Excessive savings, hidden costs: How providers who “outsource” special services do not deliver the promised value


MedCity News

Specialty drugs – expensive drugs used to treat complex, chronic conditions – have become a major contributor to total prescription drug spending. In fact, according to CVS Health’s 2020 Drug Trend Report, they account for 52% of spending, despite only being used by 2.5% of all patients. The spending on these drugs is increasing rapidly as more specialized treatments are introduced at high prices and drugs that are already on the market are given additional indications to treat additional diseases, thereby expanding the patient population. Although this expands the treatment options, it also means increasing use and thus ever higher costs for employers.

Employers looking to manage their pharmacy benefits often face tough decisions as they try to balance the impact of rising treatment costs by providing reliable prescription drug insurance to their employees.

In recent years, a number of niche providers have come onto the market who promise the payers considerable savings if they separate special pharmacy services from the integrated pharmacy service management (PBM). While the savings they claim sound undeniably attractive, they are often grossly exaggerated.

A flawed approach that hides real “costs”

In the first place, it is often unclear how these providers get their estimated savings promised – and whether these estimates are based on the unlikely assumption that the payer is currently not employing any form of specialty management. An essential component of many of these “carve-out” approaches is also aggressive usage management, i.e. refusing medication to as many people as possible. This means that even those who should be taking certain medications may be denied access. Since such decisions are not backed by clinical evidence or treatment guidelines, they are likely to be overturned on appeal, meaning the savings are not true, permanent cost reductions. In addition, the complaints procedure itself causes additional costs in the form of fees and administrative work.

Often there are also hidden costs for the payer that he may not be aware of. One of them is the loss of rebates – the rebates that PBMs negotiate from pharmaceutical manufacturers on behalf of their customers.

Similarly, outsourcing a component of pharmacy service management can also affect overall pricing and guarantees, and incur additional fees. In addition, using multiple providers can lead to higher administrative costs that further reduce the perceived savings.

Outsourcing components of the specialty pharmacy also risks jeopardizing members’ outcomes by fragmenting supply to track perceived cost savings. Keep in mind that the majority of those taking specialized medications are people with complex, chronic conditions who need these treatments to treat them effectively and avoid costly, long-term health complications. Adequate usage management to ensure effective cost control, with decisions based on strict criteria and clinical treatment guidelines, not only ensures better results, but also offers payers lasting savings.

An integrated approach guided by connectivity and clinical rigor

The best way to manage specialty costs while improving outcomes is through an integrated approach that leverages clinically sound decision-making, sophisticated data analytics, and digital infrastructures, as well as interoperability that breaks silos in healthcare. Combined with holistic nursing support and engagement efforts, such an approach avoids waste and ensures the appropriate use of inexpensive treatments for the diagnosis of each individual.

For many special treatments with multiple indications, for example, there are now weight- and indication-based dosage recommendations from the US Food and Drug Administration. By using our connectivity, we can review the member’s diagnostic information against their electronic health records – rather than just confirming the prescribing physician to confirm that the prescribed therapy and dosage are appropriate for their specific diagnosis. Many drugs also have significant side effects that can lead to non-adherence. Digital tools like messaging and symptom tracking via wearable devices or smartphones can ensure that a drug is working for a person, has no serious side effects, and treatment is followed. This avoids wasted spending on expensive drugs that may not provide clinical value.

What we owe employees and members

Ultimately, health care is about making sure people have access to appropriate treatment options that will help them stay healthy. No employer would like to do without this in the interests of saving costs. The fact is that isolated carve-out approaches often betray a commitment to patient care and results in the pursuit of savings, which in many cases are illusory.

Employers should try to work with organizations that have an integrated and thoughtful approach to member care and cost savings. Clinically rigorous therapy decisions and a focus on avoiding waste through the use of the latest technology and digital tools can result in effective cost savings in specialty areas without the need for member support. The best way to ensure cost savings in a member-centric way that supports affordability and care is to ensure a coordinated approach that addresses inappropriate use from the start and throughout therapy, while capitalizing on competition in each therapeutic area for the Reduce unit costs.

Photo: cagkansayin, Getty Images

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