Future-proofing your specialty cost management strategy

A close-up of a doctor using a calculator and tablet on top of their computer.

By Josh Fredell, Pharm.D., VP, Specialty Product Development and Tierra Ford, Pharm.D., Senior Clinical Advisor, Specialty Client Solutions

We’ve reached a transformative point in health care. The rich pipeline of specialty medications offers treatment for patients living with a wide and expanding range of complex and chronic conditions that can be challenging to manage and have a significant impact on their daily lives.

While this is great news, it also poses a new set of challenges. This is because it’s not uncommon for specialty drugs to cost into the five or six figures per year. Humira, a specialty medication and global top selling drug in 2020, costs about $72,000 annually. Zokinvy, which the U.S. Food and Drug Administration approved in November 2020 to treat Hutchinson-Gilford progeria syndrome, is the most expensive pharmacy drug, exceeding $1 million per year depending on the prescribed dose.

Specialty drug prices have risen steadily over the past several years and account for an increasing share of pharmacy spend. In 2020, specialty drugs made up 52% of our clients’ pharmacy spend, up 20 percentage points from just five years prior.

Bar graph showing specialty spend as percentage of pharmacy spend each year from 2015 to 2020. Shows an overall growth of 20 percentage points.

Notable for their high prices — even among already expensive specialty treatments — are gene therapies. Gene therapies insert DNA containing a functioning gene into a cell, to replace a faulty or missing one, to correct the effects of a disease-causing mutation. Such mutations can be somatic — occurring in the cell — or inherited. While only a handful have been approved so far, there are many more in the pipeline. This relatively new but growing class of treatments may cure previously untreatable diseases, or at least significantly improve quality of life for patients with these conditions. However, these treatments can cost hundreds of thousands or — in the case of Zolgensma, a treatment for spinal muscular atrophy, millions of dollars. At $2 million, it is the most expensive treatment in the U.S. today. Even if we assumed just 5,000 individuals were to be treated by gene therapy each year, if future treatments are priced at par with Zolgensma, it would add $10 billion per year to the nation’s health care bill — an additional $50 per year of health care costs for every insured American. Of course, if a gene therapy can cure a previously untreatable condition it can offset lifetime health care costs, but it would be a significant one-time financial impact for payors rather than over time putting a burden particularly on small plans.

Plan sponsors are understandably worried about managing costs while maintaining sustainable benefits and supporting plan member health. Vital to meeting this goal are utilization management (UM) that constantly evolve to stay ahead of marketplace trends, digital tools and care management, and new approaches specific to addressing unprecedented gene therapy costs.

Here are some strategies that can help plan sponsors refine their approach to cost management while still ensuring appropriate member access.

Enhanced UM with a clinical focus

UM remains central to managing specialty spend particularly as a small portion of members on specialty medications drive a large proportion of cost impact. Consistently enhancing the UM criteria and leveraging connectivity is critical to maximizing cost savings on the most expensive drug classes without compromising member outcomes. Plan sponsors should consider:

  • Whether their UM criteria is accredited by an independent agency, such as URAC, to ensure alignment with evidence-based guidelines and clinically rigorous treatment decisions.

  • How their UM program leverages electronic health record (EHR) data to improve efficiency. CVS Health can connect to EHR data for 70% of its specialty patients today, and one in three PA requests are approved without requiring additional provider outreach.

  • How member-specific dosing limits are used to prevent inappropriate dose escalation and wasted spend. For instance, for patients on Stelara, which has multiple supplemental indications with different dosages based on diagnosis and patient weight, CVS Health found that as many as 30% of Stelara users may be exceeding FDA-approved dosing limits. By ensuring indication- and weight-based dosing guidelines were followed, we are able to deliver about $21 million in gross cost savings.

Such solutions can ensure members get started on the most clinically effective treatment faster. Additionally, a clinically sound and digitally connected UM approach that leverages EHR data also helps ensure denials and less likely to be overturned on appeal delivering lasting savings.

Cost management throughout the duration of therapy

Our data shows that 89% of pharmacy spend is incurred after the first prescription fill. This means a sustainable cost management strategy must look beyond the start of therapy and eliminate waste throughout the duration of therapy. Here are a few considerations:

  • Is your benefit manager identifying members who may not be benefiting from their therapy, or who may be accumulating excess medication? This can help minimize wasteful spend and support better member outcomes. CVS Health has found that solutions such as Intelligent Medication Monitoring that ensures treatments are working for patients or initiating a therapy change, and Supply Management Optimization, which prevents inadvertent hoarding, lead to client cost savings while keeping members on the most clinically appropriate medication and dose.

  • What digital tools are available for helping keep members healthy while preventing unnecessary spend? Digital tools have shown improved treatment adherence — a key contributor to clinical outcomes and wasteful spend. Members of CVS Specialty for instance, can securely contact teams of nurses and pharmacists through digital messaging, on the web, or over the phone to help them manage complex treatment regimens.

  • How are you taking advantage of care management to help control costs on the medical benefit? Care management is a longitudinal and holistic approach based on understanding the underlying dynamics. Often led by specially trained nurses, it considers the person and his or her circumstances as a whole for intervention by a team of specialized practitioners. It can address acute care needs but focuses on evolving issues to prevent avoidable adverse clinical and utilization outcomes proactively. CVS Health has found that its rare disease care management program can reduce costly emergency department visits by 11%.

CVS Health presented its approach to creating a sustainable, forward-looking specialty cost management program at the 2021 PBMI® Annual National Conference. Read coverage from Managed Healthcare Executive.

Specific approaches to gene therapy costs

While the scientific and health care communities don’t know with certainty yet whether gene therapies are truly cures, there’s no doubt that they’ll alleviate suffering for many patients with genetic disorders. But plan sponsors also need ways to mitigate the cost impact. With price tags in the millions, even a handful of patients requiring such treatments has the potential to bankrupt entire benefit plans.

Plan sponsors should consider what solutions their benefit provider offers today, and what forward-looking planning they are undertaking, to help mitigate the costs of gene therapies without cutting off plan member access to this cutting-edge treatment class. CVS Health’s white paper Gene Therapy: Keeping Costs from Negating Its Unprecedented Potential highlights four complementary approaches:

  • Financing models that spread the high cost out over time to avoid excessive one-time costs

  • Financial protection programs based on proven cost saving mechanisms, such as stop-loss policies

  • Value-based contracting to tie reimbursement to clinical outcomes

  • Expanding the role of the specialty pharmacy to purchase directly from manufacturers

With rising health care costs and a growing proportion of both pharmacy and medical spend on specialty conditions, a future-focused cost management strategy must leverage enhanced UM and ongoing cost saving opportunities while looking ahead to gene therapies.