gain an "all in" view as part of the natural value of integration. This makes it easier to understand what's driving costs and gives the benefits manager valuable information to help improve the health of the individual and minimize current and future costs.



A simple solution to a complex problem

Complex health issues that require specialty medications impact individual and employer plan costs, as well as employee health and productivity. While these conditions are rare, the current trajectory suggests that the costs associated with these conditions and drugs is increasing at a rate higher than other medical or pharmacy costs. This demands highly-coordinated, integrated care management. CIGNA provides this in ways that are both unique and effective. And, we can prove it.



To learn more, contact:

Claire Marie Burchill, F.S.A.

Vice President, Strategy, Product & Marketing

CIGNA Pharmacy Management

Claire.Burchill2@CIGNA.com