Mini-White Paper: Prescription Coverage & Total Cost of Care
As organizational expenses continue to increase, employers are understandably evaluating where and how they can streamline bottom lines. Prescription coverage is not only one of the most widely accessed employee benefits, but also represents a powerful opportunity for employers to help manage their organization’s Total Cost of Care (TCOC).
Examining trends in prescription spending can uncover potential optimization. For example, large employers tend to see about 12% of their healthcare costs going to specialty drugs — or over half of their pharmacy expenses. By integrating specialty pharmacy into medical plans, employers could see savings on healthcare costs, improve care management, and enhance the effectiveness of treatments for complex conditions.
Working with a health partner who understands your workforce's needs and priorities can enhance the benefits of specialty pharmacy integration. Read this mini-white paper or view it below to learn more about how to achieve a favorable balance between costs and high-quality care.
Driving specialty pharmacy savings: the integration advantage
Specialty pharmacy costs are on the rise, especially given the emergence of multimillion-dollar drugs for complex, chronic conditions. As employers actively seek ways to control costs while maintaining high-quality employee care, one favorable solution lies in integrating specialty drugs into your medical benefits plan.
The impact of integration on Total Cost of Care (TCOC)
Total Cost of Care refers to the total amount an organization spends on healthcare and health benefits for employees and their dependents. As business expenses continue to increase, employers are understandably looking to streamline their bottom-line costs.
Specialty drugs, which account for a significant portion of healthcare expenses, are a growing concern. According to a 2023 report, large employers say specialty drugs drove 12% of their healthcare costs — equaling over half of their pharmacy expenses.1 By 2026, the cost of gene therapy treatments is expected to reach more than $25.3 billion in the U.S., so it’s no surprise that insurers and employers alike are implementing strategies to reduce costs.2
A look at specialty pharmacy services
Specialty drugs are high-cost, high-touch medications used to treat complex, chronic conditions like cancer, rheumatoid arthritis, or multiple sclerosis. They often require special handling and administration. Patients using a specialty drug may need careful oversight from a care provider.3
In Anthem’s 2022 commercial membership population, over 59% of total drug spend was for specialty medications.4
Some employers are exploring options like carving out specialty pharmacy benefits with pharmacy benefit managers (PBMs) and other vendors to reduce costs. However, due to factors like comorbidities, fragmented patient care, increased hospitalizations, and emergency visits, choosing not to integrate specialty pharmacy benefits is often more costly in the long run. The most value for employers seems to lie in the integration of specialty pharmacy benefits into overall medical plans, optimizing both costs and care management.
On the health plan side, plans often partner with PBMs for pricing strategies and care management. In doing so, they’re able to add care managers with a full picture of employee health, as well as contract arrangements with providers that drive even more value beyond what PBMs and other vendors can.
This raises a critical question: Should specialty pharmacy benefits be carved in or out? Addressing affordability involves more than sheer price. Employers are wise to look at the TCOC picture and address three key factors that impact the affordability of specialty drugs: cost, utilization, and effectiveness.
Uncovering the integration advantage
1. Lowering costs
Your health plan partner knows your employees' medical needs, your benefits plan, and what matters to your organization. This knowledge helps them find the right specialty medicines, often at better prices negotiated through volume-based contracting.
Health plan partners can also help educate your employees and healthcare providers about the benefits of generic drugs, preferred formulary options, and biosimilars. It's important to understand your options to save and provide alternatives, so don't hesitate to ask your health plan partner about their strategies and partnerships.
2. Managing utilization
Another aspect of making care more affordable involves how specialty drugs are utilized. Health plans can use data to track engagement and connect employees to care providers at the best locations for cost-effective medication administration. This not only helps employees get the right medication at the right time and place, but also ensures they take their medicines correctly.
Health plans contract directly with physicians, hospitals, and home infusion providers, creating more opportunities to incorporate specialty pharmacy into reimbursement strategies, incentive programs, location optimizations, and home-based care. This becomes increasingly crucial as gene therapies become more common, as they are mainly reimbursed through an employee’s medical benefits. A multifaceted approach is essential to ensure these high-cost therapies are prescribed appropriately and costs are managed.
Through specialty pharmacy integration, your health plan partner can add programs specifically aimed at supporting the safe and proper use of specialty medications. This may include programs like step therapies, quantity limits, and prior authorizations — all of which are significantly more effective when benefits are integrated with access to employees’ medical and pharmacy claims data.
3. Driving effectiveness
Carving in specialty pharmacy benefits allows you to optimize your health plan’s management of some of the most complex and costly conditions like hemophilia, cancer, and cystic fibrosis. It also enables health plan partners to address your workforce's specific pharmacy needs and educate them about informed choices. This can help reduce and close care gaps such as non-adherence, which costs $528.4 billion annually.5
Additionally, while today’s high-cost cell and gene therapies offer promising outcomes, their effectiveness varies among patients. Health plans can use their scale and relationships with drug manufacturers to coordinate value-based contracting arrangements tied to effectiveness — with the investment depending on certain outcome requirements. This approach promotes solutions that align payments with the value delivered.
Promoting affordability through quality generics
The Blue Cross Blue Shield Association, along with independent and locally operated Blue Cross and Blue Shield companies, joined forces with CivicaRx to cofound CivicaScript™. CivicaScript is a public benefit company dedicated to making quality generic medications more accessible and affordable.
For example, CivicaScript now offers abiraterone acetate, a specialty drug used to treat prostate cancer. The medicine is available to patients at a maximum retail price of $171 — about $3,000 less than someone on Medicare Part D would pay for a comparable month’s supply.6 CivicaScript will initially develop and manufacture six to 10 medicines where limited manufacturer competition prevents lower pricing. Learn more at civicascript.com.
Creating value through integration
Synergie Medication Collective is a new medication contracting organization founded by a group of Blue Cross and Blue Shield affiliated companies. Synergie is focused on improving affordability and access to costly medical benefit drugs — ones that are injected or infused by a healthcare professional in a clinical setting — for nearly 100 million Americans.7
These high-cost treatments include expensive gene therapies and infusible cancer drugs, representing a substantial portion of overall drug spend. Synergie will partner with pharmaceutical manufacturers and other industry stakeholders to create efficient, affordability-focused contracting models and meaningful value-based arrangements. This first-of-its-kind approach will have a positive impact for millions of people across the United States, and significant future growth is anticipated.
With specialty pharmacy carved out, the risk of therapeutic duplication increases, which is potentially costly and can result in increased risk of drug interactions and other issues. Health plans have visibility into (and the ability to coordinate with) both pharmacy and medical benefits, ensuring patients receive the most appropriate care. Supporting proper utilization can reduce redundant spending and overspending, while employees receive more comprehensive support.
Affordability through integration = balancing cost + care
Integrating specialty pharmacy benefits is ultimately an investment decision, not a purchase decision. While effective drugs can be expensive, integration (including care management) can potentially lead to long-term cost savings and fewer complications.
In fact, data shows that by integrating benefits, businesses could save more than $100 in all-cause medical spending per employee each month.8
Studies also revealed significant improvements for those with integrated benefits taking specialty drugs, including lower inpatient utilization (-6.3%) and shorter hospitalization stays (-13.1%).8
By evaluating the short- and long-term cost-effectiveness of integration, employers can gain insights into factors impacting their financial health, and ultimately help drive better health outcomes for their employees.
Questions? We’re here to help.
Contact your account management team, broker, or sales representative for more information. Together, we can determine the right Total Cost of Care approach for your organization’s needs.
1 Business Group on Health: 2023 Large Employers’ Health Care Strategy and Plan Design Survey (accessed September 2023): businessgrouphealth.org.
2 Medrxiv: Estimating the Financial Impact of Gene Therapy (accessed September 2023): medrxiv.org.
3 Healthinsurance.org: What is a specialty drug? (accessed September 2023): healthinsurance.org.
4 CarelonRx Internal Data, 2022 (formerly known as IngenioRx).
5 Pan Foundation: Medication non-adherence: a common and costly problem (accessed September 2023): panfoundation.org.
6 CivicaScript: CivicaScript TM Announces Launch of its First Product, Creating Significant Patient Savings: https://civicascript.com/wp-content/uploads/2022/08/CivicaScript-1st-Product-Press-Release-FINAL-08_03_22.pdf.
7 Blue Cross Blue Shield Association: Blue Cross Blue Shield Companies Form Synergie Medication Collective, a New Venture to Radically Improve Affordability and Access to Costly Medications for Millions of Americans (accessed October 2023): bcbs.com.
8 CarelonRx Specialty Conditions Value of Integration (VOI) Study 2022 (formerly known as IngenioRx).