Although specialty pharmacy medications are expensive and treat complex conditions like cancer, multiple sclerosis and hemophilia, managing them does not have to break the benefits budget or be as complicated as the conditions they treat.

Helping employers get back to the fundamentals of managing specialty drugs was Keith Bruhnsen, assistant director of benefits at the University of Michigan, as he offered cost-containment tips at EBN's 21st annual Benefits Forum & Expo.

Overall, the university's specialty drug cost is about 16% of its total pharmacy cost, which represents about 1.6% of its population. The average national trend for specialty drugs about 12%, according to pharmacy benefit manager Express Scripts.

At UM, however, yearly trend is about 8%, said Bruhnsen. The university employs about 35,000 workers and has 7,000 retirees. According to Bruhnsen, last year the institution, which covers about 86,000 beneficiaries, spent around $250 million on health care with $70 million going toward prescription drugs.

He noted, however, that from January to June the percentage of total drug spending on specialty drugs grew from 14.8% to 16.2%. "That's a pretty dramatic increase," Bruhnsen explained.

In 2001, UM convened a taskforce to benchmark data and best practices for specialty pharmacy benefits. The taskforce recommended the institution move to a self-insured and self-administered drug plan.

"We carved out our prescription drugs from our medical plan in 2003," Bruhnsen told attendees. The university had worked with a large, traditional pharmacy benefit manger, but decided to move over to SXC Health Solutions, which provides services for claims and pharmacy administration.

"We did this because we really thought we needed a fully transparent arrangement, one that focuses on providing us maximum control and flexibility" in designing the benefit, he said. The program focuses on providing best-valued drugs and trying to eliminate expensive brands that offer no superior value over low-cost generic drugs, explained Bruhnsen. "It's been successful for us both financially and clinically."

Basics on specialty Rx

There are really two main strategies with managing specialty pharmacy, said Bruhnsen. "You want to get the best pricing out there in the market, and you want to manage for appropriate use. That means getting the right drug in the right amount at the right time for the patient."

Employers also need to decide which drugs will go on the medical side and which ones will go on the pharmacy side, he said. Organizations will most likely have specialty medications in both the medical benefit and pharmacy benefits.

"One of the things plan sponsors need to do is to evaluate their data to look at the cost as to which products can be self-administrated and which ones can be acquired cheaper through the discount you are going to get under the pharmacy plan," Bruhnsen noted.

Move those drugs from the medical plan over to pharmacy to get the improved pricing and employ some therapy management, which focuses on optimal patient care as an objective, he added. "Virtually every patient that is taking a biotech drug represents a complex case, so side effects are common, and they need additional guidance in terms of managing the drug."

Employers also need to coordinate with their health plans to make sure there is not an overlap or duplication of drugs on both the medical and pharmacy sides.

Additionally, model the cost and utilization by reviewing claims from the pharmacy benefit manager, Bruhnsen advised. "You want to look at any new discounts that you are going to get. The data also allows you to follow the trends and see what is going on in the market."

The plan design should address each drug and its appropriateness by using evidence-based decision-making and clinical guidelines, such as prior authorization, that focus on safety and ethical costs.

Employers should also consider using the Food and Drug Administration's labeling and communication tools for the drugs, which will help patients in managing the usage of the drugs.

Equally important, plan sponsors need to look closely at cost-sharing approaches. "If you use a coinsurance, annual cap, lifetime cap or deductible, they can sometimes unintentionally impact on whether a member obtains the drugs or is compliant with his or her therapies," explained Bruhnsen. "Finding the right balance of cost-sharing and tier placement is really important for your design."

At the university, copays are $7, $14 and $24. "But based on some research that we have conducted, we are going to change that for 2009 to $5, $15 and $30 to get a better spread between the tiers and to get some behavioral changes," said Bruhnsen.

"Sometimes there are copay challenges to the members if you have a coinsurance model. I have heard from many specialty pharmacy experts that about $50 is where people start having some difficulties in managing the cost," Bruhnsen said.

Plan sponsors need to know beforehand how their members are going to respond to copays on specialty drugs. Medco, a PBM, reports that the increase in specialty drug utilization has slowed. In 2006, utilization hit 7.3%, while in 2007 that number was 3.9%, according to Bruhnsen. "There some indication that there is some leveling out," he said.

The future cost trend in specialty drugs, however, is predicted by most large PBMs to double that of traditional drugs. "There is some speculation that pharmaceutical manufacturers will be shifting cost increases to the specialty side to make up for some loses that they are getting from seeing more generic dispensing going on," Bruhnsen said.

For more Benefits Forum & Expo coverage, visit ebn.benefitnews.com