Management of Specialty Spend Requires Coordination of Pharmacy and Medical Benefits, Says Prime

Peter Wickersham, senior vice president of cost of care at Prime Therapeutics, revealed at this year’s PBMI Drug Benefit Conference how to best structure benefit design and formulary to reduce specialty drug costs.

“Historians will look back on this time and call it ‘The Age of Specialty Medications,’” commented Peter Wickersham of Prime Therapeutics at the recent Pharmacy Benefit Management Institute (PBMI) Drug Benefit Conference in Las Vegas.

In his presentation, entitled “Managing Specialty Drug Spend: A Progress Report,” Wickersham characterized specialty medications as a neutron bomb that could “wipe us all out.” He gave an example of a Midwest manufacturer’s drug spend, and compared their 4th quarter to Prime’s normal book of business. Where Prime showed 2.1% pharmacy spend, the Midwest manufacturer showed a 12.1% pharmacy spend—and this total spend differential was due to use of specialty medications by just 2 patients of the 19,780 patients in the plan. One of these patients had hemophilia, and the other used Acthar gel for the treatment of kidney disease, a drug whose price “invites scrutiny,” Wickersham told The New York Times earlier this year. Wickersham stressed that Prime’s clients who are diligent with traditional pharmacy spending cannot always control or predict their specialty trend. Specialty drugs, he noted, will permanently alter the spend landscape in years to come.

Specialty spend has increased due to 3 specific factors: an increase in utilization, a boom in new drug development, and price inflation. According to Wickersham’s numbers, utilization has increased 4.8% in 2012, whereas price inflation increased 12.6%. The specialty drug pipeline is practically bursting with new drug candidates; there are currently more than 600 drugs in development, with 8 of 10 approved drugs expected to be in the specialty category by 2016.

It should come as no surprise that specialty drugs now make up a major component of the country’s total health spend. Although most other accounts say that 50% of all drugs will be specialty by 2030, Prime estimates that this will be the case by 2017 or 2018.

According to Prime’s reports, the specialty drug spend is largest for autoimmune conditions. The top 2 drugs dominating pharmacy spend in 2012 were Humira (adalimumab) and Enbrel (etanercept), which accounted for 12.6% and 10.5% of specialty spend, respectively. Another autoimmune drug, Remicade (infliximab), produced the largest spend on the medical side, accounting for 11.2% of the total spend in the medical benefit. After looking at spend in these categories, Wickersham concluded that over time it will be necessary to customize the strategy for individual products. Looking at drugs by therapeutic category alone may not be an appropriate strategy for looking at drugs developed in the specialty space, he asserted.

Wickersham provided a case study of autoimmune disorders to illustrate how Prime employed benefit design tactics to lower total overall spend. He showed how the company combined utilization management techniques, channel management, contracting activities, and coordination of care methods to drive cost out of the system.

First, the company used a preferred products model to drive cost out of the system. It chose an “exclusive Humira play” design, which resulted in nearly 30% savings and doubled its market share in the first 6 months of program implementation. Prime also used contracting activities driven by rebates to reduce drug costs, and examined site-of-care cost data to help its health plans optimize reimbursement rates on the medical side of the equation. By dispensing the drug through a dedicated channel (Prime Specialty Pharmacy), the company was also able to add value and cut additional costs through coordinated care management. This type of care also allowed the company to better treat its patients and improve adherence to therapy, which in turn produced less drug waste.

In short, Wickersham argued that comprehensive management of autoimmune products can help employers trim 30% to 35% of drug costs from their systems. Coordination of the activities of a pharmacy benefit manager and a health plan is crucial to the management of specialty drugs, and employers benefit most from a design that accounts for alignment of benefits on the medical and pharmacy sides.