Featured Health Business Daily Story, April 20, 2017

Coinsurance Was Main Pharmacy Benefit Specialty Cost-Share Tool (with Charts: Medical, Pharmacy Benefits Coinsurance Maximums Vary Widely; Coinsurance Leads Benefits in Specialty Drug Cost-Sharing Approaches)

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers. Subscribe today!

March 24, 2017Volume 18Issue 6

While copayments have long been the dominant reimbursement methodology of specialty drugs under the pharmacy benefit, in 2016 coinsurance for the first time took the lead, according to the 2017 edition of Trends in Specialty Drug Benefits from the Pharmacy Benefit Management Institute (PBMI). Respondents continue to be concerned with increasing costs and utilization of specialty treatments.

Sponsored by Walgreens Specialty Pharmacy, the sixth edition of the annual report was released March 7 at PBMI’s 22nd Annual Drug Benefit Conference. Findings were based on responses from 298 employers representing approximately 10 million covered lives that PBMI surveyed in September 2016.

“Specialty drugs continue to pose a huge challenge to plan sponsors,” maintained Jane Lutz, PBMI executive director, during a March 16 webinar to discuss highlights of the report.

Drug Benefit News

In a finding that probably shouldn’t come as a surprise, the top goal for specialty drug management was to manage specialty drug cost trend, cited by 51% of respondents. Following it were reducing inappropriate use (13%), improving adherence and persistency (11%) and reducing drug acquisition cost (10%).

“These [top] two goals do go hand-in-hand if you think about it” in order to effectively manage specialty drugs, commented Sharon Glave Frazee, Ph.D., vice president of research and education at PBMI, who also spoke at the webinar.

Specialty drugs can fall under both the pharmacy and the medical benefits. For many years, PBMs in particular have called for shifting coverage of these medications from the medical to the pharmacy benefit, where real-time adjudication of claims and more specific product codes lend themselves to more effective management tactics. In 2016, though, 37% of respondents said they covered specialty therapies under the pharmacy benefit but not the medical — a decrease from 42% the previous year. But coverage of the drugs under both the pharmacy and medical benefit increased, from 56% in 2015 to 61% last year, a “significant increase,” according to PBMI. Large employers (those with more than 5,000 employees) were the main drivers of that increase, with 71% of them reporting this benefit coverage as opposed to 50% of smaller employers (fewer than 5,000 employees).

Coinsurance, both with and without minimums and/or maximums, continues to be the main cost-sharing design within the medical benefit, with 54% of 2015 respondents and 55% of 2016 respondents using it (see box, below). And while copays have long been the main approach for drugs under the pharmacy benefit, respondents reported a decrease from 48% to 43% in copay use. The use of coinsurance within the pharmacy benefit actually increased slightly year over year, from 48% to 51%.

“For the first time ever, the use of coinsurance now exceeds copayments” under the pharmacy benefit, pointed out Frazee. “This seems to be a trend if you look at the last six years.”

Average copay amounts in the medical and pharmacy benefit were similar — $80 and $83, respectively — as were mean coinsurance percentages: 37% in the medical benefit and 38% in the pharmacy benefit (see box, p. 4). But among respondents who had a coinsurance minimum and/or maximum out-of-pocket cost, there was quite a difference when comparing the average maximum coinsurance amount between the benefits. In the pharmacy benefit, the maximum out-of-pocket total was $700, while the maximum amount in the medical benefit was more than double that, at $1,571. “The out-of-pocket amount can be quite a bit higher depending on the cost of the drug,” Frazee said.

She also noted that the average copay amounts and coinsurance percentages in both benefits rose from 2015 to 2016. The medical and pharmacy copays of $80 and $83 in 2016 were up from $67 and $76 in 2015. And the average medical benefit coinsurance of 37% last year was up from 32% the previous year, while the 38% average pharmacy benefit coinsurance in 2016 was up from 29% in 2015. “The impact of cost sharing is being felt more widely by members as they access their prescriptions,” stated Frazee.

The percentage of respondents that can track outcomes for people taking specialty drugs decreased from 2015 to 2016. The ability to track overall health care costs for people on specialty medications dropped from 65% to 60%, while the ability to track adherence and persistency outcomes for people taking specialty therapies dropped from 55% to 53%.

While many payers have created a specialty drug tier, about half of the respondents (47%) said they did not have a separate cost-sharing tier last year. Of this group, only 23% said they planned to implement one in the next few years, down from 31% in 2015.

One tactic that is becoming more popular is the use of formulary exclusions. Among respondents, 54% said they agree or strongly agree that formulary exclusions are an effective way to manage specialty trend, up from 50% in 2015. That year, 48% of respondents said they used formulary exclusions, which increased to 54% in 2016. The most popular classes that used this approach were drugs for growth deficiency (48%), fertility (48%), hepatitis C (47%) and inflammatory conditions (40%). Among classes that respondents are considering for formulary exclusions, hepatitis C was at the top of the list (45%), followed by inflammatory conditions (39%), multiple sclerosis (38%), cholesterol (37%) and cancer (30%).

But even though there is growing use of formulary exclusions, they can have challenges. When respondents were asked about their top two challenges, member dissatisfaction was cited most as the first choice (53%), as well as the second (27%). Among first choices, clinical disruption was in the No. 2 spot (17%), followed by physician complaints (13%). The second most frequent challenge among second choices was physician complaints (23%), which was followed by appeals (18%) and clinical disruption (17%).

“You have to balance cost containment and member satisfaction when implementing formulary exclusions,” maintained Frazee.

Download the report at http://tinyurl.com/z5mh584.

Medical, Pharmacy Benefits Coinsurance Maximums Vary Widely

Medical, Pharmacy Benefits Coinsurance Maximums Vary Widely

Coinsurance Leads Benefits in Specialty Drug Cost-Sharing Approaches

Coinsurance Leads Benefits in Specialty Drug Cost-Sharing Approaches

SOURCE: Pharmacy Benefit Management Institute, Trends in Specialty Drug Benefits Report, 2017 edition, released March 2017. To download the report, visit www.pbmi.com/PBMI/Research/Store/Specialty_DBR_Reports.aspx.

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