While all the factors discussed in this chapter impact the cost of pharmacy benefits, no analysis of today's PBM marketplace is complete without an examination of some ofthe external factors driving plan costs.
High-Cost Injectable Drugs
One of the most significant trends affecting employers is the growth of biogenetic drugs, also known as injectables or specialty pharmaceuticals. The primary goal of an employers' specialty pharmacy program must be to improve the organizations' health and economic outcomes and most importantly, the medical outcomes and quality of life ofplan members. Specialty pharmacy programs are currently evolving to assure appropriate use and positive outcomes for millions of employees today who need these powerful and very expensive pharmaceuticals.
However, as utilization of specialty pharmaceuticals increases, so too do the challenges and costs for employers. Injectable medications are now a $35 billion a year market and are projected to double within the next decade. Often these drugs cost more than $1,000 per dose, up to 100 times the cost of many oral agents. In most plans, members taking specialty pharmacy drugs will represent one to five percent of a health plan's population, yet account for up to 50 percent of medical costs. Early studies indicate that specialty pharmaceuticals have tremendous potential to improve productivity and quality of life for millions of Americans. Therefore, employers who do not cover specialty pharmaceuticals or who limit coverage may be diminishing the ability of the pharmacy program to provide real value to their organization and plan members.
However, while promising, specialty pharmacy drugs are not clinically indicated for all plan members. Because of their high cost, the utilization of specialty pharmaceuticals must be tightly managed. Some of the more widely used specialty pharmacy medications include those to treat multiple sclerosis (MS), rheumatoid arthritis (RA), infertility, cancer and hepatitis. A review of pharmacy and medical data can identify the current drug utilization patterns for plan members and indicate the percent of the plan population with specific diseases that are candidates and can best be treated with specialty pharmacy drugs.
To ensure that members who will secure the most value from specialty pharmaceuticals can access those drugs, plan sponsors need a multifaceted and multidisciplined approach to the development of guidelines that will help to validate these drugs' use for appropriate members. One important component of a comprehensive specialty pharmacyprogram is the use of guidelines, which are typically developed by pharmacy & therapeutic, and/or guideline committees. These committees consist of practicing physicians, pharmacists and other professionals who use the expertise of consultants and health outcomes researchers. The guidelines developed should be provider-oriented, member-focused and condition specific. For example, guidelines for initiation of therapy for rheumatoid arthritis might include age, severity of disability, non-response to previous therapies and physician recommendation. Guidelines also play a key role in ensuring appropriate duration of therapy, dosage, titration and that the desired results of the drug therapy are being achieved.
As more high-cost specialty pharmacy drugs are introduced, there will be more evidence as to which drugs work best with which patients (e.g., genetic testing to identify individuals for whom the drug is most likely to be successful). Comprehensive programs that are integrated with the pharmacy and medical benefit, and that include managed care principles, such as prior authorization, formulary development and case management will more effectively ensure that employers and their employees get the maximum value from these promising new drug therapies.
Role of Pharmaceutical Marketing
Pharmaceutical manufacturer marketing efforts to both consumers and physicians has garnered widespread attention over the past few years. While there are issues to explore with regard to direct-to-consumer (DTC) advertising, an equally important concern for employers should be the products being advertised. For example, a growing trend among pharmaceutical manufacturers is "niche" marketing for products, such as over-active-bladder, nail fungus, dry mouth, and so on. While certainly there are instances where these ailments require medical intervention, the key goal of advertising appears to be to create demand where there has historically been little interest.
Of course, pharmaceutical manufacturers also spend significant sums of money directly marketing to physicians. While product marketing in itself is certainly an appropriate tactic within a free market, employers must be aware of the tremendous influence such advertising has on physicians and ultimately consumers.
A 2003 report from Tufts University noted that prescribing newer, more expensive drugs, rather than older, generics contributed to an estimated 24 percent increase in drug spending over a one-year period. A 2003 FDA report noted that patients who are subject to DTC advertising are more likely to request and secure a prescription for a specific drug. A primary concern for employers should not only be the excess costs such marketing can generate because of increased demand, but also the potential for side effects and medication errors from consumers demanding unnecessary medications that could further increase costs.
The message for the employer is to work carefully with its PBM to implement benefit design features that ensure that the most cost-effective, and not the most heavily promoted drugs, are used by their plan members.
Formularies, prior authorization, and strong member and physician education programs are excellent tools to address the issue of DTC advertising.
Impact of an Aging Population
There are now an estimated 76 million "Baby Boomers" approaching retirement age. However, many show no real signs of wanting to slow down or retire. As this generation surges ahead, steadfast in its belief that age is little more than a number, employers and plan sponsors will find themselves needing to provide health care benefits to an increasingly aging workforce. But the Boomers are not your average employees.
According to the Alliance for Aging Research, Baby Boomers refuse to believe that "aches and pains" are the price to pay for getting older. They tend to be less sedentary than past aging generations. To help accomplish their many life goals, Boomers are looking to health care, including prescription drugs, to help them stay active. From lifestyle drugs to those that help them manage chronic illnesses, Boomers look to health care services and products to help them successfully defy the aging process.
Boomers are also much better informed than their parents were about a variety of health care topics, and they expect to be given all the necessary information with which to make medical decisions. Unlike their parents, Boomers do not always take the word of medical "authority figures" who try to tell them what is best—they want to decide for themselves. According to the book Selling to the Generations by Robert Brenner, overall, Boomers are more likely to question authority and expect instant gratification. Atthe same time, particularly as they age, they are "brand loyal" and are strongly influenced by the brand building efforts of pharmaceutical companies to create this loyalty.
What does this mean for plan sponsors? First, the health care needs of an aging workforce will have a long-term and significant impact on the utilization of prescription drugs and on health care services. Many of today's workers will continue to work beyond the traditional retirement age and will want (and expect) to remain healthy and productive as they age. They are likely to expect to have these services and products available to them, including the brands that they have come to know and trust.
In addition, they are not likely to be automatically accepting of substitutions and especially, the unavailability of the goods and services that they perceive are necessary for them to remain healthy. According to the AARP study, Baby Boomers Envision Retirement II—Key Findings, about half of all Boomers expect their insurance to cover healthcare expenses. They will be well informed and will expect to be participants in their own health care. They will welcome options, but will resist ultimatums.
All these factors must be taken into consideration as plan sponsors seek to balance costs and access in their pharmacy benefit programs.
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