Top 10 health conditions costing employers the most

What health conditions are costing employers the most? As healthcare costs continue to rise, employers are constantly looking for ways to lower their costs. Continue reading to learn more.


As healthcare costs continue to rise, more employers are looking at ways to target those costs. One step they are taking is looking at what health conditions are hitting their pocketbooks the hardest.

“About half of employers use disease management programs to help manage the costs of these very expensive chronic conditions,” says Julie Stich, associate vice president of content at the International Foundation of Employee Benefits Plans. “In addition, about three in five employers use health screenings and health risk assessments to help employees identify and monitor these conditions so that they can be managed more effectively. Early identification helps the employer and the employee.”

What conditions are costly for employers to cover? In IFEPB’s Workplace Wellness Trends 2017 Survey, more than 500 employers were asked to select the top three conditions impacting plan costs. The following 10 topped the list.

10. High-risk pregnancy

Although high-risk pregnancies have seen a dip of 1% since 2015, they still bottom out the list in 2017; 5.6% of employers report these costs are a leading cost concern for health plans.

9. Smoking

Smoking has remained a consistent concern of employers over the last several years; 8.6% of employers report smoking has a significant impact on health plans.

8. High cholesterol

While high cholesterol still has a major impact on health costs — 11.6% say it’s a top cause of rising healthcare costs — that number is significantly lower from where it was in 2015 (19.3%).

7. Depression/mental illness

For 13.9% of employers, mental health has a big influence on healthcare costs. This is down from 22.8% in 2015.

Employers take steps to address opioid crisis

Employers are seeking ways to address the nationwide opioid crisis. Read on to learn how employers are working with their health plan and pharmacy benefit managers to address this issue.


President Donald Trump declared the nation's opioid crisis a "public health emergency" last month, underscoring employer concerns about this growing epidemic.

The opioid crisis cost the U.S. economy $95 billion in 2016, and preliminary data for 2017 predict the cost will increase, according to a new analysis from Altarum, a health care research and consulting firm. Addressing opioid misuse could lead to more productive workers and lower health care costs.

U.S. employers are increasingly seeking ways to reduce the abuse of prescription opioids, according to new findings from the Washington, D.C.-based National Business Group on Health (NBGH), which represents large employers.

NBGH's Large Employers' 2018 Health Care Strategy and Plan Design Survey found that the vast majority of big employers (80 percent) are concerned about abuse of prescription opioids, with 53 percent stating that they are very concerned. Thirty percent have restrictions for prescription opioids, and 21 percent have programs to manage prescription opioid use.

The survey was conducted between May 22 and June 26, and reflects the strategies and plan offerings of 148 U.S. employers, two-thirds of which belong to the Fortune 500 or the Fortune Global 500.

"The opioid crisis is a growing concern among large employers, and with good reason," said Brian Marcotte, NBGH president and CEO. "The misuse and abuse of opioids could negatively impact employee productivity, workplace costs, the availability of labor, absenteeism and disability costs, workers' compensation claims, as well as overall medical expenses."

Given the widespread nature and expanding scope of the opioid crisis, some employers are working directly with their health plans and pharmacy benefit managers (PBMs) to address the issue, the survey showed. Those that are working to manage opioid use most often use the following strategies:

  • Limiting the quantity of pills on initial prescriptions for opioids.
  • Limiting coverage of opioids to a network of pharmacies and/or providers.
  • Expanding coverage of alternatives for pain management, such as physical therapy.
  • Providing training in the workplace to increase awareness and recognition of signs of opioid abuse.
  • Working with their health plans to encourage physicians to communicate about the dangers of opioids and to consider alternatives for pain management.

Apart from these measures, employers are:

  • Increasing communications and training for managers and employees to raise awareness of the issue.
  • Identifying people who may be at risk for addiction who could benefit from help.
  • Encouraging employees to take advantage of an employee assistance program, the health plan and other resources for help and treatment.

Different Pain Management Approaches

Janet Poppe, senior director for payer and employer relations at Pacira Pharmaceuticals, based in Parsippany-Troy Hills, N.J., advises using a multitherapy pain management strategy to minimize opioid use—especially following surgery, which she called "the gateway to the opioid epidemic."

"Opioid monotherapy is the current standard of care for postsurgical pain management," Poppe said on Nov. 14 at the National Alliance of Healthcare Purchaser Coalitions' 2017 annual conference, held in Arlington, Va. She cited research showing that:

  • 92 percent of postsurgical patients who receive opioids for acute pain report adverse side effects such as urinary retention or respiratory depression, the treatment of which can be costly.

In another study, more than 10 percent of patients who were prescribed an opioid within seven days of surgery were identified as long-term opioid users one year after surgery. Other research shows that 1 in 15 patients who receive an opioid post-surgery become chronic users.

Local anesthetics, anti-inflammatory drugs and nonopioids such as sodium-channel blockers are among the options available to address pain without the addictive and debilitating effects of opioids, Poppe said. "Using two or more nonopioid pain relievers that act on the body in different ways can produce a better result, at a lower cost, than using opioids."

"There is a need to generate widespread public awareness of the role that postsurgical opioids play in the larger public health crisis in the U.S.," Poppe noted. Health plan sponsors should work with their insurers or third-party administrators to alleviate the risks associated with opioid dependence by encouraging nonopioid pain-management approaches, she advised. Employers can:

  • Cover and demand opioid-free options for employees.
  • Ask provider networks what they are doing to reduce opioid use post-surgery.
  • Educate employees about discussing alternative pain strategies with their doctor. Pacira'sPlanAgainstPain website offers resources.
  • Change benefit designs to steer employees to surgeons and facilities using alternatives to opioids

"To stem widespread opioid abuse, state actors and employers must urge insurers to remove barriers to care, including prior authorization for medication-assisted treatment (MAT) and nonopioid treatments for pain management," Caleb H. Randall-Bodman, a senior analyst for public affairs with Forbes Tate Partners in Washington, D.C., said in an e-mail.

"Patients, especially those in great need, will take the most affordable and accessible treatment available. As such, the epidemic will not end until patients have access to 1) affordable, comprehensive pain management, and 2) comprehensive treatment for substance use disorders," said Randall-Bodman, who works with the American Medical Association's taskforce to reduce opioid abuse.

SOURCE: Miller, S (28 November 2017) "Employers take steps to address opioid crisis" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/steps-to-address-opioid-crisis.aspx


How employers can manage the skyrocketing cost of specialty drugs

Since the 90's, the number of specialty medications, not to mention their costs, has grown exponentially. Continue reading to learn what employers can do to manage these costs.


In the past two decades, the number of specialty medications — which treat rare and complex diseases such as multiple sclerosis, pulmonary arterial hypertension, hepatitis C, HIV, cystic fibrosis, some types of cancer and hemophilia — has grown exponentially. In 1990, there were only 10 specialty drugs on the market. By 2015, that number had increased to 300 medications, and by the end of 2016 there were approximately 700 more specialty drugs in development.

These medications are usually very high cost, with some new biologic medications costing more than $750,000 a year. Why are the costs so high? There are a number of factors, including the facts that distribution networks are limited, these medications are complicated to develop and distribute, and there are few, if any, generic alternatives for these drugs.

See also: A Look at Drug Spending in the U.S.

The Pew Charitable Trusts found that although only 1% to 2% of Americans use specialty medications, they account for approximately 38% of total drug spending in the U.S.

So, how can employers better gain control over the cost of specialty medications? Because there are hundreds of specialty medications, there’s no single strategy for cost management that can be applied universally. To build an effective cost management strategy, employers need to first analyze employee use of specialty medications. The best strategy will approach specialty medication management by disease class and drug by drug.

However, there are key building blocks of a strategy that will both manage costs and ensure that employees have access to the medications they need. Here are six things employers can do.

Assess benefit plan design structure. Employers should consider how they are incenting employees to spend their benefit dollars appropriately and wisely. A multi-tiered medication formulary where employees pay less out of pocket for generic drugs and lower cost medications and more for costly medications is one approach that’s proven effective. To help employees afford these higher out-of-pocket costs, employers can promote manufacturer copay savings programs, which many drug makers offer.

Think about utilization management. This can include requiring prior authorization for high-cost specialty medications and step therapies (employees must start with lower cost therapies and can move up to more costly ones if those are not effective).

Consider a custom pharmacy network design. By narrowing the network of pharmacies that fill specialty medication prescriptions, employers can negotiate a better unit price. A freestanding specialty pharmacy or a pharmacy benefits manager can provide savings by optimizing discounts for both employers and employees.

Offer second opinion and other support services for rare and complex diseases. A newly diagnosed rare or complex disease patient will see, on average, seven different specialists over the course of eight years before getting a true diagnosis and appropriate treatment path. These programs aim to reduce that burden and ensure success with that treatment once it’s identified. A second opinion from a top specialist in the field provides an expert assessment of the diagnosis and recommendations on the most effective treatment protocol. This not only helps manage costs, it lowers the risk of misdiagnosis and inappropriate treatment. Additional case management services can include one-to-one counseling and, when the drug regimen requires, in-home nursing services to help patients better manage their disease and improve outcomes.

See also: Specialty Drugs and Health Care Costs

Offer site of care choices. Where specialty drugs are administered can have a significant impact on what they cost. Medications administered in an outpatient clinic at a hospital can cost five times as much as those that are injected or infused in a physician’s office or at the patient’s home. Offering services such as home infusion or injection delivered by nurses or incenting patients with lower copays when they receive their medications at their physician’s office can lower overall specialty drug costs.

Educate employees. When an employee or covered family member is diagnosed with a rare or complex condition that will require a higher level of care and the use of specialty medications, employers can connect employees with case managers or similar services that provide education about the condition and the medication, such as how to manage side effects or what alternative medications are available, which can increase employee adherence with the medication regimen.

SOURCE: Varn, M (8 August 2018) "How employers can manage the skyrocketing cost of specialty drugs" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/specialty-pharmaceuticals-and-how-employers-can-manage-cost


Specialty Drugs and Health Care Costs

Prescription drug spending is rising every year and a significant portion of that spending it on specialty drugs. Read on to learn more.


This November 2015 fact sheet was updated in December 2016 to reflect new data.

Overview

Spending on prescription medications continues to rise each year in the United States.1Specialty drugs— including those used to treat conditions such as cancer and hepatitis C—represent a significant portion of this spending. The high cost of these novel therapies, which often offer advancements in patient care, raises affordability concerns for health plans, patients, and consumers.

What is a specialty drug?

The Pew Charitable Trusts defines specialty drugs as medications with high costs for a course of treatment or a year of therapy. Some health plans also categorize drugs as specialty if they are novel therapies; require special handling, monitoring, or administration; or are used to treat rare conditions. In general, elevated costs are a distinguishing characteristic of specialty drugs. A recent survey found that 85 percent of health plans consider high cost a determining factor in identifying specialty drugs.2 Medicare’s definition of specialty drugs is also based on price: Pharmaceuticals costing $600 or more per month are considered specialty.3

See also: How employers can manage the skyrocketing cost of specialty drugs

Cost implications

The estimated price tag for treating a patient with a specialty drug is high: For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000.4 In 2015, only 1 to 2 percent of the American public used specialty drugs, yet they accounted for approximately 38 percent of total drug expenditures.5 And the price of many specialty drugs continues to rise: In 2015, specialty drug unit costs increased by 11 percent.6 More patients are treating their health conditions with these drugs; utilization rose by 6.8 percent in 2015 because of increased use of existing drugs and the introduction of new pharmaceuticals.7 In 1990, only 10 specialty drugs were on the market,8 but there are now more than 300,9 33 of which became available in 2015 alone.10 And nearly 700 specialty drugs are under development.11 Because of higher prices and increased use, spending on specialty drugs represents an increasing share of total health care costs.12 In 2015, specialty drug spending reached $121 billion on a net price basis.13 The estimated number of Americans with annual drug costs greater than $50,000 increased 63 percent in 2014, from 352,000 people to 576,000.14 Many of these patients take multiple drugs, and 92 percent use high-priced specialty drugs.15 Importantly, patients who need specialty drugs face higher out-of-pocket (OOP) costs, because health plans often require a co-insurance payment, which is a set percentage of a drug’s price. Some plans charge a co-insurance payment as high as 33 percent.16

Managing specialty drug costs

To deal with the high cost of specialty medications, payers in public and private programs use a number of strategies to control patient OOP costs and member premiums, such as negotiating with manufacturers to obtain rebates and other discounts that help reduce the prices that plan members pay for medications. Payers also use different benefit design strategies to ensure the appropriate use of medications and manage total drug spending, including:

Formularies and cost sharing: Specialty drugs are typically placed in a health plan’s highest drug formulary tier, where OOP costs are most expensive. Patients are often required to pay co-insurance in order to access these medications. Research shows that requiring patients to pay more out of pocket reduces their use of prescription drugs.17 In their negotiations with drug manufacturers, payers can sometimes achieve lower prices by allowing patients to pay lower OOP costs for drugs.

See also: A Look at Drug Spending in the U.S.

Step therapy: When multiple treatment options are available for a patient’s condition, plans sometimes require patients to try, and fail, treatment with a cheaper, traditional drug before letting them access a specialty drug. Patients with rheumatoid arthritis, for example, are sometimes required to attempt therapy with traditional oral medications before they can use specialty biologics.18

Prior authorization: These policies require a health care professional to provide documentation that validates a patient’s need for a particular medication. Under most prior authorization criteria, clinical information is necessary to verify that a specialty drug is medically appropriate for a patient before coverage is granted.

Looking forward

Many specialty drugs offer meaningful therapeutic advances over existing treatments. However, if current trends continue, the high cost of specialty drugs will have a significant impact on overall health care spending and patients’ OOP costs. Pew is focused on identifying and evaluating policy options that balance the need to control overall health care spending with ensuring patient access to appropriate medications.

Endnotes

  1. Express Scripts, 2015 Drug Trend Report (2016), https://lab.express-scripts.com/lab/drug-trend-report.
  2. EMD Serono, EMD Serono Specialty Digest, 10th Edition: Managed Care Strategies for Specialty Pharmaceuticals (2014), http://specialtydigest.emdserono.com/pdf/Digest10.pdf.
  3. Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter (2015), http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.
  4. Bradford R. Hirsch, Suresh Balu, and Kevin A. Schulman, “The Impact of Specialty Pharmaceuticals as Drivers of Health Care Costs,” Health Affairs 33, no. 10 (2014): 1714–1720, http://content.healthaffairs.org/content/33/10/1714.short.
  5. Express Scripts, 2015 Drug Trend Report.
  6. Ibid.
  7. Ibid.
  8. American Journal of Managed Care, “The Growing Cost of Specialty Pharmacy—Is it Sustainable?” (2013), http://www.ajmc.com/payer-perspectives/0213/the-growing-cost-of-specialty-pharmacyis-it-sustainable.
  9. Ibid.
  10. Express Scripts, “FDA Approvals Set All-Time High” (2016), https://lab.express-scripts.com/lab/insights/drug-options/fda-approvals-set-all-time-high.
  11. IMS Health, “Overview of the Specialty Drug Trend: Succeeding in the Rapidly Changing U.S. Specialty Market” (2014), http://docplayer.net/4230764-Overview-of-the-specialty-drug-trend.html.
  12. The estimates in this section are based on published reports, some of which use different definitions for a specialty drug. However, the various authors do note that drug price or cost is used as part of their definitions of specialty.
  13. Quintiles IMS Institute, “Medicines Use and Spending in the U.S.: A Review of 2015 and Outlook to 2020,” (2016), http://www.imshealth.com/en/thought-leadership/quintilesims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020.
  14. On an invoice price basis, specialty spending was $150.8 billion in 2015.
  15. Express Scripts, “Super Spending: U.S. Trends in High-Cost Medication Use” (2015), http://lab.express-scripts.com/lab/insights/drug-options/super-spending-us-trends-in-high-cost-medication-use.
  16. Kaiser Family Foundation, Medicare Part D at Ten Years: The 2015 Marketplace and Key Trends, 2006-2015 (2015), http://kff.org/medicare/report/medicare-part-d-at-ten-years-the-2015-marketplace-and-key-trends-2006-2015/.
  17. Dana P. Goldman, Geoffrey F. Joyce, and Yuhui Zheng, “Prescription Drug Cost Sharing: Associations With Medication and Medical Utilization and Spending and Health,” Journal of the American Medical Association 298, no. 1 (2007): 61–69, http://jama.jamanetwork.com/article.aspx?articleid=207805.
  18. Express Scripts, Drugs That Require Prior Authorization (PA) Before Being Approved for Coverage (2015), https://www.express-scripts.com/art/medicare15/pdf/prior_authorization_choice.pdf.

SOURCE: PEW (16 November 2015) "Specialty drugs and health care costs" (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2015/11/specialty-drugs-and-health-care-costs


A Look at Drug Spending in the U.S.

Spending on prescription drugs in the U.S. is projected to overtake other sectors of healthcare in 2018. Continue reading this blog post to learn more.


This fact sheet was updated on April 26, 2018, to reflect newly published data.

Overview

Spending on prescription drugs in the United States is on the rise and is projected to outpace growth in other parts of the healthcare sector in 2018.1 Limited public data on how much various payers and supply chain intermediaries pay for prescription drugs, as well as a lack of consensus on a single metric for drug expenditures, presents methodological challenges in measuring drug spending.

See also: Specialty Drugs and Health Care Costs

Nevertheless, a number of public and private organizations have published drug spending estimates over the past several years, including the share of health spending attributed to drugs. Historical estimates and spending projections from the Department of Health and Human Services’ Assistant Secretary for Planning and Evaluation (ASPE), the Centers for Medicare & Medicaid Services’ (CMS’) National Health Expenditure Accounts (NHEA), the Altarum Institute, and IQVIA are explored in Figures 1 and 2.

Figure 1 illustrates estimates and projections of U.S. drug spending by source from 2010 to 2018. Each incorporates rebates and spending on drugs, excluding over-the-counter (OTC) products.

  • ASPE estimates total prescription drug spending, including retail and nonretail, using CMS NHEA, IQVIA, and Altarum Institute data.2
  • CMS’ NHEA data provide estimates of retail prescription drug spending, excluding nonretail.3
  • IQVIA estimates total manufacturer revenue (“net price spending”), accounting for rebates and other price concessions.IQVIA also breaks down manufacturer revenue for drugs sold in both retail and nonretail settings.

Figure 2 illustrates drug spending as a percentage of health expenditure. Each of these estimates incorporates rebates and spending in retail and nonretail settings excluding OTC products, unless noted below.

  • ASPE estimates total drug spending (retail and nonretail) as a percentage of personal health expenditures, a subset of national health expenditures.5
  • The Altarum Institute estimates total prescription drug spending (retail and nonretail) as a percentage of total national health expenditures.6
  • CMS NHEA estimates drug spending (excluding nonretail) as a percentage of total national health expenditures.7
  • IQVIA estimates net drug spending (retail and nonretail) as a percentage of health care spending, including OTC products that do not require a prescription.8

See also: How employers can manage the skyrocketing cost of specialty drugs

Organizations use different denominators to describe health care expenditures

  • National health expenditures: Total health expenditures, including medical spending and public health activities, administrative costs, and research investments (Altarum Institute and CMS).
  • Personal health expenditures: Spending exclusively on direct patient care (ASPE).
  • Healthcare spending: An estimate of health care spending from the World Health Organization (IQVIA).

What drug spending estimates include

  • Rebates: Drug price reductions intended to increase sales through formulary placement. While the method used to calculate the rebate is specified at the time of purchase, the actual rebate is received in the future, as it is based on product sales. Most rebates are paid to pharmacy benefit managers and health plans. Rebates are accounted for in all five estimates, but none of the organizations has access to the specifics of manufacturer agreements.9 IQVIA approximates rebates and other price concessions using publicly available wholesaler and pharmaceutical sales data, public financial filings, the Medicare trustees’ report, and proprietary audits. CMS NHEA adjusts estimated drug expenditures to account for rebates in retail and mail-order settings.10 Altarum Institute and ASPE apply CMS’ rebate adjustments to their drug expenditure estimates.
  • Payers: Entities other than patients responsible for paying health care costs. In the United States, payers generally include insurance companies, health plan sponsors—such as employers or unions—and pharmacy benefit managers. Medicare is the nation’s largest payer. CMS NHEA data include estimates of pharmaceutical expenditures by private health insurers and public health insurers such as Medicare and Medicaid. CMS NHEA data also incorporate the amount that premiums contribute to the cost of pharmaceuticals, though the data do not include the share of premiums that go toward pharmaceuticals. IQVIA does not directly incorporate patient premiums in its drug spending estimates. CMS NHEA data include nonretail prescription drug spending in overall health expenditures but do not separately report spending on nonretail drugs. Spending on drugs in these sites of care is included in overall health cost estimates for each respective setting (for example, drugs purchased by hospitals are reported as hospital spending). The Altarum Institute uses IQVIA data to estimate spending on nonretail prescription drugs. ASPE also publishes an estimate of pharmaceutical spending for both retail and nonretail outlets.
  • Over the counter: Drugs that do not require a prescription. Only the IQVIA estimate for net drug spending as a percentage of health care spending incorporates spending on OTC products.
  • Retail prescription drugs: Drugs sold in a retail setting, such as a pharmacy, drugstore, mail-order, or other mass-merchandising establishment.
  • Nonretail prescription drugs: Drugs dispensed in clinics and institutional settings such as hospitals, long-term care facilities, and nursing homes.

Endnotes

  1. Gigi A. Cuckler et al., “National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth,” Health Affairs 37, no. 3 (2018): 553–63, https://doi.org/10.1377/hlthaff.2016.1627; Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  2. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016), https://aspe.hhs.gov/pdf-report/observations-trends-prescription-drug-spending. ASPE figures rely on data from the NHEA and the Altarum Institute. ASPE expenditures are available from 2009 to 2013 and projections from 2014 to 2018. This was a one-time publication.
  3. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data.” CMS data are sourced from Census Bureau retail data, Medicare and Medicaid claims, and IQVIA data. CMS expenditures are available from 1970 to 2016 and projections from 2017 to 2026. CMS publishes these data annually.
  4. IQVIA, “Medicines Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022” (2018), https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-review-of-2017-outlook-to-2022. IQVIA data are sourced from wholesaler and pharmaceutical company sales information. IQVIA publishes expenditures from 2013 to 2017 and projections from 2018 to 2022. It updates this publication annually.
  5. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016).
  6. Charles Roehrig, “A Ten Year Projection of the Prescription Drug Share of National Health Expenditures Including Non-Retail,” Altarum Institute (2017), https://altarum.org/sites/default/files/uploaded-publication-files/Non-Retail%20Rx%20Forecast%20Data%20Brief%20with%20Addendum%20May%202017.pdf.
  7. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  8. IQVIA, “Understanding the Dynamics of Drug Expenditure: Shares, Levels, Compositions and Drivers” (2017) https://www.iqvia.com/institute/reports/understanding-the-dynamics-of-drug-expenditure-shares-levels-compositions-and-drivers. IQVIA data are sourced from wholesaler and pharmaceutical company sales information and the World Health Organization’s Global Health Expenditure Database from December 2016. This one-time publication includes expenditures from 1995 to 2015.
  9. IQVIA accounts for but does not report drug supply and payment chain entity profit retentions (e.g., discounts, rebates, chargebacks and other financial transactions among manufacturers, pharmacy benefit managers, pharmacies, and wholesalers).
  10. Centers for Medicare & Medicaid Services, “National Health Expenditure Accounts: Methodology Paper, 2015,” https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.

SOURCE: PEW (27 February 2018) "A look at drug spending in the U.S." (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2018/02/a-look-at-drug-spending-in-the-us


Pressure Builds To Cut Medicare Patients In On Prescription Deals

In this article from Kaiser Health News, the stupendous rise of prescription costs is finally addressed. What steps are being taken to reduce costs for Medicare patients? Find out below.


Medicare enrollees, who have watched their out-of-pocket spending on prescription drugs climb in recent years, might be in for a break.

Federal officials are exploring how beneficiaries could get a share of certain behind-the-scenes fees and discounts negotiated by insurers and pharmacy benefit managers, or PBMs, who together administer Medicare’s Part D drug program. Supporters say this could help enrollees by reducing the price tag of their prescription drugs and slow their approach to the coverage gap in the Part D program.

The Centers for Medicare & Medicaid Services (CMS) could disclose the fees to the public and apply them to what enrollees pay for their drugs. However, there’s no guarantee that such an approach would be included in a proposed rule change that could land any day, according to several experts familiar with the discussions.

“It’s obvious something has to be done about this. This is causing higher drug prices for patients and taxpayers,” Rep. Earl “Buddy” Carter (R-Ga.), a pharmacist, said this week.

While Medicare itself cannot negotiate drug prices, the health insurers and PBMs have long been able to negotiate with manufacturers who are willing to pay rebates and other discounts so their products win a good spot on a health plan’s list of approved drugs.

Federal officials described these fees in a January fact sheet as direct and indirect remuneration, or DIR fees.

In recent years, pharmacies and specialty pharmacies have also begun paying fees to PBMs. These fees, which are different than the rebates and discounts offered by manufacturers, can be controversial, in part, because they are retroactive or “clawed back” from the pharmacies.

The controversy is also part of the reason advocates, such as pharmacy organizations, have lobbied for this kind of policy change.

PBMs have long contended that they help contain costs and are improving drug availability rather than driving up prices.

Pressure has been building for the administration to take action. Earlier this year, the federal agency’s fact sheet set the stage for change, describing how the fees kept Medicare Part D monthly premiums lower but translated to higher out-of-pocket spending by enrollees and increased costs to the program overall.

In early October, Carter led a group of more than 50 House members in a letter urging Medicare to dedicate a share of the fees to reducing the price paid by Part D beneficiaries when they buy a drug. Also in the House, Rep. Morgan Griffith (R-Va.) introduced a related bill.

On the Senate side, Chuck Grassley (R-Iowa) and 10 other senators sent a letter in July to CMS Administrator Seema Verma as well as officials at the Department of Health and Human Services asking for more transparency in the fees — which could lead to a drop in soaring drug prices if patients get a share of the action.

A response from Verma last month notes that the agency is analyzing how altering DIR requirements would affect Part D beneficiary premiums — a key point that muted previous political conversations.

But advocates say the tone of discussions with the agency and on Capitol Hill have changed this year. That’s partly because Medicare beneficiaries have become more vocal about their rising out-of-pocket costs, increasing scrutiny of these fees.

Ellen Miller, a 70-year-old Medicare enrollee in New York City’s borough of Queens, sent a letter to the Trump administration demanding lower drug prices. Miller’s prescription prices went up this year, sending her into the Medicare “doughnut hole” by April, compared with October in 2016. With coverage, Miller pays about $200 a month for several prescriptions that help her cope with COPD, or chronic obstructive pulmonary disease, as well as another chronic illness.

In the doughnut hole, where coverage drops until catastrophic coverage kicks in, her out-of-pocket costs climb to $600 a month.

It’s “ridiculous, and that doesn’t count my medical bills,” Miller said.

The number of Medicare Part D enrollees with high out-of-pocket costs, like Miller, is on the rise. And in 2015, 3.6 million Medicare Part D enrollees had drug spending above the program’s catastrophic threshold of $7,062, according to a report released this week by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Supporters of the rule change say making the fees more transparent and applying them to what enrollees pay would provide relief for beneficiaries like Miller.

The Pharmaceutical Care Management Association (PCMA), which represents the PBMs who negotiate the rebates and discounts, says changing the fees would endanger the Part D program.

“In Medicare Part D, you have one of the most successful programs in health care,” said Mark Merritt, president and chief executive of PCMA. “Why anybody would choose to destabilize the program is beyond me.”

CMS declined to comment on a vague reference to a pending rule change, which was posted in September.

For now, though, according to the CMS fact sheet, the fees pose two compounding problems for seniors and the agency:

  • Enrollees pay more out-of-pocket for each drug, causing them to reach the program’s coverage gap quicker. In 2018, the so-called doughnut hole begins once an enrollee and the plan spends $3,750 and ends at $5,000 out-of-pocket, and then catastrophic coverage begins.
  • Medicare, thus taxpayers, pays more for each beneficiary. Once enrollees reach the threshold for catastrophic coverage, Medicare pays the bulk cost of the drugs.

CVS Health, one of the nation’s top three PBMs, released a statement in February calling the fees part of a pay-for-performance program that helps improve patient care. The fees, CVS noted, are fully disclosed and help drive down how much Medicare pays plans that help run the program.

“CVS Health is not profiting from this program,” the company noted.

Express Scripts, also among the nation’s top three PBMs, agreed that the fees lower costs and give incentives for the pharmacies to deliver quality care. As for criticism from the pharmacies, Jennifer Luddy, director of corporate communications for the company, said, “We’re not administering fees in a way that penalizes a pharmacy over something they cannot control.”

Regardless, even if a rule is changed or a law is passed, there is some question as to how easily the fees can translate into lower costs for seniors, in part because the negotiations are so complicated.

When the Medicare Payment Advisory Commission, which provides guidance to Congress, discussed the negotiations in September, Commissioner Jack Hoadley thanked the presenters and said, “In my eyes, what you’ve revealed is a real maze of financial … entanglements.”

Tara O’Neill Hayes, deputy director of health care policy at the conservative American Action Forum, said passing on the discounts and fees to beneficiaries when they buy the drug could be difficult because costs crystallize only after a sale has occurred.

“They can’t be known,” said Hayes, who created an illustration of the negotiations.

“There’s money flowing many different ways between many different stakeholders,” Hayes said.

 

Source:
Tribble S. (10 November 2017). "Pressure Builds To Cut Medicare Patients In On Prescription Deals" [Web blog post]. Retrieved from address https://khn.org/news/pressure-builds-to-cut-medicare-patients-in-on-prescription-deals/


Solving the Prescription Puzzle

Great article from our partner, United Benefit Advisors (UBA) by Mary Delaney

Determining how an employer develops the most effective formulary, while protecting the financial stability of the plan, is certainly the challenge of this decade. Prescription management used to mean monitoring that the right people are taking medications to control their disease while creating strategies to move them from brand name to generic medications. With the dawn of specialty medications, formulary management has become a game of maximizing the pass-through of rebates, creating the best prior authorization strategies and tiering of benefits to create some barrier to more expensive medications, all without becoming too disruptive. As benefits managers know, that is a difficult challenge. The latest UBA Health Plan Survey revealed that 53.6 percent of plans offer four tiers or more, a 21.5 percent increase from last year and nearly a 55.5 percent increase in just two years. Thus, making “tiering” a top strategy to control drug costs. There are many additional opportunities to improve and help control the pharmacy investment, but focusing on the key components of formulary management and working on solutions that decrease the demands for medications are critical to successful plan management.

When developing a formulary, Brenda Motheral, RPh, MBA, Ph.D., CEO of Archimedes, suggests that chasing rebates is not a strategy to optimize your investment. Some of the highest rebates may be from medications that add no better therapeutic value than an inexpensive medication that does not offer a rebate, but net cost is much lower than the brand or specialty medication being offered. Best formulary management will mean that specific medications that do not offer a significant therapeutic value are removed from the formulary, or are covered at a “referenced price” so the member pays the cost difference. Formulary management will need to focus on where the drug is filled and which medications are available.

When setting up parameters on where a drug is to be filled, the decision needs to be made if a plan will promote mail order. Mail order, if used and monitored appropriately, makes it more convenient for a patient to receive their regularly used medications and may provide savings. In fact, the UBA Health Plan Survey finds that more than one-third (36.3 percent) of prescription drug plans provide a 90-day supply at a cost of two times retail copays. But if mail order programs are not monitored, people can continue to receive medications that are no longer required and never used, adding to medical spend waste. Furthermore, in our analysis, we are finding that not all medications are less expensive through mail order, as shown in Figure 1 below. Therefore, examining the cost differential is critical in a decision to promote, or not promote, mail order.

To see the full original article and charts click Here.

Source:

Delany M. (2017 January 24). Solving the prescription puzzle [Web blog post]. Retrieved from address http://blog.ubabenefits.com/solving-the-prescription-puzzle


Employers Split on Whether to Self-Fund Prescription Drug Plans

From our partner, UBA, Bill Olson provides insight to self-funded prescription programs in the article below.

Original Post from UBABenefits.com on June 30, 2016.

On average, 11.9% of prescription plans are self-funded, with the vast majority (88.1%) of employers choosing to fully insure their prescription plans, according to UBA’s newSpecial Report: Trends in Prescription Drug Benefits, based on data from the latest UBA Health Plan Survey of more than 10,000 employer-sponsored health plans. Although self-funding has increased 9% from the past survey year, the move to self-funding is slow but positive among small groups (10 to 199 employees), while large groups are actually moving away from this model.

  • Education, finance/insurance, government, and utilities employers have the most self- funded prescription plans (more than 20%), a trend that has persisted for three years.
  • Regionally, there are vast discrepancies in self-funding trends. California has the fewest self-funded plans (1.9% — which has changed little in three years). Self-funding is the most common in the North Central U.S. (18.3%).
  • Typically, the larger the employer, the more likely it is to self-fund the prescription drug plan. Over 60% of plans among employers with more than 1,000 employees are self- funded. However, this is a 15.5% decrease from two years ago. Similarly, employers with 200 to 499 employees have seen an 11.7% decrease in self-funding in two years.
  • Approximately 1.9% of employers with one to 49 employees have self-funded prescription plans—a small number, although that is a significant increase when you consider that only 1.0% of these plans were self-funded just two years ago.

“With the possible expiration of grandfathered and grandmothered ACA plans in 2017, many small employers are looking to self-funded and level-funded plans,” says Scott Deru, President of UBA Partner Firm Fringe Benefit Analysts. “Level-funded means funding a self-funded plan at the maximum potential liability so that no additional liability exists at the end of the plan year or upon termination of the plan. Many employers are also joining a pool that employs a self-funded or level-funded strategy. These plans can avoid many of the ACA provisions that employers consider unfavorable. A continued increase in adoption of these plans is anticipated.”

Besides funding options, UBA’s Special Report finds that employers are using other cost containment strategies such as increased tiers, blended copay/coinsurance models and penalties for brand name drugs—as part of their effort to control the soaring costs of specialty pharmacy drugs.

For more information on prescription drug trends, subscribe to the UBA blog, read our breaking news release or download UBA’s free (no form!) publication: Special Report: Trends in Prescription Drug Benefits.

Read the original article here.

Source:

Olson, B. (2016, June 30). Employers split on whether to self-fund prescription drug plans [Web log post]. Retrieved from http://blog.ubabenefits.com/employers-split-on-whether-to-self-fund-prescription-drug-plans


The Rise of Four-Tier Drug Plans and Prescription Copays

By Carol Taylor
Source: United Benefit Advisors (UBA)

Remember when you used to pay a $15 copay for prescription drugs and that was the end of the story? Those days are quickly disappearing and in their place is a complex four-tiered prescription drug plan, with copays becoming less of an option for many.

The fourth tier pays for biotechnology or the highest cost drugs. This plan design enables employers to pass along the cost of the most expensive drugs to employees by segmenting these drugs into another category with significantly higher copays.

With some of these drugs ranging from $1,200 to $20,000 per month (the cost of some cancer drugs), it is very costly for the plans, which in turn affects their premium rates. As a result, we are seeing more and more employers, small and large, raising copays substantially on fourth-tier drugs.

According to the 2013 UBA Health Plan Survey special pharmacy report, the number of employers offering four-tier drug plans increased 11.5% from 2012 to 2013, with 27.9% of employers now using this pharmacy plan design element. The median pharmacy retail copays for fourth-tier drugs increased by 25% from $80 in 2012 to $100 in 2013. Additionally, many are charging between 10% and 30% of the cost of tier four drugs.

We've seen this for quite some time with self-funded plans, but we expect it will become more popular among small and large employers with group health insurance. Employees of large employers in particular face significantly higher copay on tier four drugs.

For example, the tier four median copay for small employers (less than 100 employees) was $52, on average, between $45 to $60 for mid-size employers (100-499), and between $80 to $100 for large employers (500+).

There are a number of factors that would cause larger groups to have higher copays for brand/specialty prescription drugs: Small group markets are pooled by ratings areas, but larger groups are rated more independently. They have much more incentive, then,  to raise copays, especially for items that will cause rate increases.

Another strategy to control health care costs is to require that the major medical deductible be met before prescription copays kick in. It used to be that all drugs were applied to the deductible, then coinsurance on major medical. Now, quite a few carriers, particularly on high-deductible health plans (HDHPs), require a deductible, then copays. We're also seeing small group and mid-market employers place generic brands before the deductible, but brand names after.

In 2015, as employers are forced to come into compliance with health care reform, this might shift since the prescription copays and deductibles, etc. must all track to the out-of-pocket maximum.

The ultimate goal of shifting more cost to employees is to drive behavior -- to create better health care consumers. Employers want their employees to price shop prescription drugs the way they would a blender, or a car, and by making them face more cost up front, they're providing plenty of incentive to do so. The truth is, there's no reason to buy a sinus infection drug at CVS for $295 when you can get the same one at "big-box" retailers like Costco and Wal-Mart for $100. If, however, you're prescribed a brand new cancer drug, you certainly have fewer options and tougher decisions to make.

 


Five tips for saving on prescription drugs

Original article http://www.benefitspro.com

By Kathryn Mayer

No two pharmacies are alike.

According to an analysis by Consumer Reports, prescription drugs vary widely in price depending on where you shop. Failing to comparison shop could result in overpaying by as much as $100 a month or even more, depending on the drug.

The consumer group says shoppers need to compare prices. Here are five other tips on how to save money on prescriptions, according to Consumer Reports.

Request the lowest price. Consumer Reports analysis reveals shoppers weren’t always given the best, lowest price. Make sure you ask.

Go generic. Generics are copies of brand-name medications whose patents have expired. The Food and Drug Administration requires generics contain the same active ingredients in the same strength as the brands they copy. In addition, a generic must be “bioequivalent” to its corresponding brand, meaning that it delivers the same amount of active ingredients into a person’s bloodstream in the same amount of time as the original brand.

Leave the city. Some grocery store and independent drugstores had higher prices in urban areas than rural areas, according to Consumer Reports. For example, CR shoppers priced a 30-day supply of generic Actos at a pharmacy in Raleigh, N.C., for $203, while another pharmacy in a rural area of the state sold it for just $37.

Get a refill for 90 days, not 30 days. Most pharmacies offer discounts on a three-month supply.

Look for additional discounts. All chain and big-box drugstores now offer discount generic-drug programs, with some selling hundreds of generic drugs for $4 a month or $10 for a three-month supply. Just make sure your drug is on the list. Offers vary and check the fine print.