It is clear that the economics of specialty drugs constrains their distribution and use and has the industry in flux. To rectify this, various stakeholders are looking at ways to manage costs to effectively provide critical drugs to those who need them while maintaining financial viability.
Adjudication for specialty drugs is processed by two separate means: through PBMs and through employee healthcare benefit programs. The PBM method offers more potential in managing costs due to the level of detail in the adjudication process.
PBMs use National Drug Codes (NDCs) to adjudicate. NDCs provide a level of precision that enables tracking – and potentially control – of each specialty drug’s cost at each dosage level and quantity dispensed. In contrast, entities that dispense drugs as part of the benefit package typically adjudicate specialty drugs using Healthcare Common Procedure Coding System (HCPCS) J Codes, which are inclusive of many different drugs and provide little detailregarding specific manufacturer, strength, package size or quantity.
To take advantage of rebates, The Centers for Medicare & Medicaid Services (CMS) won’t pay claims submitted with HCPCS codes, unless the claim is for a single source drug. Experts recommend that employee health plans adjudicate specialty drugs using NDCs as well. Until they do, one contends, it is “unlikely” that healthcare providers can control the costs of these pharmaceuticals.
...without the ability to track which drugs are being dispensed and at what dosage level and quantity, one cannot possibly control the drugs’ costs
As noted, there is no one definitive description of “specialty drug,” but most health plans – and CMS – consider cost a determining factor. This lack of a clear definition raises issues, especially when contracting.
A consulting firm reported having reviewed hundreds of PBM/insurer contracts, all of which, a representative said, “contained either no definition for specialty drugs or a definition that is so elastic that it is essentially entirely useless.”
Among the firm’s suggestions for payers establishing clarity when entering into a contract with a PBM are to:
- Define “specialty drug” as all drugs on an exhibit list, including every specialty drug available, as well as drug-by-drug minimum discount guarantees
- Include an amendment clause for the exhibit list as new drugs enter the market
- Solidify pricing terms to prevent manipulation
Require PBMs to provide pass-through pricing for every drug dispensed, with invoicing reflective of the PBM’s actual drug cost and other potentially cost-saving initiatives.
At a recent conference, payers reportedly were getting more aggressive about managing specialty drugs under both the pharmacy and medical benefits, with many reiterating their reliance on the utilization management tools that are already well established in pharmacy benefit management of specialty drugs.
They also said that tighter formulary management is becoming routine for specialty pharmaceuticals.
Additional reports note that, in an attempt to increase the efficiency of their drug benefit policies, payers are increasingly excluding drugs from their formularies to create cost savings, negotiate higher rebates from drug manufacturers and limit cost increases.
Step therapy and prior authorization are among other tactics payers are employing to ensure the appropriate use of medications and manage total drug spending.
The use of these tactics and others, such as quantity limits and partial fills, can assure health plan beneficiaries are getting the most clinically appropriate and cost-effective medicines at the right time. These efforts plus drug utilization and comparative effectiveness reviews also can limit a patient’s exposure to inappropriate drugs and lower the high cost of treatment by favoring clinically effective, lower price products.
According to the Pharmaceutical Care Management Association (PCMA), PBMs increasingly are working with specialty pharmacies to provide advanced clinical management programs that ensure the value of therapy is being optimized at the lowest possible cost.
These efforts include medication adherence programs that offer services to “encourage patients not to abandon medication therapy by engaging, educating and communicating with patients and prescribers.” By utilizing tools such as interactive voice response calls, emails, texts, letters, mobile app medication reminders, patient education and one-on-one pharmacist outreach and consultation, the PCMA says, specialty pharmacies help patients manage side effects and other issues that could otherwise result in their premature discontinuation of treatment and suboptimal outcomes.
Specialty pharmacies also are ramping up their role as trusted advisers, providing more comprehensive, high-touch and frequent counseling sessions supported by adherence and disease-specific surveys; proactive counseling on mitigation strategies for adverse events and initiating other interactions to foster adherence and help patients avoid the sometimes immediate consequences of poor adherence.
Risk Evaluation and Mitigation Strategies
Many specialty drugs fall under Risk Evaluation and Mitigation Strategies (REMS), an FDA-required distribution and care management restriction program that manufacturers must implement to help ensure the benefits of taking a drug will outweigh the risks. REMS requirements can impact the clinician as well as the pharmacy or pharmacist; via limited distribution, they reduce the availability of certain specialty drugs to an even smaller number of pharmacies or physician offices, limiting access.
Biosimilars: Hope on the Horizon?
The entry of biosimilars in the United States is projected to do for specialty drug pricing what generic drugs did for brands, that is, significantly lower costs.
Simply put, biosimilar drugs are less costly versions of biologics that are built from living and chemical compounds. They are different from generics because the active ingredients in brand and generic drugs must match, whereas, in biosimilars, there may be other ingredients included, thus they are not exact copies. The two drug types are alike, however, in that much like a generic is similar to the brand drug, each biosimilar drug is similar to an already approved biologic drug. Thus, biosimilars have the advantage of being able to extrapolate and “piggyback” on the branded drug to get approval for all the original drug’s indications.
According to the Federal Trade Commission (FTC), biosimilars have the potential to save the U.S.healthcare system $250 billion through 2022.
Furthermore, the global biosimilars market, according to an analysis by Frost & Sullivan, “will see exponential growth” over the next decade. This growth will not only save the healthcare system money; it also can improve patient outcomes and be a significant economic driver.
Comprehensive management approaches that effectively balance patient care, outcomes and costs can help ensure that new, innovative medications are readily available and affordable to the patients who need them most.
While there is no immediate or simple solution, many stakeholders can take steps toward resolution by arming themselves with the best drug information and tools that help them deliver needed drugs while protecting their bottom line.
Leading drug compendia companies are seeking to play a role in addressing this issue with drug database information that flags limited-distribution drugs and identifies where they are available, providing retail pharmacies faster access to specialty drugs suppliers and more control over the dispensing process.
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