Controlling specialty drug spending should be at the top of CFOs’ priority list.
Reason: Specialty drugs are expected to account for about 50% of total pharmacy spending this year, according to CVS Caremark. That’s up from one-third of total spending just two years ago.
And with an average monthly cost of $3,000 – 10 times the average non-specialty drug cost – the effect of this growth on employers will be significant.
Rebates, coupons and limits
That’s why it’s critical to take every opportunity available to reduce your plan’s specialty drug costs.
During a recent presentation, Gregory Madsen, the co-CEO of Innovative RX Strategies, LLC., laid out a number of ways employers can fight specialty drug costs.
Two underused tactics Madsen highlighted:
Rebates. Specialty drug rebates, which pharmacy benefit managers negotiate with drug manufactures, are significant and should be taken advantage of. Specifically, employers should look for Price Protection/Inflation Guarantee Rebates.
These rebates cap the average wholesale price (AWP) increase on specialty drugs, and any AWP increase in excess of the cap is “rebated back.”
Variable copay programs. Employers save by adding a program that uses manufacturer coupons that cut plan costs by bumping up copays for select specialty drugs.
If an employee uses a manufacturer coupon to pay for the cost of the drug, the plan should only allow a portion of the coupon to apply to the copay and use the remaining amount to lower its drug cost.
Some additional best practices:
- quantity level limits (e.g., six pills per month, limited to a 30-day supply)
- step therapies (employees try cheaper alternatives first)
- copay tiers (preferred and non-preferred), and
- a drug plan stop-loss limit.