Specialty Pharmacy

Prominent insurance brokers are expecting large percentage increases in employer-plan costs next year, brought on by factors like rising labor costs and higher health care utilization. But there isn’t likely to be any relief in coming years, and experts say plan sponsors will have to be creative and disruptive if they hope to cushion the blow of increasing expenses.

Brokers Mercer Inc., Aon PLC and WTW PLC project that average employer plan costs will increase between 5.4% and 8.5% in plan year 2024.

And while employers don’t have to pass that onto employees in the form of higher monthly plan rates, some industry experts expect rising premiums are on the horizon, too.

A Sept. 26 potential class action lawsuit brought by independent pharmacists accuses CVS Health Corp. of charging excessive direct and indirect remuneration (DIR) fees for Medicare Part D claims administered by the firm’s Caremark PBM division. The suit, filed in the U.S. District Court for the Western District of Washington, calls the DIR fees charged by Caremark “unconscionable,” and says that the vertically integrated managed care, retail and pharmacy giant breached “the covenant of good faith and fair dealing.” In a Sept. 27 press release, the National Community Pharmacists Association (NCPA) — a trade group of independent pharmacists that has recently lobbied in favor of strict regulation of PBMs — backed the lawsuit. “It’s payback time,” said NCPA CEO B. Douglas Hoey. “Finally, community pharmacies have a chance to recover DIR fees that were unfairly taken. PBMs have been gaming the system for a long time, and it’s time to turn the tables.”

PBMs are increasingly deriving profits from collecting fees and from their specialty pharmacies as opposed to manufacturer rebates and spread pricing, according to an analysis published on Sept. 18 from Nephron Research. Eric Percher, the report’s author and a Nephron research analyst, tells AIS Health, a division of MMIT, that the findings suggest PBMs have shifted their business model in recent years even as they receive scrutiny from state and federal government officials for old tactics.

Nephron received compensation for the survey design and independent data analysis from the Pharmaceutical Research and Manufacturers of America (PhRMA), the leading trade group for drug manufacturers. Percher maintains that Nephron had full editorial control of the report.

When the FDA in July granted full approval to the Alzheimer’s drug Leqembi (lecanemab), CMS followed with a swift announcement that Medicare will cover it — although just for people with a specific diagnosis who have a physician willing to participate in a qualifying clinical registry. However, payers so far seem reluctant to cover the drug for their commercially insured populations, which represent a smaller but still important portion of the addressable market for Leqembi.

Two Pennsylvania-based insurers — Highmark Inc. and Independence Blue Cross — are taking heat for deciding not to cover the drug for their commercial members. A Philadelphia-area neurology practice recently sent them a critical open letter that claims the insurers are wrong to deem Leqembi “experimental.”

Employers should start thinking about their specialty drug benefit design differently, recommended an industry expert at a recent conference. That includes not only reconsidering tiering but also coverage of biosimilars, as well as disease categories that increasingly will contribute to their specialty spend.

Alex Jung, founder of Alex Jung Consulting LLC and member of the Midwest Business Group on Health's board, opened her session at the MBGH Employer Forum on Pharmacy Benefits, Specialty Drugs & Biopharma: How PBMs Control Prices & What Employers Can Do About It by explaining that she is “try[ing] to correct a lot of the things that became misaligned incentives or…business practices that have resulted in exploitation of employers and their employees.” She expressed an interest in getting public policy experts to “understand that they need to step up and put in some governance and controls so that the burden doesn’t always fall on the employer” because they have enough to deal with.

Sen. Mike Lee (R-Utah) reintroduced the Biosimilar Red Tape Elimination Act (S. 2305), his office said on July 13. The legislation is focused on increasing competition among biologics and lowering consumer costs for them. He first introduced the bill, which would do away with the FDA requirement for switching studies for biosimilars seeking the interchangeability designation, on Nov. 17, 2022. The legislation has been referred to the Senate Committee on Health, Education, Labor, and Pensions.

Clearway Health is working with The Brooklyn Hospital Center to help improve access to specialty pharmacy drugs for underserved patients, Clearway Health said on Aug. 2. The company, which partners with hospitals and health systems to build or improve their own specialty pharmacy programs, said it will help the hospital by broadening its services, decreasing patients’ financial responsibilities, improving patient adherence and boosting clinical outcomes.

Employers should start thinking about their specialty drug benefit design differently, recommended an industry expert at a recent conference. That includes not only reconsidering tiering but also coverage of biosimilars, as well as disease categories that increasingly will contribute to their specialty spend.

Alex Jung, founder of Alex Jung Consulting LLC and member of the Midwest Business Group on Health's board, opened her session at the MBGH Employer Forum on Pharmacy Benefits, Specialty Drugs & Biopharma: How PBMs Control Prices & What Employers Can Do About It by explaining that she is “try[ing] to correct a lot of the things that became misaligned incentives or…business practices that have resulted in exploitation or employers and their employees.” She expressed an interest in getting public policy experts to “understand that they need to step up and put in some governance and controls so that the burden doesn’t always fall on the employer” because they have enough to deal with.

The large markups that hospital outpatient departments (HOPDs) place on biologic medicines are both causing plan sponsors’ costs to soar and muting the potential savings that could come from biosimilars, according to a new report from the Employee Benefit Research Institute (EBRI). One of the report’s coauthors says that health care provider consolidation is largely the culprit — and it’s an issue that plan sponsors may struggle to combat.

While physician practices also mark up the prices of provider-administered drugs, HOPDs generally raise them even more, explains Paul Fronstin, Ph.D., director of health benefits research at EBRI. “And that’s because they’ve got purchasing power, and the purchasing power is increasing as they acquire more and more physician practices,” he adds.

A new study from the Employee Benefit Research Institute highlights the high — and growing — markups that hospital outpatient departments assign to biologic drugs, while also examining the variation in how HOPDs and physician offices (POs) treat innovator biologics compared to their biosimilars.

The study analyzed medical and pharmacy claims data from Merative MarketScan Commercial Database — which covers nearly 25 million people with private health insurance — from 2013 to 2020, and it focused on seven innovator biologics and their biosimilars that had been launched as of 2020.

Over the next few years, numerous biosimilars are expected to hit the U.S. market, leading to more competition and potentially lower costs for some expensive medications. However, that will not be enough to offset the entrance of new high-cost drugs and expanded indications for specialty medicines, according to the latest Pharmaceutical Strategies Group (PSG) “Spend and Trend” report.

The analysis, published on July 25, found that the per member per year (PMPY) cost for specialty drugs was $1,169 in 2022, a 14.1% increase from the previous year. After factoring in rebates, the PMPY increased by 12.5%, from $822 in 2021 to $925 in 2022.

PSG projects that the pre-rebate and post-rebate PMPY in 2025 will be $1,712 and $1,370, representing a 46.5% and 48.5% increase from last year, respectively.