Insurers are putting a growing focus on specialty drugs covered under the medical benefit, and on re-evaluating the efficacy of traditional rebate models, according to a new report.
The Pharmaceutical Strategies Group (PSG) on Monday released its annual Trends in Specialty Drug Benefits report, which offers a look at how payers are responding to rising costs for these products and striking a balance between cost management and access.
PSG surveyed 228 benefits leaders representing employers, health plans and union coverage, and found that 43% ranked managing specialty drug costs as their top goal. By comparison, 37% said their No. 1 goal is to manage total cost of care, per the report.
As more and more of these products come to market and existing drugs gain new indications, managing them across the pharmacy and medical benefits poses significant complexity, the report found. More payers listed this as a top challenge than access to integrated data or member affordability.
Renee Rayburg, vice president of specialty clinical consulting at PSG, told Fierce in an interview that last year, 76% of novel new drugs approved by the Food and Drug Administration were specialty drugs. And while the specialty pipeline has been active of late, accounting for about 50% of pipeline products, that spike is significant, she said.
"When you look at it that way, you understand why [this issue] is front and center," Rayburg said.
Given this activity, 68% of those surveyed said that optimizing specialty formularies across pharmacy and medical plans is either a moderate or great focus. Most (72%) of the payers surveyed said they have a medical benefit formulary in addition to a more traditional pharmacy formulary.
The survey found that 50% of employers and 72% of insurers have plans in motion for cross-benefit formulary management.
In addition, the survey found that as costs rise, there are likely payers willing to make trade-offs between rebates and utilization management. Two in five of those surveyed said they would be willing to accept less in rebates if they could implement additional UM.
This does track with a broader shift in the pharmacy benefit management space away from rebates, especially as regulators and lawmakers aim to crack down on the industry to drive greater transparency.
"The payers are looking for kind of any lever they can pull to help to get direct savings," Rayburg said.
Almost all (93%) of the payers surveyed receive rebates under their pharmacy benefit, but just over half (51%) receive rebates for drugs covered under the medical benefit, the report found. Health plans were far more likely to earn rebates in the medical benefit, highlighting a gap faced by employers, per the survey.
The report also found that payers are skeptical that the current PBM model, in which they own the specialty pharmacy and manage costs, is working in their best interest. However, the respondents generally viewed specialty pharmacies positively, even if they saw limited differentiation between them.
"They expect high service levels, they expect specialty drug expertise, and they expect enhanced patient care," Rayburg said. "And I think that the plans struggle with the high expectations, because I think the reality is that they're getting sub-optimal delivery of what they expect from these pharmacies."