Back in the late eighties, for every dollar spent on medicine, roughly 12 cents went towards prescription drugs. Fast forward to the present, and you’ll find that number has increased to a whopping 38 cents, with pharmacy trend expected to continue rising at 15%-25% annually.

Consider this: there are 6 new Specialty maintenance drugs (not cures, maintenance drugs) slated for release before the end of 2016, each carrying a 6 figure price tag. How did Specialty Pharmacy become such a trend-inflating monster? Why is the use of these medication types skyrocketing? To find some of the answers, we need to look no further than our home TV.

We’ve all seen the Specialty medication commercials …you know, the ones that endlessly drone on between the nightly news segments. But, did you know only the U.S. and New Zealand allow DTC (Direct to Consumer) drug ads? It appears the FCC will continue to allow Big Pharma to use their sneaky commercials to solicit and entice us to run to our doctors and ask for these new, amazing medications by name. But these commercials and their drugs come at a price... a big one for group health plans! 

So what is feeding this pervasive Specialty drug trend? The top 3 specialty therapy classes include medications for multiple sclerosis, oncology and inflammatory conditions. Just these three 3 classes alone accounted for 56.3% of the entire specialty medication spend in 2015. Let’s take a look at the top 10 specialty therapy classes for 2015:

1. Sleep Disorders – average cost per script about $9,000 fueled by an 18.5% increase in cost and 5.5% increase in utilization. This category of medications remains one of the most challenging classes to stop taking, yet one of the easiest to get a prescription for!
2. Hemophilia – this medication went up in cost by 15.4% per unit.
3. Pulmonary Hypertension – these drugs incurred a 13.4% increase in utilization and 4.8% increase in unit cost.
4. Cystic Fibrosis – The trend for this class of medications reached 53.4% in 2015 with an average cost of $6,441.27 per prescription.
5. Growth Deficiency – Some of the highest trend in 2015 (+140.6%) was attributable to treating rare condition growth deficiencies.
6. HIV - 6 of the top drugs increasing in spend by double and triple digits in 2015 are from the HIV category, moving it up to fifth place in the most expensive specialty therapy class. Brand inflation and utilization will continue to drive the trend for HIV drugs.
7. Hepatitis C – At $1,200 per pill and a multi-million dollar marketing campaign, Harvoni which was approved in 2014, accounted for more than 57% of market share for hepatitis therapy. No end in sight here.
8. Oncology - The FDA approved 10 oncology therapies in 2015, which helped increase spend 23.7%, while the increase in utilization (9.3%) and unit cost (14.4%) helped drive the trend.
9. Multiple Sclerosis - MS is ranked at number 2 in total trend for medications at 9.7%.
10. Inflammatory Conditions – When ranked by per member per month spend, inflammatory conditions remained at the top of the specialty therapy classes for the 7th consecutive year in a row, trending at a whopping 25%. Yikes!

Source: American Journal of Pharmacy Benefits, Published online March 16, 2016. www.ajpb.com

Most large, self-insured employers (2,000+ employees) enjoy having the option to carve-out prescription drug costs away from their medical plan and contract directly with the PBM (Pharmacy Benefit Manager) itself, resulting in increased transparency and a potential for large cost savings. But, what if you are a smaller self-insured employer, say around 250 employees? I can’t help but wonder what price that health plan is currently paying for Specialty and other drugs. 

The truth is, the large PBMs won’t even pick up the phone and speak with a smaller employer, because the PBMs pricing and servicing bandwidth just isn’t cost favorable for this segment. That is until recently. 

At PNW Insurance Solutions, we approach pharmacy claims for smaller employers as something to be managed, as part of a multi-year strategy. If you are a smaller employer, you can have options too, you just need to know the right insurance advisor who can provide them. Faced with double-digit increases in health care costs and premiums, many driven by high cost specialty medications, smaller employers between 100-1,999 lives want and need solutions too! Fortunately, PNW Insurance Solutions has an established process to provide PBM carve out analysis to the underserved smaller, group employer segment.

You have options!

www.pnwisol.com