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Part 1: Demand More from Your Health Plan & Other Partners

By Wes Smith

Certilytics Senior VP for Advisory & Consulting

Specialty pharmacy is a hot topic these days – and for good reason.

Plan sponsors are seeing more and more of their total pharmacy spend being attributed to specialty. Evernorth’s 2020 Drug Trend Report found that just 2% of their covered population used specialty drugs—but that this accounted for over half of total spend under the pharmacy benefit.

With a robust pipeline of additional therapies on the way, some with multi-million dollar price tags, it’s unlikely this trend will reverse anytime soon. That’s why it’s crucial for employers to take proactive steps to get a handle on their population’s specialty drug spending.

This is the first of three blog posts outlining concrete steps you can take to better manage specialty drug utilization. In this post, we discuss the questions you should be asking your health plan partner and other vendors. Next week, we’ll discuss how you can turn your data into action. And the following week, we’ll look at how best to protect your organization from catastrophic claims related to specialty pharmacy.

You can download the full report here!

Demand More From Your Partners

Plan sponsors work hard to balance attractive and affordable coverage with ever-growing budgetary constraints. Rising specialty costs strain both sides of this balancing act – with high out-of-pocket costs for members, and significant cost pressures on health plan budgets.

One simple way to get started is to begin pushing your partners and vendors on what they’re already doing, and what more they can do, to support your plan with respect to specialty pharmacy. After all, this phenomenon is not new. Specialty pharmacy as a percentage of total pharmacy spend has been steadily on the rise, accelerating in recent years as manufacturers have developed and sought approval for an increasing number of orphan therapies. Vendors should be helping you address the specific challenges your plan is facing – and, if not, or if you think they could do more, here are a few questions to start with:

Reactive Versus Proactive

It’s difficult to solve a problem if you aren’t getting accurate and timely information. Learning at the end
of the year that your plan saw a 25% spike in specialty spending makes it very difficult to stay ahead of
emerging trends, especially when they can be as costly as specialty pharmacy.

Don’t get stuck reacting year after year, constantly chasing. Ensure you’re getting timely reporting to monitor new developments and support faster decision-making. Ask your vendors for specifics about
what they’re doing proactively to stay ahead, and consider using predictive modeling to better
anticipate cost and care needs.

Ready to learn more?

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Part 1 of 3: Helping Employers Get a Handle on Rising Specialty Drug Costs

Member Engagement

An important part of managing specialty costs is engaging with the right patients and ensuring they have
the education and support they need.

Techniques will be detailed in next week’s post, or in the full report available for download, but simply ensuring members understand their options when it comes to alternative therapies and sites of care can make a huge difference. Similarly, providing support mechanisms to increase adherence and reduce discontinuance rates can go a long way toward improving outcomes and lowering costs. Push your
vendors on what they’re doing to engage and support specialty pharma utilizers in your population.

Program ROI Validation

You may have been in sales presentations touting lofty ROI results that are “nearly guaranteed.” If
you’re in such an arrangement with one of your vendors, make sure performance is being independently
validated.

Though intentional misrepresentation or outright fabrication is rare, we find that some vendors have lots of “choosy” criteria tucked in their measurement methodologies that tend to tip the evaluation scale in their favor. Make sure you understand and agree with your vendor’s performance results, and seek outside expertise if needed. If by chance you are not actively and regularly evaluating vendor
performance, now is a great time to start.

Transparency

There’s no such thing as a free lunch. If we accept this fact, and acknowledge that nearly every enterprise has to make money, we should be transparent about it. Like most things, that’s easier said than done. Two areas particularly prone to limited transparency are drug rebates and “shared savings”
arrangements:

• Pharmacy rebates are a pretty well-known source of cost offset for plan sponsors, and generally evaluated and discussed through the pharmacy benefit. But don’t forget about drugs flowing through the medical benefit. PSG’s 2020 Specialty Spend and Trend Report found nearly 40% of specialty spend occurs under the medical benefit. These can include many high-cost specialty drugs, so you want to ensure you are receiving a portion of the medical pharmacy rebates as well. Request specifics from your health plan on what you are (or are not) receiving today, and ensure it’s competitive with the marketplace. 
• “Shared savings” programs can be particularly tricky. The names and specifics can take various
  forms, but they typically follow this pattern: “…if we, the vendor, save you $X, we take a
  percentage of that $X and give you the balance.” Sounds great, right? Not so fast.
  

Unfortunately, these programs can create some questionable--and in some cases outright conflicting--incentives. Here’s a simple example: A self-funded plan has a large out-of-network
claim. The health plan “negotiates” with the out-of-network provider, and receives a portion of the “savings” based on their negotiations. In this scenario, the health plan has less incentive to control the cost of the claim (or what is billed) originally – as the higher the claim, the higher the health plan’s portion of the “savings” can become. The health plan should be first controlling,
and second aggressively negotiating, for savings that are 100% the plan sponsor’s. That’s what the plan sponsor is paying the health plan to do through ASO fees in the first place. Be cautious about these arrangements, and, if needed, seek outside expertise to navigate.

It shouldn’t come as any surprise that these two areas tend to be big revenue generators for those on the other side (i.e., PBMs and health plans). We recommend pushing for more transparency across both to ensure your plan is not missing out on opportunities to offset high
specialty costs.

Tune in for next week’s post, where we’ll discuss turning your data on specialty Rx spending into action.
You can also download the full report, containing all three parts, here.

And if you’re interested in more information, downloaded our employer fact sheet, our specialty drug reporting brochure, or reach out at contact@certilytics.com to schedule a free consultation with our
team of experts.