Employers Tackling Rising Specialty Drug Costs Head-on

It’s no secret that specialty prescription drug costs are rising rapidly. A recent survey shows that employers are not taking it laying down. Business Insurance recently reported results revealing that 53% of employers are putting restrictions on new coverage for and utilization of new specialty drugs. They are requiring prior authorization and limiting quantities based on clinical evidence.

The survey, conducted by Towers Watson & Co, included 487 employers with at least 1000 workers. Other findings:

• More employers plan to exclude specific compound medications. Some 39% have already done so, and 24% plan to by 2018.
• More than one-fourth of employers are addressing specialty drug cost and utilization in their medical plan, inasmuch as these medications can be billed as such due to special handling and delivery requirements.

In an analysis of the survey results and trends, Towers Watson expects the percentage of employers addressing specialty drugs in their medical plan to triple by 2018, according to Business Insurance.

“Although pharmacy represents approximately 20% of employer-sponsored medical benefits costs, it is increasing at a rate that accounts for roughly half of medical cost inflation and should be a top priority for employers,” Eric Michael, US central division pharmacy leader for Towers Watson, noted in a statement.

“Left unchecked, pharmacy costs will continue to soar, creating an urgent need for employers to reevaluate their pharmacy plans and benefits to include maximizing use of generic drugs, and develop clear policies on the use of specialty and compound drugs,” added Carmelina Rivera, Towers Watson's US west division pharmacy leader, in the statement. “The challenge is to prudently manage pharmacy costs while enabling employees to access effective and affordable treatment.”—Dean Celia

Reference: Livingstron S. Employers scramble to keep lid on climbing specialty drug costs. Business Insurance. December 15, 2015.