Limits being set for specialty and biotech drugs

While health care costs have generally slowed for employer-sponsored health plans, prescription drug prices have not. Drug prices spiked in 2014 and this trend is continuing, according to recent research from the International Foundation of Employee Benefit Plans (IFEBP). The Employee Benefits Survey 2016 found that 18 percent of organizations are setting limits for specialty and biotech drugs to help combat prescription drug prices.

“We’ve noticed a slight uptick in organizations placing limits on specialty and biotech drugs since we last surveyed our members in 2014,” said Julie Stich, research director at IFEBP. “At that time, 15 percent placed limits. The estimated price tag for treating a patient with a specialty drug is high: For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000.”

Other cost-control methods. The most popular cost-controlling methods for organizations are tiered pricing and a mail-order drug service, with 89 percent and 82 percent of employers currently implementing these initiatives. As for drug formulary lists, 71 percent of organizations have this tool in place, and 63 percent are using a pharmacy benefit manager (PBM). IFEBP found other techniques include:

• Step therapy/therapeutic substitution – 46 percent;
• Prior authorization/utilization management – 38 percent;
• Mandated use of generic drugs when available – 37 percent;
• Preferred provider networks – 35 percent;
• Drug card program – 28 percent;
• Preferential pricing agreements (negotiated with pharmacies/manufacturers) – 18 percent;
• Discontinued or limited coverage of lifestyle drugs – 17 percent;
• On-site or near-site pharmacy – 16 percent;
• Coverage of select over-the-counter drugs – 15 percent;
• Collective purchasing groups – 14 percent; and
• Reference-based pricing – 6 percent.

In addition employers have started passing the increased costs onto employees. More than one-third of employers have increased their employees’ share of prescription drug costs already or will within the next year.

“Employers are finding it necessary to vigilantly watch prescription drug prices,” Stich said. “They are striving to keep costs controlled by trying new approaches like using five or more tiers for cost sharing, where the highest tier is for the highest-priced drugs—usually specialty drugs. Moving forward, employers will continue exploring new cost-saving measures like referenced-based pricing.”

SOURCE: IFEBP press release, June 16, 2016.

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