News & Commentary

Clinically Nuanced Benefit Design Recommended for High-Cost Drugs

For patients using specialty pharmaceuticals, health plans and employers may need to adjust their benefit structure, according to a new report. Specialty pharmaceuticals have complex molecules or qualities that result in costly delivery, and can cost patients more than $600 per month, according to “Supporting Consumer Access to Specialty Medications Through Value-Based Insurance Design,” a report from the Center for Value-Based Insurance Design at the University of Michigan.

Cost sharing for these medications should be related to clinical value and not simply tied to what the patient pays for the medication, the report says. Instead, insurers should use more nuanced approaches to financial incentives, says A. Mark Fendrick, MD, director of the center.

“We have to move the discussion away from how much we spend and toward how well we spend,” he adds.

The report suggests that for specialty medications, insurers should:

  • Impose no more than modest cost-sharing
  • Reduce cost-sharing in accordance with patient- or disease-specific characteristics
  • Relieve patients of high cost-sharing after failure on a different medication
  • Use cost-sharing to encourage patients to select high-performing providers and settings for their care

Specialty medications are commonly used to treat patients with cancer, multiple sclerosis, rheumatoid arthritis, and other serious health conditions like hepatitis C, new treatments which may be the fastest-growing class over the next two years. Specialty drugs constitute about 25% of all pharmaceutical spending, according to the Express Scripts Drug Trend Report, and by 2018 will make up half of all drug spending, according to another analysis by Artemetrx.

Last year, 23% of people with ­employer-sponsored prescription drug coverage were in plans with four or five tiers and the highest two were for specialty drugs. Coinsurance rates for these drugs average 30% and can be as high as 50%, the VBID report says. If a medication costs $1,000 per month and the patient has a high cost-sharing plan, the out-of-pocket cost could be $300 to $500 per month.

Value-based insurance design to rescue?

The tinkering to control specialty drug costs continues. The Affordable Care Act helps to relieve some of the financial burden on consumers, but even the ACA’s out-of-pocket limits can leave beneficiaries struggling, says a new study, which pushes VBID as a possible solution.

Average coinsurance for specialty medications covered under prescription benefit (2013)

Average copayment for specialty medications covered under prescription benefit (2013)

Source: National Pharmaceutical Council; Center for Value-Based Insurance Design

For years, health plans and employers have set high cost sharing levels for high-cost medications, but the report warns that indiscriminately high cost sharing may cause patients not to fill prescriptions.

For many patients and clinical indications, the cost of specialty medications is money well spent, the report adds.

But considering that the benefit any medication delivers can vary markedly depending on the patient’s response and other circumstances, health plans should implement condition-specific, clinically nuanced variation in benefit design.


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