The Employer's Guide Blog for Overseeing PBMs

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Tip of the Week: The Specialty Drug Pipeline Will Make You Rethink Your Pharmacy Benefits Management Strategy

Employers should be aware that the new drug pipeline focuses on manufacturer investments in developing high-cost brand, specialty and orphan drugs. With more than 8,000 drugs in development, new drug launches will reach historically high levels over the next several years.

New and potentially lifesaving or life-prolonging therapies are reviewed and approved every year, but generally there are two drug pipelines to monitor: novel drugs coming to the market for the first time for any indication, and new indications for existing medications already approved by the U.S. Food and Drug Administration (FDA).
There are several recommended strategies that are proven effective for managing high-cost specialty drugs today. It begins with first understanding the financial and member disruption (i.e., employee retention/recruitment impact) goals for each employer. Then you can focus on these four key areas to ensure a holistic solution is in place to manage costs and appropriate utilization in line with both the contract and clinical perspectives:

1. Maximize contract value:
Obtain the lowest net costs with radically transparent discounts and manufacturer revenue yield through an aligned formulary coupled with an unbiased analysis and independent review strategy. Easier said than done.

2. Evaluate plan design: Examine tiering, copay vs. coinsurance, HDHP vs non-HDHP; Deductibles/Out of Pocket Maximum changes, separate medical/pharmacy accumulators, network design, mail order, Dispense as Written penalties, etc., as well as the extent of each change under consideration (ex: 10% vs 20% coinsurance).
3. Eliminate wasteful spending: Remove questionable low clinical value medications from the formulary; independently review prior authorizations, suspect high-dollar claims, and drugs with the potential to be used off-label; optimize existing therapy and dosing to remedy any per-dose cost improvement opportunities; and independently verify appropriate indication and dosing for complex conditions.
4. Manufacturer assistance programs: Leverage available manufacturer-provided member incentives on specialty medications through a PBM systems-based approach, as opposed to partial carveout solutions that require manual formulary and system manipulations that generate additional risks and inefficiencies.

Tyrone’s Commentary:
Pharmaceutical manufacturers are light years ahead of plan sponsors including both public and private entities. They are keenly aware that the “free” drugs given away today are a temporary slow down of specialty drug spend, for instance. They will continue to innovate and manufacture curative pharmaceutical products. As a result, more and more people will not qualify for patient assistance and/or exhaust coupon savings programs. Many plans will see their drug spend fall back to pre-manufacturer assistance levels in 2-3 years. Specialty drugs will soon account for more than three-quarters (75%) of total drug spend wiping away early gains from manufacturer cost-saving programs. 

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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