Directors of Benefits and employee benefit brokers are under increasing pressure to deliver comprehensive, cost-effective strategies while maintaining exceptional outcomes for plan members. One of the most impactful ways to achieve this is by leveraging data from medical and pharmacy benefit claims. Data alignment is no longer optional—it’s essential for managing costs, optimizing plan performance, and meeting the needs of today’s self-insured employers. Directors of Benefits and employee benefit brokers must grasp how data is revolutionizing medical and pharmacy benefit decisions.

Why Data Alignment Is Crucial for Benefits Management

Medical and pharmacy claims data often exist in silos, creating blind spots in cost management and care strategies. For example, understanding the total impact of high-cost specialty drugs requires analyzing both medical (J-codes) and pharmacy benefits. Without alignment, it’s nearly impossible to identify patterns, optimize formulary decisions, or improve outcomes.

Aligned claims data allow benefits professionals to:

• Pinpoint Cost Drivers: See the complete picture of how certain drugs or conditions affect plan costs.
• Support Better Plan Design: Use integrated data to create benefits that balance cost control with member satisfaction.
• Deliver Strategic Insights: Provide employers with actionable recommendations based on real-world analytics.

Implementing a data-driven approach to benefits management begins with investing in technology that integrates data from medical and pharmacy claims into a unified platform. This step is foundational, as it enables a comprehensive view of costs, utilization, and outcomes. Once the technology is in place, the focus shifts to prioritizing transparency, ensuring that all stakeholders—whether payers, brokers, or plan sponsors—can access and understand the data driving decisions. Transparency builds trust and allows for more informed discussions about cost-saving strategies and plan performance.

Next, fostering collaboration between medical and pharmacy benefit teams is essential. By breaking down silos, these teams can work together to identify patterns, improve member outcomes, and align strategies. The process continues with the adoption of predictive analytics to anticipate trends and costs, enabling benefits professionals to recommend proactive interventions. For example, predicting the impact of high-cost specialty drugs allows brokers to guide employers toward cost-effective solutions before expenses spiral out of control.

Finally, all efforts must converge on a member-centric approach that focuses on improving employee health and satisfaction. By aligning benefits with the needs of plan members—such as medication adherence programs or personalized interventions—employers can achieve better outcomes while controlling costs. As a result, this integrated, step-by-step approach not only enhances decision-making but also positions brokers and benefits directors as indispensable partners in delivering value to self-insured employers.

What Results Can Directors of Benefits and Brokers Expect?

By aligning medical and pharmacy claims data, benefits teams can achieve:

• Cost Savings: Unified data uncovers inefficiencies and opportunities for savings, such as moving high-cost J-code drugs from medical to pharmacy benefits, where discounts and management are more robust.
• Better Employer Retention: Employers want results. Offering aligned, data-driven strategies positions brokers as indispensable partners in their success.
• Improved Outcomes: Benefit strategies rooted in data lead to healthier, more productive employees and fewer costly interventions.
• Stronger Reporting: Unified data simplifies the process of meeting reporting requirements while providing powerful insights to employers.

Why It Matters for Brokers and Benefits Directors

As the healthcare landscape evolves, self-insured employers expect more from their benefits professionals. By driving discussions around data alignment and sustainable strategies, you can position yourself as a forward-thinking leader who delivers measurable results. Data isn’t just a tool—it’s your competitive advantage. Use it to design benefits that control costs, improve outcomes, and meet the demands of the modern workforce.

The Inflation Reduction Act’s implications for employer-sponsored health plans and other notes from around the interweb:

• The Inflation Reduction Act’s implications for employer-sponsored health plans. The Inflation Reduction Act (IRA) aims to lower prescription drug costs and enhance Medicare benefits. While these changes benefit Medicare recipients, they raise concerns for employer-sponsored health plans that are not part of government price negotiations. These plans could see cost increases due to price shifts, with premiums rising for employers and employees alike. The primary concern is that non-Medicare participants will bear these higher costs as pharmaceutical companies and health care providers raise prices to offset lost revenue. Historically, Medicare’s cost reductions have led to higher prices for employer-sponsored plans. When Medicare sets lower prices for services under Parts A (hospital) and B (outpatient), providers often shift costs to those with private insurance to maintain profitability. This trend is expected to continue under the IRA.

• What to know about brand-name and generic drugs. When choosing medications, patients typically encounter brand-name and generic drugs. While both types are designed to treat medical conditions effectively, understanding their subtle differences can help you make more informed decisions regarding your health. One of the first noticeable distinctions between originator and generic drugs is their name. Generic medications are typically named after the drug’s active ingredient instead of the manufacturer’s brand. The cost and appearance of the medication are also key differentiators. Generic medications are typically 80-85% less expensive than the brand-name version, primarily because they undergo fewer development processes. Although the drugs have the same active ingredients, they do not have to include the same inactive ingredients. This means the medication can appear different in color, shape, or size.

• Pharmacies Accuse GoodRx of ‘Inviting Price-Fixing’ in Series of Antitrust Class Actions. The plaintiff pharmacies alleged that GoodRx, a prescription discount card aggregator, and four of the largest pharmacy benefit managers (PBMs) engaged in a conspiracy to fix prices paid to pharmacies for reimbursement of prescription drug claims. “This case involves an unlawful price-fixing agreement among several PBMs—orchestrated by the PBM rate aggregator, GoodRx—to suppress the prices paid to independent pharmacies for generic drugs,” according to one complaint filed Nov. 1 in the U.S. District Court for the Central District of California by an independent pharmacy, Community Care. The complaints allege that when a pharmacy submits claims for reimbursement from a pharmacy benefit manager and the patient pays with a discount card, that PBM uses GoodRx’s pricing software to determine whether another PBM offers a lower discount card price. If they find one with a lower price, the claim is rerouted to that PBM, which minimizes the reimbursements paid to pharmacies.

• The Need for Regulation to Positively Impact Drug Formulary Decisions to Ensure Appropriate Patient Access: A Little-Discussed Topic in Pharmaceutical Policy and Pricing Debate. Most recently, PBMs have received an increasing amount of scrutiny. Two areas that have received significant attention are the PBMs’ impact on drug pricing and the lack of transparency in their business practices. One issue that has not received a great deal of attention is the misuse of the drug formulary—the foundation of the drug benefit—which consists of a list of medications covered by one’s health insurance. Although some would say that the purpose of drug formularies has remained the same over the past 30-plus years, others would disagree. Initially, drug formularies were developed by a pharmacy and therapeutics committee of a PBM, health plan, or other organization. The committee was made up primarily of clinicians and other experts who determined the safety, efficacy, and unique clinical aspects of the drug. If it met their standards, it was placed on the formulary.

The pharmacy benefits management (PBM) landscape is constantly evolving, prompting plan sponsors to prioritize metrics that deliver actionable insights into their prescription drug spending. One such emerging metric is the Specialty Dispensing Rate (SDR). Understanding and optimizing SDR can play a crucial role in managing costs and evaluating PBM performance. This blog will introduce SDR, explain its importance, and illustrate its impact through practical examples presented in tables.

What Is the Specialty Dispensing Rate (SDR)?

The Specialty Dispensing Rate (SDR) is defined as the percentage of all dispensed prescriptions that are specialty drugs. Specialty drugs are high-cost medications used to treat complex, chronic conditions such as cancer, rheumatoid arthritis, and multiple sclerosis. These drugs often require special handling, administration, or monitoring.

Calculation of SDR:

SDR = (Number of Specialty Drug Prescriptions / Total Number of Prescriptions) x 100

Why Is SDR Important?

Specialty drugs, while accounting for a small percentage of total prescriptions, represent a sizable portion (∽50%) of total drug spending due to their high costs. By tracking SDR, plan sponsors can:

• Evaluate PBM Performance: A higher SDR may indicate that a PBM is not effectively managing specialty drug utilization, potentially leading to unnecessary costs.
• Manage Costs: Understanding SDR helps identify trends in specialty drug usage, allowing for targeted interventions to control spending.
• Improve Patient Outcomes: By monitoring SDR, plan sponsors can ensure appropriate use of specialty medications, enhancing patient care.

Impact of SDR Differences: Practical Examples

Let’s illustrate how differences in SDR can impact overall drug spending using two examples.

Assumptions:

• Average Cost of a Non-Specialty Prescription: $100
• Average Cost of a Specialty Drug Prescription: $8,500 per 28-day supply
• Analysis Considers SDRs of 1%, 2%, 3%, 4%, 5%, and 6%

Specialty Dispensing Rate increases might seem modest on paper but have substantial financial repercussions in practice. In example two, raising the SDR from 3% to 4% would result in an additional cost of $4,569,600. If the rate were increased to 5%, the extra expense would climb to $9,130,800. Pushing the SDR even further to 6% would amplify the additional cost to a staggering $13,700,400! These insights highlight the significant impact that small percentage changes in the SDR could have on self-insured employers’ overall financial obligations.

Action Steps for Plan Sponsors:

1. Establish a Baseline SDR: Know where you stand to measure progress effectively.
2. Monitor Regularly: Keep a close eye on SDR trends and associated costs.
3. Engage Stakeholders: Collaborate with PBMs, healthcare providers, and patients to manage specialty drug utilization.
4. Implement Cost-Saving Strategies: Use the insights gained to optimize your pharmacy benefit plan.

Conclusion

TransparentRx’s Solution Stacking cost management process tackles rising specialty dispensing rates (SDR) head-on, ensuring specialty drugs are dispensed only when clinically necessary and at the lowest possible cost. Each step in the process—from TransparentPA® reviews to identify cost-effective alternatives to Transparent340B’s discounted pharmacy network—reduces unnecessary specialty drug utilization. Tools like TransparentPGx® optimize medication selection through genetics, while TransparentMTM® provides ongoing medication therapy management, ensuring the appropriate prescribing and efficient management of specialty drugs.

This comprehensive approach enables plan sponsors to monitor and control SDR, which is a key driver of pharmacy costs. TransparentRx provides the transparency and strategic insights needed to optimize specialty drug utilization, reduce costs, and improve patient outcomes—all while ensuring a fiduciary standard of care.

Barron’s exposé details the role of PBMs in possibly fueling the opioid crisis and other notes from around the interweb:

• Shedding Light On Payers And PBMs As Possible Drivers Of Opioid Crisis. A recent Barron’s exposé details the role of PBMs in possibly fueling the opioid crisis. PBMs are important intermediaries in the prescription drug ecosystem, wielding power over which medications patients have access to and how much they cost. What the Barron’s article doesn’t emphasize is that PBMs serve at the behest of payers, which include employers, health plans and government agencies. On behalf of payers, PBMs negotiate net prices for drugs in conjunction with determining their positioning on formularies, or lists of covered medicines.

• Copay Adjustment Programs: What Are They and What Do They Mean for Consumers? Americans spend on average more than $1,000 per person per year on prescription drugs, far surpassing prescription drug spending in other peer nations. According to a 2023 KFF poll, 3 in 10 adults taking prescription drugs report that they have not taken their medication as prescribed due to costs. In a 2023 KFF consumer survey, nearly one-quarter (23%) of insured adults reported that their health insurance did not cover a prescription drug or required a very high copay for a drug that a doctor prescribed, increasing to more than one-third (35%) of insured adults in fair or poor physical health. People who need specialty or brand-name medications to treat chronic health conditions such as diabetes, cancer, arthritis, and HIV are especially vulnerable to high costs, particularly considering rising deductibles over the years.

• Pharmacies Accuse GoodRx of ‘Inviting Price-Fixing’ in Series of Antitrust Class Actions. The plaintiff pharmacies alleged that GoodRx, a prescription discount card aggregator, and four of the largest pharmacy benefit managers (PBMs) engaged in a conspiracy to fix prices paid to pharmacies for reimbursement of prescription drug claims. “This case involves an unlawful price-fixing agreement among several PBMs—orchestrated by the PBM rate aggregator, GoodRx—to suppress the prices paid to independent pharmacies for generic drugs,” according to one complaint filed Nov. 1 in the U.S. District Court for the Central District of California by an independent pharmacy, Community Care. The complaints allege that when a pharmacy submits claims for reimbursement from a pharmacy benefit manager and the patient pays with a discount card, that PBM uses GoodRx’s pricing software to determine whether another PBM offers a lower discount card price. If they find one with a lower price, the claim is rerouted to that PBM, which minimizes the reimbursements paid to pharmacies.

• The Need for Regulation to Positively Impact Drug Formulary Decisions to Ensure Appropriate Patient Access: A Little-Discussed Topic in Pharmaceutical Policy and Pricing Debate. Most recently, PBMs have received an increasing amount of scrutiny. Two areas that have received significant attention are the PBMs’ impact on drug pricing and the lack of transparency in their business practices. One issue that has not received a great deal of attention is the misuse of the drug formulary—the foundation of the drug benefit—which consists of a list of medications covered by one’s health insurance. Although some would say that the purpose of drug formularies has remained the same over the past 30-plus years, others would disagree. Initially, drug formularies were developed by a pharmacy and therapeutics committee of a PBM, health plan, or other organization. The committee was made up primarily of clinicians and other experts who determined the safety, efficacy, and unique clinical aspects of the drug. If it met their standards, it was placed on the formulary.

Formulary management can make or break the value of your pharmacy benefit program. It’s a term often tossed around, but many self-insured employers aren’t aware of the intricate mechanics that can either reduce their costs effectively or skyrocket them unnecessarily. Let’s dive into unpacking the complexity of formulary management; what a formulary is, how to assess its impact, and the common pitfalls that employers face when relying solely on rebate-driven solutions.

What Is a Formulary’s Primary Goal and Why Should You Care?

A formulary is a curated list of medications covered by a health plan, carefully designed to balance effective treatment with cost considerations. The primary goal is to ensure patients receive the most appropriate medication for their condition in a cost-effective manner. However, today’s formularies have often moved away from this purpose, transforming instead into a financial tool that prioritizes profit over patient care.

For self-insured employers, understanding what drives these lists is crucial. The choices made during formulary creation can significantly impact patient outcomes, employee satisfaction, and ultimately, your overall healthcare spend.

Evaluating Your Formulary and Utilization Management Program

How do you know if your formulary is working efficiently? Evaluating a formulary involves understanding the key metrics that reflect its performance:

1. Generic Dispensing Rate (GDR): This metric shows the percentage of prescriptions filled with generic drugs instead of brand names. Generics offer the same therapeutic value at a fraction of the cost, and a high GDR is often indicative of cost-effective formulary management.
2. Generic Substitution Rate (GSR): Similar but distinct from GDR, GSR represents how often generics are substituted when a brand-name drug is prescribed. High substitution rates suggest an effort to reduce costs without compromising quality.
3. Prior Authorization (PA): PA requirements are intended to ensure that only medically necessary prescriptions are approved, controlling inappropriate use. However, when PA is rubberstamped or when the PBM owns a specialty pharmacy, it can lead to conflicts of interest and undermine clinical appropriateness. Instead of genuinely evaluating the necessity of a medication, these PAs can become mere formalities, designed to channel prescriptions through the PBM’s specialty pharmacy—often at a higher cost. This practice creates unnecessary hurdles for patients and inflates costs for employers, all while sacrificing the intended clinical oversight.
4. Appeal Approval Rates: If many PA denials are being overturned on appeal, it may indicate that the formulary isn’t aligned well with actual clinical needs. When appeals are rubberstamped or primarily exist to protect the PBM’s financial interests, particularly if the PBM also owns the specialty pharmacy, it can mean that the initial denial was never based on clinical reasoning in the first place. High appeal approval rates can signal that the formulary management process is more about protecting profit margins than ensuring patients receive the medications they need.

The Risks of Rebate-Driven Formularies

Rebates sound like a good deal—a way to get money back from manufacturers. But when PBMs prioritize rebates in formulary decisions, it often leads to higher overall drug spend. Why? Because rebate-driven decisions incentivize expensive brand-name drugs over equally effective, cheaper alternatives. These formularies don’t prioritize clinical appropriateness; they prioritize financial incentives, leaving your employees to foot the real costs in the form of unnecessary treatments, side effects, or lack of access to needed medications.

Take, for example, a patient like Joanne, a 49-year-old woman with diabetes. When her medication was removed from the formulary for purely financial reasons, she had to switch treatments—resulting in multiple doctor’s visits, lab tests, and months of discomfort before regaining control of her condition. The real kicker? While the medication switch saved a few dollars on the unit price, the total cost—both financial and human—far exceeded what was saved.

PBM Consultants Overlook Clinical Management—To Everyone’s Detriment

Many PBM consultants or PBCs focus primarily on rebates and discount guarantees when evaluating potential savings, but clinical management is where the real cost control happens. Formularies should be tools for clinical value—not profit generation. By neglecting clinical focus, PBM consultants miss an opportunity to truly manage costs, improve outcomes, and ensure employee health remains the priority.

A clinical-first formulary keeps the patient’s needs in focus, balancing efficacy and cost-effectiveness. When rebates and discounts drive the conversation, you end up managing the price of each pill rather than the value of the overall treatment—often leading to a “penny wise, pound foolish” scenario.

Reclaiming Control—How TransparentRx Can Help

Navigating formulary management is challenging, but it’s not impossible. TransparentRx uses a fiduciary model that guarantees every decision is in the best interest of the patient—and by extension, the employer. By moving away from rebate-driven formularies and aligning formulary decisions with clinical best practices, we help you optimize your pharmacy benefit program, ultimately reducing costs without sacrificing patient outcomes.

With the right approach to formulary management, you can be confident that your pharmacy benefits program isn’t just reducing costs—it’s ensuring your employees have access to the medications they need, without unnecessary hurdles or additional financial burden.

The Need for Regulation to Positively Impact Drug Formulary Decisions to Ensure Appropriate Patient Access: A Little-Discussed Topic in Pharmaceutical Policy and Pricing Debate other notes from around the interweb:

• The Need for Regulation to Positively Impact Drug Formulary Decisions to Ensure Appropriate Patient Access: A Little-Discussed Topic in Pharmaceutical Policy and Pricing Debate. Most recently, PBMs have received an increasing amount of scrutiny. Two areas that have received significant attention are the PBMs’ impact on drug pricing and the lack of transparency in their business practices. One issue that has not received a great deal of attention is the misuse of the drug formulary—the foundation of the drug benefit—which consists of a list of medications covered by one’s health insurance. Although some would say that the purpose of drug formularies has remained the same over the past 30-plus years, others would disagree. Initially, drug formularies were developed by a pharmacy and therapeutics committee of a PBM, health plan, or other organization. The committee was made up primarily of clinicians and other experts who determined the safety, efficacy, and unique clinical aspects of the drug. If it met their standards, it was placed on the formulary.

• Copay Adjustment Programs: What Are They and What Do They Mean for Consumers? Americans spend on average more than $1,000 per person per year on prescription drugs, far surpassing prescription drug spending in other peer nations. According to a 2023 KFF poll, 3 in 10 adults taking prescription drugs report that they have not taken their medication as prescribed due to costs. In a 2023 KFF consumer survey, nearly one-quarter (23%) of insured adults reported that their health insurance did not cover a prescription drug or required a very high copay for a drug that a doctor prescribed, increasing to more than one-third (35%) of insured adults in fair or poor physical health. People who need specialty or brand-name medications to treat chronic health conditions such as diabetes, cancer, arthritis, and HIV are especially vulnerable to high costs, particularly considering rising deductibles over the years.

• Analysis finds that after 2 years GLP-1 drugs for weight loss don’t justify their price. Patients who have taken popular GLP-1 medications for weight loss aren’t saving themselves or their health plans any money, at least not right away. Eagan-based pharmacy benefits manager Prime Therapeutics issued that disappointing finding this week after analyzing the health care spending of thousands of patients who started taking GLP-1 medications in 2021, comparing them with similar patients who didn’t take the drugs. Spending was $4,206 higher per patient the year after they started taking the GLP-1 medications compared to the group of patients who didn’t take it, primarily because of the costly medications themselves. “It’s too soon to conclude whether these drugs will have a return on investment from a total cost of care perspective,” said David Lassen, Prime’s vice president of primary clinical services. “We didn’t expect to see that in two years, but we were hopeful that we would start to see something!”

• ‘Biosimilar’ drugs are gaining market share, Tufts researchers find. Biosimilars drugs are almost identical copies of original biologic products. Early biosimilars had slower adoption and savings than expected; however, biosimilars launched in recent years have had more success. With several biosimilar launches planned in the next few years, it is important to understand how the state of the market might foretell significant market savings in the future. To do so, we explored how the introduction of biosimilars affected originator-biosimilar markets during the period 2017–22. We found that after biosimilar availability, payers increasingly allowed choice of preferred products. By 2022, 76 percent of commercial payers’ coverage policies listed two or more products (originator or biosimilar) as first-line options. Biosimilar market shares exceeded those of originators by a mean of three years after the first biosimilar launch, and originator-biosimilar market average sales price declined substantially. Taken together, these findings provide evidence of a functioning competitive market.

The latest Pulse of the Purchaser survey provides critical insights for self-insured employers grappling with the evolving healthcare landscape. Below are the five most impactful takeaways from the survey, highlighting areas where employers can optimize their pharmacy benefits strategies.

1. Drug Prices Are a Primary Concern
   With nearly 100% of respondents identifying drug prices as a significant threat to healthcare affordability, managing prescription costs is paramount. Employers should consider renegotiating PBM contracts to ensure transparency in pricing, rebates, and fees. Implementing a value-based formulary instead of a rebate-driven one can yield significant cost savings.
2. Interest in PBM Reform Is Rising
   More than half of employers plan to reconsider their PBM within the next three years. The most sought-after reforms include full revenue disclosure and flexibility in formulary customization without financial penalties. By adopting these strategies, employers can regain control over drug utilization and ensure alignment with fiduciary responsibilities.
3. High-Cost Claims Demand New Strategies
   High-cost claims remain a major threat to affordability. Strategies such as site-of-care redirection (e.g., home infusion) and enhanced case management are seeing increased adoption. Employers can mitigate the budgetary impact of large claims by incorporating precision medicine and partnering with centers of excellence.
4. GLP-1 Coverage and Obesity Management
   Coverage for GLP-1 drugs and other anti-obesity medications is gaining traction. However, cost-mitigation strategies, such as limiting access to high-risk populations and covering compounded alternatives, are crucial. Employers offering obesity management programs, including lifestyle interventions and bariatric surgery, are ahead of the curve in controlling related healthcare costs.
5. Transparency and Fiduciary Responsibility in Focus
   Fiduciary duties are increasingly under the spotlight, with employers expressing concerns about the integrity and conflicts in PBM and hospital billing practices. Ensuring independent audit rights and retaining ownership of all health plan data can strengthen employers’ fiduciary oversight and drive down unnecessary expenses.

By acting on these insights, self-insured employers can better manage rising healthcare costs while safeguarding the health and well-being of their workforce.

Copay Adjustment Programs: What Are They and What Do They Mean for Consumers and other notes from around the interweb:

• Copay Adjustment Programs: What Are They and What Do They Mean for Consumers? Americans spend on average more than $1,000 per person per year on prescription drugs, far surpassing prescription drug spending in other peer nations. According to a 2023 KFF poll, 3 in 10 adults taking prescription drugs report that they have not taken their medication as prescribed due to costs. In a 2023 KFF consumer survey, nearly one-quarter (23%) of insured adults reported that their health insurance did not cover a prescription drug or required a very high copay for a drug that a doctor prescribed, increasing to more than one-third (35%) of insured adults in fair or poor physical health. People who need specialty or brand-name medications to treat chronic health conditions such as diabetes, cancer, arthritis, and HIV are especially vulnerable to high costs, particularly considering rising deductibles over the years.

• Analysis finds that after 2 years GLP-1 drugs for weight loss don’t justify their price. Patients who have taken popular GLP-1 medications for weight loss aren’t saving themselves or their health plans any money, at least not right away. Eagan-based pharmacy benefits manager Prime Therapeutics issued that disappointing finding this week after analyzing the health care spending of thousands of patients who started taking GLP-1 medications in 2021, comparing them with similar patients who didn’t take the drugs. Spending was $4,206 higher per patient the year after they started taking the GLP-1 medications compared to the group of patients who didn’t take it, primarily because of the costly medications themselves. “It’s too soon to conclude whether these drugs will have a return on investment from a total cost of care perspective,” said David Lassen, Prime’s vice president of primary clinical services. “We didn’t expect to see that in two years, but we were hopeful that we would start to see something!”

• ‘Biosimilar’ drugs are gaining market share, Tufts researchers find. Biosimilars drugs are almost identical copies of original biologic products. Early biosimilars had slower adoption and savings than expected; however, biosimilars launched in recent years have had more success. With several biosimilar launches planned in the next few years, it is important to understand how the state of the market might foretell significant market savings in the future. To do so, we explored how the introduction of biosimilars affected originator-biosimilar markets during the period 2017–22. We found that after biosimilar availability, payers increasingly allowed choice of preferred products. By 2022, 76 percent of commercial payers’ coverage policies listed two or more products (originator or biosimilar) as first-line options. Biosimilar market shares exceeded those of originators by a mean of three years after the first biosimilar launch, and originator-biosimilar market average sales price declined substantially. Taken together, these findings provide evidence of a functioning competitive market.

• FDA Approves IV Form of Stelara Biosimilar Selardsi. Alvotech and Teva Pharmaceuticals announced this week the FDA approval of Selardsi (ustekinumab-aekn) to treat adults with moderately severe and severe Crohn’s disease or ulcerative colitis, according to a news release. This approval is an expansion on the reference product Stelara and is expected to launch in the first quarter of 2025 in the United States. Selardsi will be available in a 130 mg/26mL single dose and will be administered intravenously. Dosage is dependent on weight. If the patient weighs 121 pounds or less, they will be given two vials. Patients weighing between 121 pounds and 187 pounds should take three vials. Patients weighing more than 187 pounds should be given four vials. Subcutaneous maintenance doses of 90mg should be given every eight weeks after the initial intravenous dose.

Managing specialty pharmacy benefits has become a critical challenge for self-insured employers and benefit consultants alike. With specialty drugs accounting for over 50% of pharmacy spend, it’s essential to balance cost management with patient outcomes. Here are three key considerations for specialty pharmacy benefits management: price, clinical appropriateness, and drug mix.

Price: Breaking Down the True Cost

Specialty drug prices are notoriously high, and without proper oversight, costs can skyrocket. The first step in controlling spend is to ensure that you’re paying a fair price for the drugs your employees are using. Traditional PBMs may inflate costs through opaque pricing models, rebates, and spread pricing. To combat this, employers should:

• Demand transparency: Insist on a transparent, fiduciary model where your PBM charges only what the drug costs—nothing more, nothing less. This ensures there are no hidden markups or conflicts of interest.
• Implement cost-control measures: Require your PBM to actively negotiate with manufacturers for better pricing and rebates while using strategies like step therapy and prior authorization to ensure appropriate utilization. Additionally, price-lock guarantees and inflation protection clauses can offer predictability and protect against future cost hikes.

Clinical Appropriateness: Ensuring Optimal Use

Simply managing costs is not enough—it’s critical that specialty drugs are being used appropriately. This involves assessing whether the prescribed drug is the most clinically appropriate option for the patient based on their condition and overall health.

• Utilization management: Implement rigorous prior authorization protocols that evaluate the necessity of the specialty drug. This can prevent overprescribing or the use of more expensive drugs when equally effective, lower-cost options are available.
• Ongoing monitoring: Continuous evaluation of therapy effectiveness and adherence is key. Specialty drugs often require complex administration and management, so it’s important that patients are following their treatment plans and that the drugs are working as intended. Partner with a PBM that offers comprehensive patient support services and clinical oversight.

Drug Mix: Structuring an Efficient Specialty Formulary

The final piece of the puzzle is optimizing your specialty drug mix. This means ensuring that the drugs on your formulary provide the best value—both in terms of price and clinical outcomes.

• Formulary management: Work with your PBM to establish a tightly managed specialty drug formulary that prioritizes clinically effective, lower-cost alternatives such as biosimilars. Don’t just include drugs because they’re new—evaluate each drug for value and efficacy.
• Promote biosimilars: Biosimilars provide a great opportunity for cost savings. They are clinically equivalent to brand-name biologics but are often significantly less expensive. Ensuring they are included in your formulary and promoted as the preferred option can yield substantial savings.

Conclusion

By focusing on price transparency, ensuring clinical appropriateness, and optimizing your drug mix, self-insured employers can manage their specialty pharmacy benefits effectively. The goal is to strike the right balance between controlling costs and ensuring the best possible health outcomes for your employees. Working with a PBM that is aligned with your fiduciary responsibilities can help you achieve that balance and avoid the pitfalls of a profit-driven model.

For those seeking further guidance, TransparentRx offers a fiduciary model designed to reduce specialty drug costs while maintaining high standards of care. Reach out today to learn how we can help you create a sustainable and effective specialty pharmacy benefit.

‘Biosimilar’ drugs are gaining market share, Tufts researchers find and other notes from around the interweb:

• ‘Biosimilar’ drugs are gaining market share, Tufts researchers find. Biosimilars drugs are almost identical copies of original biologic products. Early biosimilars had slower adoption and savings than expected; however, biosimilars launched in recent years have had more success. With several biosimilar launches planned in the next few years, it is important to understand how the state of the market might foretell significant market savings in the future. To do so, we explored how the introduction of biosimilars affected originator-biosimilar markets during the period 2017–22. We found that after biosimilar availability, payers increasingly allowed choice of preferred products. By 2022, 76 percent of commercial payers’ coverage policies listed two or more products (originator or biosimilar) as first-line options. Biosimilar market shares exceeded those of originators by a mean of three years after the first biosimilar launch, and originator-biosimilar market average sales price declined substantially. Taken together, these findings provide evidence of a functioning competitive market.

• PBM Math: Big Chains Are Paid $23.55 To Fill a Blood Pressure Rx. Small Drugstores? $1.51. Alternate Funding Programs, such as copay assistance programs (CAPs), are offered by manufacturers on some brand name medications to lower patients’ out-of-pocket costs. While the focus is on removing barriers, if not managed, these programs can circumvent the formulary and the plan design’s ability to steer members toward lower cost and effective therapies. In response, Pharmacy Benefit Managers (PBM) have developed programs that plan sponsors can opt into. PBMs either manage their own programs or outsource all or a portion of their programs. One such program is manufacturer copay assistance programs. CAPs are non-need-based programs for those on commercial or private insurance. PBMs typically manage CAP in two ways: accumulator programs and/or variable copay programs.

• Supreme Court takes up PBM case: Does ERISA preempt states’ efforts to regulate drug prices? The U.S. Supreme Court plans to look at states’ ability to regulate pharmacy benefit managers this term. Glen Mulready, Oklahoma’s insurance commissioner, is trying to overturn an appeals court ruling that found that the Employee Retirement Income Security Act of 1974 benefits rule uniformity provisions preempt state efforts to regulate PBMs when the PBMs are serving self-funded employer health plans. The Supreme Court “has long cautioned against stretching ERISA to preempt laws in ‘traditionally state-regulated’ areas about which ‘ERISA has nothing to say,’ Mulready says in a brief filed in connection with the case, Mulready v. Pharmaceutical Care Management Association. “Pharmacy regulation is an area of traditional state concern and neither PBMs nor prescription-drug benefits are mentioned anywhere in ERISA.” But the PCMA, the PBMs’ group, says ERISA should preempt the Oklahoma PBM law.

• Employers haven’t a clue how their drug benefits are managed. Most employers have little idea what the pharmacy benefit managers they hire do with the money they exchange for the medications used by their employees, according to a KFF survey released Wednesday morning. In KFF’s latest employer health benefits survey, company officials were asked how much of the rebates collected from drugmakers by pharmacy benefit managers, or PBMs, is returned to them. In recent years, the pharmaceutical industry has tried to deflect criticism of high drug prices by saying much of that income is siphoned off by the PBMs, companies that manage patients’ drug benefits on behalf of employers and health plans. Employers may assume the PBMs are acting in their best interest, but they don’t have a legal obligation to do so.