Pharmacy trends: What’s Benefit pros need to know

Handling benefits, it’s important to keep an eye on what’s going on in the pharmaceutical industry. New pharmacy trends can affect healthcare benefits and budgets.

So, here’s a brief overview of what’s been happening and what to watch for.

A trend that has emerged over the past year is certain states have proposed legislation to remove limits on pharmacies that dispense both specialty and maintenance type medications.

“Historically, much of the emphasis on this topic has been on the fully insured benefit,” said Alysha Fluno, Pharmacy Innovation Leader at Mercer in the webcast New Shape of Work: Top Employer Considerations in 2022. “But what’s changing is we’re starting to see legislation written that also impacts, the self-insured benefit. This has the potential to impact plan design. So, staying informed about what’s happening with legislation – what’s being provided and improved – will be important to track in the upcoming year.”

Another trend that’s gaining traction is managing pharmacy benefits through data driven insight.

Not only are employers able to see how their plan is performing throughout the year, but they’re now using their data as a foundation to optimize their benefit, making more timely and informed decision.

Pharmacy benefits managers

A couple of consistent themes that’ll continue into next year are around drug costs and transparency of how pharmacy benefits managers (PBMs) are making money.

PBMs manage prescription drug benefits on behalf of health insurers, Medicare part D drug plans, large employers, and other payers. They can have a big impact on figuring out total drug costs because they negotiate with drug manufacturers and pharmacies to control spending. This in turn shapes patients’ access to medications and determining how pharmacies are paid.

Since 2015 there has been a downward shift in revenue from rebates, and that’s indicative of PBMs reducing their business risk on rebates by shifting the rebates over to newer rebate GPOs (Group Purchasing Organizations). “This practice is ultimately causing less transparency in the industry, and clients are now needing to find creative ways to manage their rebates now that these GPO entities have become involved,” said Fluno.

Plus, the growth in PBM fees and specialty pharmaceuticals have become the main source of profit for PBMs. This is forcing companies to manage contract negotiations differently and focus more on specialty drug management in the future.

Specialty drugs

While the cost trend for specialty drugs has increased year over year, relief may be coming, but not until 2023.

“The good news is we have a year to prepare for the changes that’ll be happening in the biosimilar market,” shared Fluno.

Biosimilars are a class of medications akin to generic drugs. But they’re for certain infusible or injectable medications. Many PBM contracts that are in the market today are either vague around this class of medications or they’re mute on them. So, 2022 is going to be the year to renegotiate contracts regarding biosimilars.

Here’s why: This summer Semglee, which is a biosimilar of the insulin Lantus, was brought to market.

“It’s great because we now have market competition for biosimilars in diabetes, which you would think would help to drive down costs. But what’s different with this launch is Semglee came out with two different pricing options: a high list price with a rebate and a second lower list price option,” explained Fluno.

Drugs have never been brought to market with two pricing options.

“This is a new approach we’re now needing to manage,” said Fluno. “And we need to do it quickly. I say this because the final patent on Humira, which is an injectable anti-inflammatory drug, is expected to expire in early 2023. And there are six manufacturers right now that are approved to bring their biosimilars to market, as soon as the Humira patent expires.”

Humira is likely the No. 1 drug in terms of costs for just about every plan sponsor. It generates over $20 billion a year in annual revenue in the U.S. “So, this is going to be one of the largest patent expirations in the history of the U.S. drug market,” stated Fluno.

“So, as we are now seeing with Semglee, PBM contracts need to be negotiated with very tight language around biosimilars, including biosimilar rebate guarantees, not only to drive value to the plan when those patents for Humira finally expire, but also to drive value back to your members so they can save on their drug costs,” explained Fluno.

High-cost therapies

The final trend that needs to be pointed out is the high-cost therapies entering the market – gene and cellular therapies. When it comes to specialty drugs, this small and growing group of treatments are the costliest advancements in medicine today. They’re slowly trickling into the market, and they’re mainly seen right now on medical benefits because they’re infusible medications.

“The cost of these treatments is much higher than any therapy costs from the past,” said Fluno. “These therapies have truly been deemed break throughs in modern medicine. Many of them are actually cures for rare diseases like sickle-cell anemia, hemophilia and even different cancers.”

The good news is the utilization of these therapies will be very low. But on the flip side, it’ll only take one member with one treatment to change the financial forecast of your drug budget.

“Predictive analytic tools have really come into the market around this to help plans understand their risk of these expensive therapies,” said Fluno. “And while you may not be able to avoid the costs, just having insight into your plans risk will allow you to not only plan but prepare for that potential cost exposure.”