Employers consider unconventional strategies to manage double-digit drug cost increases

Although the vast majority of employers (88 percent) still rely on traditional plan designs (co-pays and coinsurance), many are ready to focus on new and novel approaches to managing specialty drugs costs. That’s according to the Midwest Business Group on Health’s (MBGH) fourth annual employer survey on specialty drug management.

Survey results indicate a significant number of employers (68 percent) are considering using a narrow network to manage patients, while less than 10 percent offer one. In addition, with 16 percent carving out their specialty drug benefit, 63 percent are considering moving towards this strategy. The biggest trend, however, is cost shifting. Over half of employers are considering shifting more costs to employees with 18 percent already doing so. In addition, 43 percent of the employers who shifted costs over the last three years, increased them by 50 percent in 2014.

“These results are an encouraging sign that employers are ready to think proactively about their cost management options,” said Cheryl Larson, MBGH vice president. “It is also a reminder of the impacts cost shifting can have on employee and family members, yet most employers don’t feel they have a choice. In fact, many employers are concerned about their ability to continue to offer medical and/or pharmacy benefits in the future. For employers, doing nothing is no longer an option.”

Additional survey findings include:

• Seventy-eight percent of employers are strongly concerned about the increasing costs of specialty drugs and 60 percent are strongly concerned about the number of specialty drugs in the pipeline.

• Eighty percent agree (34 percent) or somewhat agree (41 percent) that their pharmacy benefit manager does a good job managing specialty drug costs, but 90 percent strongly agree (56 percent) or agree (34 percent) that new and innovative solutions to managing specialty drugs are needed.

• Even though most employers still rely on traditional plan design approaches, many are ready to think more proactively. In fact, survey results indicate that 40 percent of employers include vendor performance guarantees, and 51 percent are willing to consider this in the future.

• The top three most effective cost management strategies include: 1) coordinated information on disease therapies; 2) defined contracting terms/coverage for claims reimbursement; and, 3) day’s supply/limitations messaging.

However, most employers (63 percent) don’t offer plan design elements to drive people to the lowest cost site of care for infusions, and very few offer incentives for strategies such as compliance to drugs, adherence to treatment or going to lower-cost site of care. These are missed opportunities for better cost management and patient outcomes.

SOURCE: http://www.mbgh.org

Visit our News Library to read more news stories.