Specialty medications can be life-changing for people diagnosed with debilitating or life-threatening conditions. But for self-funded employers bearing the financial burden, the high cost of these specialty drugs can be difficult to absorb.
A new set of solution providers promises to reduce a large percentage of the employer’s pharmacy spending by connecting plan participants with organizations that offer alternative funding for specific drug therapies. But while these solutions may save an employer money, the coverage isn’t guaranteed, and benefits advisors have good reason to question if these are the right solutions to recommend.
Benefits advisors must ask those important questions to determine if alternative funding programs are a viable solution to reduce immediate specialty costs and long-term risks for their clients.
Will an employer actually see the savings promised?
What seems financially responsible on behalf of the employer can have unintended real-world consequences. The process can damage the employer-employee relationship and the member’s health, from delaying the onset of therapy to a member being deemed ineligible for charitable funding. In the end, the employer may end up working through an override or exception process to cover the treatment with zero savings for the plan and much precious time wasted.
It’s important to remember that removing a segment of medications from the formulary can impact contract underwriting provisions and change the terms of the contract. The fees incurred are based on gross savings achieved, which may be based on gross costs, rather than what the plan is currently paying after rebates. Fees, lost contract value, and lack of visibility into clinical review could negate those savings and even increase medical utilization.
Are there legal risks or liabilities associated with alternative funding programs that employers should consider?
Perhaps most worrying of all is the thought of sick, lower-earning Americans going without treatment because for-profit alternative funding programs have methodically consumed funding resources that were scarce to begin with. As many as 18 million Americans can’t afford their prescribed medications at all, while many others are forced to ration them, according to a 2021 nationwide poll.1 The dollars that alternative funding vendors tap into were intentionally set aside to assist people who have no other options—they were never intended to support alternative funding programs that financially benefit plan sponsors.
Many drug manufacturers and charitable organizations are on high alert regarding these employer-sponsored alternative funding programs. They’re beginning to take legal or other action to protect their funds for indigent patients. In the next few years, it’s safe to expect their efforts to block alternative funding vendors’ access to their funds.
Are there alternatives to alternative funding?
Benefits advisors should rely on highly skilled pharmacy experts to find the right solution using every tool available to them, including a detailed review of historical pharmacy claims, comprehensive feasibility analysis, and/or pharmacy performance evaluation, and you should expect this pharmacy expert to employ other experts in self-funded benefits plans, stop loss contracts, and many other pharmacy cost-containment programs.
The viability assessment should consider disease states affecting the current population, the prevalence of high-cost claimants, the top drug classes utilized by their members, the efficacy of high-cost medications covered by the plan, and the net cost of medications after rebates.
And that pharmacy expert should bring clinical experts to the table to help you and your client understand the effectiveness of lower-cost drug alternatives and the cost savings they could achieve through a thorough, targeted clinical approach to utilization management, including independent prior authorization reviews.
Are the risks worth the reward?
There may be situations in which the risk is worth the reward. Employers with a significant number of low-income, high-cost claimants taking brand-name or specialty medications that are eligible for coverage through multiple alternative funding sources could see a financial benefit in the short term. Alternative funding sources might not be the answer for employers in other situations.
Whether alternative funding solutions make sense for a particular client calls for serious clinical, financial, and ethical considerations. It isn’t surprising that employers and most benefits advisors aren’t aware of when and how these solutions can be deployed – and all of the factors that should be considered.
While each alternative funding option will have pros and cons that will differ from plan to plan, two things are certain: Alternative funding vendors make big promises, and the approach they take is inevitably highly disruptive to the affected members.
SOURCE: Gallup organization, news release, Sept. 21, 2021