Three Ways to Keep Specialty Drug Costs Under Control


By Zack Robinson, MBA
Managing Partner

With pharmacy spend edging up over 25-30% of healthcare costs, and specialty drugs expected to rise another 11.5% during 2021, employers need solutions to contain the main cost driver behind their pharmacy spend: Specialty Drugs.
Specialty drugs are high-cost drugs that usually require special handling and often require delivery via injection or infusion.  While the number of specialty claims is often only 1-2% of total claims, the cost for those specialty drugs are over 50% of total pharmacy spend.  Generic drugs may make up 87% of scripts filled within a plan, but those claims rarely amount to even 20% of the total cost.  Driving down generic costs will not deliver substantial results.  To make a meaningful impact, employers must find ways to keep their specialty drug costs in check.

Eliminate Conflicts

One of the easiest ways employers might work to contain specialty drug costs is by designing a plan that eliminates conflicts of interest for their PBM.  Many PBMs have inherent conflicts that work against the best interests of the employers they represent.  Some questions you can ask to highlight these conflicts are:
1. Will the PBM contractually agree to only accepting the clearly stated admin fees in their contract, and derive no other revenue from the client or any other source that is not fully communicated?
2. Does the PBM own their own specialty pharmacy or otherwise derive any financial benefit from a specialty pharmacy? Will the PBM allow the employer to choose an alternate specialty pharmacy at no additional cost?
3. Does the contract state all rebates and supply chain credits or any other revenue derived from the supply side of specialty drugs is returned to the client?
If the answer to any of these questions is no, employers must then ask why.  These conflicts all lead to increased specialty drug prices and inflated pharmacy benefit costs.

Choose Your Own Specialty Pharmacy

Contrary to how it may seem, employers have choices when it comes to specialty pharmacies.  There are many independent specialty pharmacies that are not owned by a PBM that will work to bring health plans the lowest net cost.  Specialty Pharmacies like Cottrill’s Pharmacy, Inc. or BioPlus Specialty Pharmacy offer plan sponsors better solutions for specialty drug pricing such as acquisition-cost-plus models that drive the lowest net cost and full disclosure.  Instead of the PBM-owned pharmacy acting as a profit center, plan sponsors can deploy a specialty pharmacy working to bring costs down in a competitive marketplace.

Deploy Specialty Cost Containment

There are many ways to bring specialty costs down, through both domestic and international programs.  Often, these programs are disparate and require a broker or another in-house resource at employers to get all the wheels turning in the same direction.  Finding the right partner can be challenging.  Utilizing a program like DisclosedRx’s Agile Channel Management program brings all potential programs under one management architecture, ensuring that meds are directed to the most cost effective channel each time they are filled, saving the plan and the member money every month.  DisclosedRx makes this process easy for employers and brokers alike to save between 35-45% off their overall drug spend.
While management of specialty drug costs may seem mundane, these costs will continue to impact the bottom line of plan sponsors until they are addressed adequately.  If your current PBM can’t help you implement the strategies outlined above, give us a call at DisclosedRx.  We’d love to show you how easy it can be to bring down brand and specialty costs while still providing exceptional member service.