The forecast for health care costs continues to indicate double digit increases, according to the human capital and management consulting firm Aon Corp. While general pharmacy rates are up 13.1 percent, specialty pharmacy costs are expected to rise 22.5 percent - due to lack of generic competition and the fact that the drugs will account for a larger share of total drug spending. These statistics were set forth in the June 2005 BNA Pension & Benefits Reporter.
Brand name drugs coming off patent during 2006 include Zocor, Zoloft, Zithromax, Pravachol, Ambien and Allegra. In 2007, the drugs Norvasc, Zyrtec, Protonix and Nexium will go generic. This movement accounts for a significant increase in generic dispensing rates and a slowing trend in general pharmacy. The push for generics with a lesser co-pay and carrier discounts for mail order have also contributed this trend.
Given that, the projected growth of biotech, or specialty, drugs is rapid. Specialty pharmacy includes pricey drugs that require injection or infusion, controlled temperatures, special handling and clinical support. These drugs are commonly used to treat anemia, cancer, multiple sclerosis and rheumatoid arthritis. There are more than 20 biotech drugs due to be released in 2006. They will treat various forms of cancer, diabetes, respiratory distress syndrome, infertility and Crohn's Disease.
Specialty drugs represent about 5 percent of overall pharmacy spending for employers, but are expected to grow as the work force ages and medicine advances. Annual costs can range from $10,000 to $250,000 per patient, and drug makers report that at least 800 specialty drugs are currently in development.
Lisa Zeitel, a Mercer prescription drug specialist, has predicted that in 2006 employers will see significant new activity in the specialty pharmacy area because many vendors have recently beefed up their specialty pharmacy capabilities or made acquisitions in this area. Another reason is that employers are finally beginning to see evidence of rising specialty drug spending.
"Some employers have already added special limitations or higher co-payments for expensive specialty products, but typically these strategies are applied only to products delivered under the traditional pharmacy benefit," she said. "In many programs, specialty drugs are covered through the medical benefit as well, where patients receive their drug therapies in office or hospital settings."
Complete utilization data is hard to obtain. According to Accredo Health, about 1 percent of the total patient population is prescribed specialty medications, but because these patients also use other health care services, they can account for 33 percent of total health care costs. Zeitel is advising employers to "focus on getting the best price, using the most efficient distribution channel and ensuring that patients using these products are getting good clinical management."
Patient management is essential. An effective pharmacy benefit manager can ensure no wasted medication and ultimately no wasted money. Patients should know how to administer a drug correctly and have everything needed to do so. Helping a patient anticipate and manage side effects is also a critical aspect to specialty drug therapy. A support system available 24/7 is needed to assist with financial, social, nutritional and education issues and, the patient's physician must be kept in the loop, ensuring a successful collaborative effort.
In the December 2005 Benefits & Compensation Digest, F. Randy Vogenberg and Joanne M. Sica reflect that a proactive approach toward health care and disease management is crucial in this exciting time when "evolving pharmaceuticals and related technology make possible advances that only Star Trek or Star Wars creators could hint at ... The overall advantages of carefully managing health care provided through these innovations will also help the employer manage cost, quality and accessibility of health care and prescription drug medications" all of which ultimately impact claims experience and the well being of health care consumers.
If controlling specialty pharmacy spending is not on your radar screen yet, it will be soon. An informed employee benefits advisor can help you make choices appropriate to the needs of your organization. Welcome to the new world of health care benefits management.
Julee Drennan, SPHR, is an account executive for The Wilson Agency in Anchorage. She can be reached at (907) 277-1616 or at juleed@thewilsonagency.com.
