Employers Get Tougher on Specialty Drugs

If you are interested in specialty drug management, I suggest you download the extensively-titled 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. (Free download.) This new report provides great insight into employer-sponsored health care, including: cost trends, premiums, employee contribution strategies, and healthcare reform.

For the first time, the report also summarizes employer strategies for specialty pharmacy. The news isn’t pretty, with employers planning more aggressive specialty drug utilization management. The report doesn’t delve deeply into more exotic strategies, such as coordinating medical and pharmacy benefits or implementing tighter specialty channel shifts.

Pharmaceutical manufacturers should start planning for tighter specialty pharmacy management. Unique specialty therapies do not usually contract for access, but that will change as the rules tighten.

The survey includes 583 employers that collectively employ 11.3 million full-time employees. The companies range from less than 1,000 employees to more than 25,000 employees. Unfortunately, the results are not broken down by company size.

Consistent with other employer surveys (such as Payers Know Little About Specialty Drug Spending ), the Towers Watson sample is still confused about specialty drugs. Less than half are “very familiar” with specialty drug costs under the pharmacy benefit. Less than one in five are “very familiar" with specialty drug costs under the medical benefit.

The chart below summarizes employers 2013 specialty pharmacy activities and 2014 plans.

As you can see, employers use—and will continue to apply—utilization management tools. The old favorites dominate, including: dose limits, step therapy, and prior authorization. These data show why specialty drug utilization is under pressure. See Insights from the 2012 Express Scripts Drug Trend Report.

The fastest-growing approaches appear at the bottom of the list. In 2013, only 15% of employers require case management through the medical plan. In 2014, 24% of employers expect to do so.

Note that the list doesn’t include such channel management techniques as altering provider/pharmacy reimbursement metrics, white bagging, and switching products from medical to pharmacy benefit coverage. Either employers are not using these techniques or Towers Watson forgot to ask about those strategies.

Next week, I’ll discuss the latest data on health plans’ specialty drug strategies, which are much more complex. Do you feel lucky?