2016 EMD Serono Specialty Digest: health plans’ ongoing cost struggle

Costs and care management where specialty drugs are concerned has been near pandemonium for the past couple years, with alarms being raised in the halls of Congress, leading healthcare policymakers and business organizations. While change might be coming (especially after the presidential election is settled), insurers and health plans need to deal with cost and care on an every-day basis. Getting the picture of what’s happening now is the value of the annual EMD Serono Specialty Digest, a survey (this year) of 58 commercial plans covering 140 million lives. This year’s Digest shows selected, dramatic changes from last year, and points to yet more changes to come.

In particular, over 80% of plans use prior authorization (PA) to control drug dispensing, and within that 23% use some form of electronic PA (ePA)—and that proportion is expected to more than double in the next 12 months. The majority of plans run their own PA systems, in either their pharmacy or medical departments; about a quarter depend on pharmacy benefit managers (PBMs) to manage the process. Partial-fill programs, which limit the first couple prescriptions for oral products, are being used by 42% of plans currently, and that will jump to as much as 74% in the coming year.

Plans commonly use specialty pharmacy providers (SPPs) to distribute some or most of the drugs they cover, and the majority (56%) of plans use more than one SPP. While they are mostly “satisfied” (81% of respondents) with the dispensing service, 52% indicate reporting of outcomes and expenditures was “most in need of improvement.” Patient services—providing reimbursement support, following up drug dispensing, and managing adherence programs—rated better, but is still the second-most area in need of improvement.

As in past years, oncology (the single largest category of specialty medications) is a high priority for cost reduction (as indicated by 91% of respondents), yet only 21% report significant success in cost reduction. Last year, 21% of plans were using a clinical pathways program for oncology (whereby guidelines—sometimes with incentives attached—for which drugs are first-line therapies, and how disease progression is to be managed); this year, 38% of plans use them. A significant change, though, is that this year, only 23% of plans utilize a third-party pathways provider; last year it was 69%. The preferred method now is to develop plan-specific pathways in conjunction with consulting with oncologists; this method is employed by 62% of plans.

“Site of care” management—choosing where drugs are to be administered (especially for infusion products) was identified last year as an important means of cost control; this year, 44% of plans are managing sites of care, and that could jump to 79% in the coming year.

Pharma manufacturers need to pay close attention to plans’ preferences in drug distribution, restrictions through pathways or other controls, and contracting strategies (for example, in the increasingly competitive hep C market, 93% of plans now have a “preferred product” identified—and 57% of plans outright exclude some treatments. Serono’s analysts look on all these pressures as part of an evolving healthcare ecosystem: “The exponential growth identified in numerous facets within the specialty pharmacy field need not be cause for alarm. EMD Serono views this challenge as an opportunity--a chance to improve services, outcomes and spending for plans and members alike.” However, the rapid evolution requires fast footwork to keep up with plan preferences.

The Digest is available here.