The National Business Group on Health (NBGH), a non-profit association of 420 large U.S. employers, has released a policy issue brief intended to help stem the skyrocketing costs of specialty drugs. The 31-page report provides policy recommendations to create more sustainable and affordable pricing for specialty medications. The issue brief also outlines the challenges that large employers and their employees face in paying for expensive biologic medications, or specialty drugs, and examines initiatives employers are taking to control rising costs.
“With spending on specialty drugs skyrocketing, large employers, and employees who use these medications, are struggling to manage rising costs,” said Brian Marcotte, NBGH president and CEO. “Most employers we surveyed now rank specialty pharmacy as the number one driver of rising costs, leading us to develop these policy recommendations which we believe if enacted will help create improved financial sustainability and affordability of these drugs for patients and their health plans.”
The report, Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals, notes the number of drug approvals, spending and utilization for specialty medicines are projected to overtake traditional pharmaceuticals over the next several years. These trends add to the growing sense of urgency for large employers, who continue to struggle with how best to manage these expenditures, and for employees, who are paying more out-of-pocket for these medications. Insurers, governments, patients and others are also concerned about growing expenditures for specialty medications.
The NBGH’s five specific recommendations are as follows:
• Remove uncertainties surrounding risk-based and value-oriented contracting and implement indication specific pricing and reference pricing in public programs;
• Change rules around Medicare Part D protected drug classes;
• Eliminate perverse payment incentives to providers under Medicare Part B;
• Encourage the uptake of biosimilars, medications that compete with brand; and
• Reform permissive patent and exclusivity protocols.
Employers. With concern rising over the cost of specialty pharmacy, many employers are implementing additional tactics to address these costs. The NBGH’s annual Plan Design Survey of large employers found nearly three-quarters (74 percent) have more aggressive utilization management protocols in place for specialty drugs while 69 percent require specialty medications be obtained through a freestanding specialty pharmacy. Other approaches include the use of a specialty tier in the plan design (38 percent), using high-touch case management (35 percent) and requiring prior authorization for specialty medications billed under the medical benefit (35 percent).
“While reducing or removing policy obstacles to better pricing will be a major step forward, the real solution must involve manufacturers. Ultimately, they will need to address the growing concerns about pricing and adopt pricing models that respond to and better reflect those concerns. Viable solutions will also require collaboration among patients, payers, employers, manufacturers, policy makers and providers. Failure to take action threatens to jeopardize both the ability of people to afford vital specialty medicines and the ability of insurers, employers, and governments to pay for them,” said Marcotte.
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