Why the 2021 Drug Pipeline Will Make You Rethink Your Pharmacy Benefits Strategies

Top Three Things You’ll Learn

  1. Potential blockbuster specialty drugs in the pipeline for 2021-2022
  2. How the new drugs coming to market will impact employer-sponsored plans and their members
  3. Four best practice strategies to manage high-cost specialty and non-specialty drugs

Specialty drugs is a topic that is on the top of every broker’s and employer’s mind. Just 20 years ago, specialty was not much to talk about. It started with medications such as Copaxone®, Remicade®, and Enbrel®, and slowly built up steam with the approval of Gleevec® and then a specialty explosion occurred as Humira® came on the market.

Now, the reality for most employers is that specialty dugs account for 50% to 60% of pharmacy benefits costs, driven by just 1% to 2% of their members. Additionally, employer plan sponsors are now starting to see increasing costs within their own risk mitigation strategies – particularly in stop-loss insurance – due to non-intentional interventions to control utilization. Constant vigilance concerning new and expensive drugs on the horizon and having a strategy in place to address specialty (as well as non-specialty drugs) is required.

Drugs in the Pipeline

There are several specialty drug classes with notable products in the pipeline for 2021-2022: oncology, hematology, multiple sclerosis, inflammatory diseases, and genetic disorders. Many of these medications are channel-agnostic and could find their way under either medical or pharmacy claims. Data analysis over the last 20+ years appears to validate that specialty drug costs are increasing at a similar rate under both the pharmacy and medical benefit, so evaluating net drugs costs within both channels is crucial for long-term sustainability. Whether the drugs are utilized in the medical or pharmacy channel, here are a few of the top drugs to look for this year:

  • Existing drugs getting new indications. New indications of existing drugs is an aspect of the drug pipeline that tends to be overlooked at one’s own peril. One example is the drug Rinvoq®, which is approved currently for Rheumatoid Arthritis. Rinvoq, an oral formulation, is pending Food and Drug Administration (FDA) approval for moderate-to-severe active psoriasis and atopic dermatitis, an indication that brings enormous potential for financial impact. New utilization from eligible patients who have been on the sideline due to injection aversion with Dupixent®, an injectable drug which skyrocketed to the top of many claim files in 2020, may occur. Coincidentally, Rinvoq may be accompanied by a price point higher than that of Dupixent, which may further complicate the financial outlook.
  • New treatment for hereditary angioedema (HAE). HAE is a disorder characterized by recurrent episodes of severe swelling commonly located on limbs, face, airway, and intestinal tract. Drugs such as Haegarda®, Takhyzro®, and Ruconest® are taken routinely to prevent attacks, while Firazyr® is used for acute attacks and should be used on an as-needed basis. New to the HAE market is Orladeyo®, an oral medication approved in late 2020 that may drive new utilization from individuals who previously exercised restraint with the mainstay injectable products. With a somewhat lower price point than existing self-injectable or infusion products, Orladeyo is expected to appear on claims files over the next 12 months to the tune of 20% to 30% market share for HAE treatments, which includes a portion of that untapped utilization. This category also may see new market entrants from other existing drugs receiving FDA approval for treating HAE.
  • Gene therapies. Many of the gene manipulation therapies are centered around the CAR-T space, which involves taking blood products directly from the human body, modifying them, and re-introducing the modified blood product back into the body. Currently, only two pure gene therapies are available in the market – Luxturna© and Zolgensma© – but their long-term efficacy is unknown. Gene products within the hemophilia pipeline are associated with a single infusion and possibly up to 5-7 years or more of efficacy, which will reduce the need for prophylactic and acute factor products. There potentially is a strong ROI here, but payment methodologies have not addressed the high, up-front cost expected of these treatments, and long-term effectiveness has not been established. Due to the potential cost burden, unknown payment terms, and unknown long-term effectiveness of gene therapy today, either the PBMs often exclude these products from their formularies or employers exclude them from their plans.
Employers unknowingly spend more than is necessary, or as promised in their PBM contract, because of confirmation bias and excessive utilization. By analyzing the plan holistically and reviewing pharmacy claims from a conflict-free viewpoint, they can experience maximum cost-savings and achieve the health outcomes they desire for their employees.

Drug Pipeline Impact on Consumers

Members will not see an immediate financial impact other than proactive measures taken by plans anticipating escalation of costs, such as possible copay changes/plan design arrangements (e.g., moving to coinsurance, adding a copay assistance program that requires enrollment), but eventually, high costs may force monthly premiums for health care to increase. Members may see access impact: narrowing of networks, limited formulary choices, and increased utilization management of both non-specialty and specialty drugs. The constraints on volume-driving non-specialty medications often assist with affording the specialty medications, as non-specialty represents 98% or more of claims.

Employer Strategies to Manage High Rx Costs

There are several recommended strategies that are proven effective for managing high-cost specialty drugs today. It begins with first understanding the financial and member disruption (i.e., employee retention/recruitment impact) goals for each employer. Knowing an employer’s goals can allow for a focus to be placed on these key areas to ensure a holistic approach is in place to manage costs and appropriate utilization from the contract and clinical perspectives:

  • Maximize contract value: Obtaining the deepest discounts and maximizing rebate yield through an aligned formulary coupled with an unbiased analysis and independent review strategy
  • Evaluate plan design: Tiering, copay vs coinsurance, HDHP vs non-HDHP; Deductibles/Out of Pocket Maximums changes, separate medical/pharmacy accumulators, network design, mail order, Dispense as Written penalties, etc., as well as the extent of each change under consideration (ex: 10% vs 20% coinsurance)
  • Eliminate wasteful spending: Removing questionable low clinical value medications from the formulary; Independently reviewing prior authorizations, suspect high-dollar claims, and drugs with the potential to be used off-label; optimizing existing therapy and dosing to remedy any per-dose cost improvement opportunities; and independently verifying appropriate indication and dosing for complex conditions
  • Manufacturer assistance programs: Leveraging available manufacturer-provided member incentives on specialty medications through a PBM systems-based approach, as opposed to partial carveout solutions that require manual formulary and system manipulations that generate additional risks and inefficiencies

For any other strategy under consideration, always consider the intentions of the institutions guiding the strategy options. Many times, employers unknowingly spend more than is necessary because of confirmation bias from PBMs and other entities that may benefit from excess utilization. By analyzing the plan from an unbiased viewpoint and taking a holistic approach, the employer will be positioned to experience the maximum amount of cost-savings while keeping the best interest, health, and well-being of their employees in mind.

Check out the Top Pharmacy Trends of 2020 On-Demand Webinar for more information about specialty drugs and strategies to address them.

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