National Business Group on Health Issues Policy Recommendations to Combat Skyrocketing Specialty Pharmacy Costs

WASHINGTON, DC--(Marketwired - Jan 30, 2017) -  The National Business Group on Health, a non-profit association of 420 large U.S. employers, today released a policy issue brief intended to help stem the skyrocketing costs of specialty drugs. The 31-page report provides policy recommendations to create more sustainable and affordable pricing for specialty medications. The issue brief also outlines the challenges that large employers and their employees face in paying for expensive biologic medications, or specialty drugs, and examines initiatives employers are taking to control rising costs.

 "With spending on specialty drugs skyrocketing, large employers, and employees who use these medications, are struggling to manage rising costs," said Brian Marcotte, President and CEO of the National Business Group on Health. "Most employers we surveyed now rank specialty pharmacy as the number one driver of rising costs, leading us to develop these policy recommendations which we believe if enacted will help create improved financial sustainability and affordability of these drugs for patients and their health plans."

The 31-page report, "Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals," notes the number of drug approvals, spending and utilization for specialty medicines are projected to overtake traditional pharmaceuticals over the next several years. These trends add to the growing sense of urgency for large employers, who continue to struggle with how best to manage these expenditures, and for employees, who are paying more out-of-pocket for these medications. Insurers, governments, patients and others are also concerned about growing expenditures for specialty medications.

"High specialty pharmacy prices are also facing growing public and political pressure," said Steve Wojcik, vice president of public policy at the National Business Group on Health. "Combined with employers' concern over their ability to manage rising costs, we believe now is the time to review public policies that influence the pricing, prescribing and administration of specialty meds."

The Business Group's five policy recommendations are separated across two major areas: examining and making changes to Medicare and Medicaid rules that inhibit better value and lower prices for medications, and reexamining policies to promote robust biopharmaceutical competition. The Business Group's five specific recommendations are as follows. Additional details on each recommendation are provided in the issue brief:

• Remove uncertainties surrounding risk-based and value-oriented contracting and implement indication specific pricing and reference pricing in public programs.
• Change rules around Medicare Part D protected drug classes
• Eliminate perverse payment incentives to providers under Medicare Part B
• Encourage the uptake of biosimilars, medications that compete with brand
• Reform permissive patent and exclusivity protocols

Employers Taking Steps to Curb Specialty Drug Cost Increases

With concern rising over the cost of specialty pharmacy, many employers are implementing additional tactics to address these costs. The Business Group's annual Plan Design Survey of large employers found nearly three-quarters (74%) have more aggressive utilization management protocols in place for specialty drugs while seven in 10 (69%) require specialty medications be obtained through a freestanding specialty pharmacy. Other approaches include the use of a specialty tier in the plan design (38%), using high-touch case management (35%) and requiring prior authorization for specialty medications billed under the medical benefit (35%).

"Specialty pharmacy is different from other medications in many ways, including having a tendency to be much more expensive -- some meds cost in the tens of thousands of dollars per treatment. As a result, we are seeing growing numbers of employers, along with their health plans and pharmacy benefit managers, implementing many of these techniques," said Wojcik.

"While reducing or removing policy obstacles to better pricing will be a major step forward, the real solution must involve manufacturers. Ultimately, they will need to address the growing concerns about pricing and adopt pricing models that respond to and better reflect those concerns. Viable solutions will also require collaboration among patients, payers, employers, manufacturers, policy makers and providers. Failure to take action threatens to jeopardize both the ability of people to afford vital specialty medicines and the ability of insurers, employers, and governments to pay for them," said Marcotte.

About the National Business Group on Health^®

The National Business Group on Health is the nation's only non-profit organization devoted exclusively to representing large employers' perspective on national health policy issues and helping companies optimize business performance through health improvement, innovation and health care management. The Business Group leads initiatives to address the most relevant health care issues facing employers today and enables human resource and benefit leaders to learn, share and leverage best practices from the most progressive companies.  Business Group members, which include 72 Fortune 100 companies, provide health coverage for more than 50 million U.S. workers, retirees and their families. For more information, visit www.businessgrouphealth.org.