Specialty medications are life-saving treatments for complex conditions like cancer, rheumatoid arthritis, multiple sclerosis, and more – but they come with a steep price tag.
Although specialty drugs are used by less than 2 percent of the U.S. population, they represent more than 50 percent of total pharmacy spend. The financial impact on plan sponsors is significant. Across Xevant’s client base in 2023, the average plan cost per specialty prescription was $6,700 compared to $106 for non-specialty medications.
As these expenses continue to rise, Pharmacy Benefit Managers (PBMs) play an essential role in controlling costs while delivering high-quality care that helps improve patient health outcomes. Let’s look at some of the key functions PBMs employ.
Specialty Cost Containment
Cost containment is crucial. At the same time, PBMs work to strike a balance between controlling costs and ensuring that patients have access to the therapies they need. These strategies not only help mitigate the financial burden for employers and health plans, but also promote more efficient and effective care for specialty patients. Below are some of the key approaches PBMs use to achieve this balance.
Formulary Management
PBMs manage formularies to help ensure patients get the care they need while also keeping specialty costs in check. Formularies are comprehensive lists of covered medications, which include both brand-name and generic drugs, organized into different tiers that help determine how much patients pay out of pocket. But PBMs don’t just set it and forget it; they regularly review and update their formularies throughout the year. This process involves assessing the clinical effectiveness, safety, and cost-effectiveness of each medication. They monitor the market for new drug approvals, incorporating innovative therapies that show promise in treating specific conditions. Simultaneously, PBMs may remove medications from their formulary that are less effective, have higher costs without significant clinical benefit, or have lower-cost clinically equivalent alternatives.
Utilization Management
Utilization management helps ensure patients get effective and cost-effective treatments while often requiring approval for more expensive medications. For instance, with prior authorization, doctors need to get the green light before prescribing certain high-cost drugs to confirm they’re necessary. Step therapy encourages patients to try a lower-cost treatment first before moving on to pricier options. Meanwhile, quantity limits help manage how much medication a patient can receive at one time, based on safe dosage guidelines. By using these tools, PBMs can promote generics, cut down on unnecessary spending, and improve patient outcomes, all while balancing access to medications with cost management.
Rebate Negotiation and Management
Rebates play a key role in managing specialty drug costs by providing discounts from drug manufacturers to PBMs in exchange for including specific medications on formularies. These savings can offset the high cost of specialty drugs, helping reduce overall healthcare expenses. However, transparency is crucial. Clear communication between PBMs and their clients ensures that rebate savings are passed along effectively, allowing employers and health plans to understand the true cost of medications.
Network and Site-of-Care Optimization
PBMs use network and site-of-care optimization to control specialty drug costs by directing patients to cost-effective pharmacies or treatment facilities. Network optimization ensures patients access medications through preferred, lower-cost pharmacies. While site-of-care optimization means patients seek treatments, like infusions, in more affordable outpatient or home-based settings. These strategies help reduce unnecessary spending while maintaining high-quality care, ultimately lowering specialty drug costs for everyone involved.
Clinical Oversight and Patient-Centered Care
In addition to managing costs, PBMs help ensure that specialty drug treatments are both safe and effective. With expert clinical oversight and support, PBMs work to improve medication adherence and optimize treatment outcomes. Below are some key approaches used to support clinical safety, efficacy, and patient success.
Ensuring Drug Efficacy and Patient Safety
Effective clinical management is all about giving patients the resources they need to succeed with their treatments. PBMs provide valuable educational support to help patients understand their medications and manage their health conditions. This might involve explaining how to take their medication, sharing tips to minimize side effects, or making sure patients know what to do if they experience any complications. Additionally, PBMs collaborate with doctors and other healthcare providers to coordinate care, which helps create a smoother treatment experience for everyone involved.
Drug Utilization Reviews (DURs)
DUR helps ensure medications are used safely and effectively. They involve checking patient prescriptions for potential issues like drug interactions, duplicate therapies, or incorrect dosages. PBMs conduct DURs to spot and prevent adverse events, ensuring that treatments follow established clinical guidelines. By reviewing medication use, DURs help optimize patient care, improve outcomes, and reduce the risk of harmful side effects. This not only enhances patient safety but also makes healthcare more cost-effective.
How Real-Time Analytics Can Optimize Specialty Pharmacy Management
Real-time data and analytics are essential for enhancing specialty pharmacy management, enabling PBMs to make informed decisions, optimize costs, and improve patient outcomes more efficiently. By measuring the financial and clinical impact of specialty strategies in real time, PBMs can easily assess performance and make plan design or clinical adjustments sooner.
Innovative tools, like Xevant’s automated analytics and reporting capabilities, empower PBMs to leverage data-driven insights for effective specialty pharmacy management. Some examples include:
- Proactive Cost Management: Use tools like Xevant’s ScripLogic to identify high-cost specialty claims early and implement cost containment measures before expenses escalate.
- Monitoring Specialty Drug Spending: Track spending in real time with tools like Xevant’s AlertLogic. You can then act quickly to adjust strategies to manage expensive claims and reduce overall costs.
- Patient Adherence Monitoring: Ensure adherence to specialty therapies by intervening promptly when necessary, improving overall outcomes.
- Outcome Tracking: Continuously monitor patient outcomes and adjust treatment plans for personalized, data-driven care.
- Actionable Insights: Gain immediate insights into utilization and spending to make swift decisions, whether updating formularies or renegotiating contracts.
Incorporating real-time data provides PBMs with a dynamic approach to specialty pharmacy management, enhancing cost efficiency and improving patient care.
How can real-time analytics and reporting elevate your specialty pharmacy management? Ask us.
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