The growth of biologics and specialty drugs continues to increase at warp speed. The pipeline is full of great promise, but most of these products will be for higher cost orphan diseases and oncology. There is no relief in sight for employers—as for all plan sponsors—that serve as the primary commercial market purchasers of all healthcare costs (56%) in the U.S. today.
With limited opportunities to reduce costs, employers are looking at the supply chain. Leading employers recognize they need to know the cost of a drug at its point of service, not just a price that has no direct relevance to a claim cost. In fact, it’s anticipated approximately 30–40% of an employer’s total drug spend comes from pharmacy benefit managers (PBMs). Similarly, drug-related medical spend has grown significantly in the past few years. How is this possible?
PBMs are mostly unregulated, and most healthcare stakeholders are uncertain how they really function, what deals they cut, how they generate income and what services or value they provide. Finding value in medical claim spending and where the money for all drug related claims is buried in the contracts (e.g., rebates, spread, claw backs and mandating distribution in-house, etc.) is very difficult as they are not reflected in the contract’s administrative expenses. For plan sponsors, such as employers, medical and drug benefit contracting is an important area to focus on as it relates to managing total cost of care.
While benefit managers also make money through the services that they offer, such as utilization management (UM), typically it can be disruptive or counterproductive to delivering improved outcomes. This inefficient use of UM includes prior authorization (PA). This white paper will help you better understand what is going on behind the curtain for PAs in both the medical and pharmacy benefit, including when they are needed (or not) and how they can align more effectively with other utilization management strategies.
When a patient (member of the plan) receives clinically appropriate medications that address safety concerns, and when plan sponsors advocate for lower cost alternatives while ensuring there are no delays in getting the treatment, everyone wins. And that should be everyone’s goal.