Employers Becoming Savvier About Biologics and Specialty Drugs

CHICAGO, Jan. 24, 2013 /PRNewswire/ -- Forty-nine percent of employers said they have an above average understanding of specialty pharmacy according to the latest survey from the non-profit Midwest Business Group on Health (MBGH), one of the nation's leading business groups of employers. This is a significant increase over a similar 2011 survey where 78 percent claimed to have a low to moderate understanding of this challenging benefit.

"With costs estimated to make up 40 percent of an employer's total pharmacy spend by 2020, it's essential that they focus their attention on managing this benefit – doing nothing is no longer an option," said Cheryl Larson, MBGH vice president. "Since employers primarily fund health care benefits for employees, their understanding of specialty drugs and related costs will be a key factor in resolving current challenges."

Key findings

• Executive leadership's level of interest in understanding specialty pharmacy benefits was average to low for 53 percent of respondents – a sign that employers need to engage them in this conversation.
• Twenty-five percent don't know what their cost increases have been over the past three years – these are missed opportunities for better managing of the benefit.
• Thirty-five percent are experiencing cost increases of 11-30 percent, while ten percent are experiencing 31-50 percent cost increases – making it critical to focus on understanding the benefit and working closer with service providers.
• Thirty-six percent do not know their company paid medical costs specific to specialty pharmacy drugs and related services – this is indicative of the confusion surrounding what specialty benefit costs run through the medical versus the pharmacy plan.
• Managing costs is very important to 86 percent of respondents and reducing inappropriate utilization is very important to 72 percent – although costs are very important, patient management is key to long-term success.
• For current specialty pharmacy plan design 35 percent are using use traditional pharmacy design of tiers, co-insurance and/or co-pays. Only 21 percent use special tiers with co-pays and/or co-insurance – this underscores the need for benefit design innovation.
• The majority of employers are still not offering incentives for requirements such as using a specialty pharmacy, participating in case management or adhering to medications – a missed opportunity for improved outcomes.
• Case management, drug utilization and cost sharing are the top three priorities for managing specialty pharmacy benefits – all three are essential to managing costs and patient outcomes.

The employer-driven survey was conducted by MBGH, with guidance from Randy Vogenberg, PhD, principal at the Institute for Integrated Healthcare. The objectives were to identify and assess the level of knowledge and benefit design gaps of employers in the area of specialty pharmacy drugs and biologic products used to treat conditions such as multiple sclerosis and arthritis. These drugs present significant cost challenges to employers, as well as logistical issues for patients, physicians, pharmacies and manufacturers, as these drugs often require special approvals for their use, instructions on dosing and side effects, and appropriate storage and distribution.

Survey respondents
Approximately 70 employers responded to the online survey. The top industries represented were manufacturing (34 percent), government (16 percent) and education (13 percent); 87 percent were self-insured and 13 percent fully-insured. Thirty-two percent have an active population of 1,001-5,000, while 26 percent represent 5,001-15,000.

Online toolkit
MBGH has developed an online toolkit to support employers in better understanding and managing specialty pharmacy benefits. The first section, Specialty Pharmacy 101, was launched this week and covers specific trends, employer impacts and recommendations in three key areas:  understanding the basics, the economics of specialty pharmacy, and evolving strategies in benefit plan design. Future sections address key challenges, identify innovative approaches to benefit plan design and service partner contracting, and support at-risk populations through communications and resources.

About the Midwest Business Group on Health
With more than 120 member organizations, the Midwest Business Group on Health is one of the nation's leading non-profit business groups of large, self-insured public and private employers serving as a catalyst for community initiatives to improve the quality, safety and cost-effectiveness of the health care delivery system. MBGH is an essential resource to support employers in effectively managing their health benefits through high-quality education, research, networking and benchmarking. MBGH is a founding member of the National Business Coalition on Health. www.mbgh.org

SOURCE Midwest Business Group on Health