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Specialty Drugs: A New Frontier In The Battle To Control Healthcare Costs

In the science fiction classic television show Star Trek, Captain Kirk opened up each show with the following narrative:

“Space. The final frontier. These are the voyages of the Starship Enterprise. Its 5-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.”

One aspect of the show that amazes me though, is how Dr. Leonard “Bones” McCoy always had the most cutting-edge technology, serum, or potion to cure almost any illness or injury. Okay, maybe it’s just a television show, but in the real world, doctors and scientists continue to creep closer to remedy amazing medical results improving the quality and longevity of life.

The issue is that many of these miracle drugs, particularly those considered “specialty drugs” that address certain diseases aren’t cheap. This new frontier of specialty medications is expensive; something that I learned first-hand when my son developed Crohn’s disease.  In fact, the cost of specialty drug therapies ranges from tens of thousands of dollars to hundreds of thousands of dollars annually. Specialty drugs comprise only 1% of prescriptions but spending on these drugs is about one-fourth of prescription drug spending.1 And, there appears to be no end in sight, as most studies predict significant cost trends of up to 20%- 30% for specialty medications over the next several years. Currently, up to 40% of the drugs under development are specialty drugs.1

So, what should an employer do? Most want to offer comprehensive benefits to employees, but also must reign in runaway healthcare costs, which proves more difficult each year. First, an employer should challenge it to establish an overall multi-year benefits plan that encompasses plan design, alternative funding types, a health and wellness culture, and employee engagement and education.

Next, relative to specialty drugs, an employer should be aware of its specialty drug spend and potential solutions and alternatives available to it.

Finally, while none of these are a silver bullet solution, an employer should seriously consider the potential solutions and alternatives, including, but not limited to:

  • Implement programs that maximize generic drug utilization and overall drug protocol adherence.
  • Implement cost containment programs that mitigate emerging drug costs associated with compound medications, Hepatitis C medications, and other emerging trend drivers.
  • Implement prior authorization, step therapy, and other similar cost containment strategies to ensure individuals are taking the most cost effective medication.
  • Implement narrow and/or value-based drug formularies to steer individuals to lower cost brand and generic drugs.
  • Shift cost of non-preferred drugs to individuals.
  • Manage drugs differently that are paid as medical benefits

In the end, managing specialty drug spending is, and will continue to be, a major challenge for an employer trying to offer great benefits while controlling costs. However, as each employer faces this daunting task, it should remember that these drugs are a new frontier – a frontier that is exciting in that our scientific community continues to challenge itself to seek out cures and remedies for new and existing diseases, very much like Dr. Leonard “Bones” McCoy. These new drugs provide a major benefit to the many individuals – like my son – who need them to live a “normal” life. In the end, that’s what should matter.

Live long and prosper!

1 National Center for Policy Analysis, Specialty Drugs and Pharmies, Study No. 355, May 22, 2014.