News & Commentary

Employers Expect Moderate Cost Increases But Keep Wary Eye on Specialty Pharmacy

Expect overall health benefit cost increases at large employers next year to come in at a moderate 6%, but most of that will be because of specialty pharmacy costs, which are expected to skyrocket, according to a survey by the National Business Group on Health (NBGH).

Nearly a third of respondents (31%) said that specialty pharmacy was the biggest factor in cost increases, and this is a new development. In 2014, only 6% of large employers in the same survey cited specialty pharmacy as the number one driver of costs.

Pharmacy spending is expected to increase by 7.3% next year, with specialty pharmacy, which includes biologics, accounting for most of that. Specialty pharmacy costs are expected to increase by 16.8%.

Employers and health plans are scrambling to get a handle on the spending. “Prior authorization, step therapy, and quantity limits are used by nearly all employers,” the survey stated. Step therapy has come under fire. Stat posted a story about step therapy in August with this title: “Are insurance policies saving patients money, or keeping them from the treatment they need?”

The NBGH survey included 133 large employers (10,000 or more employees) that provide coverage to more than 15 million employees and their dependents.

Some of the techniques used by employers and health plans include use of a freestanding specialty pharmacy (69%), placing specialty pharmaceuticals in their own pricing tier (38%), and using case management that includes efforts like coaching programs and medication therapy management.

Some employers and health plans have implemented programs that more closely monitor the prescribing of the medications, according to the NBGH survey. For example, 83% of employers have worked with their health plans, PBMs, or both, to place restrictions on how compounded medications are prescribed as a response to spikes in compounded medication costs. In addition, 17% of employers have instituted restrictions on medications when the pharmacy manufacturer offers patients coupons or rebates to reduce their copayments or coinsurance. Coupons and rebates can seem like a great deal for patients, but they’re used to build a market for costly brand name drugs instead of cheaper generics.

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