MedCity Influencers, Opinion, Employee Benefits

Inflated savings, hidden costs: How vendors who “carve-out” specialty benefits fail to deliver promised value

In recent years, a number of niche vendors have entered the market, promising significant savings for payers if they “carve-out” specialty pharmacy services from integrated pharmacy benefits management (PBM). While the savings they claim to provide sound undeniably attractive, they are often greatly exaggerated.

Specialty medications – high-cost medications that treat complex, chronic conditions – have become a key driver of overall prescription drug spend. In fact, according to CVS Health’s 2020 Drug Trend Report, they account for 52% of spend despite being utilized by only 2.5% of all patients. Spending on these medications is growing rapidly as more specialty treatments continue to be launched at high prices and medications already in the market obtain supplemental indications to treat additional conditions, expanding the patient population. While this expands treatment options, it also means increasing utilization and therefore ever-greater costs for employers.

Employers seeking to manage their pharmacy benefits often face challenging decisions as they try to balance the impact of growing treatment costs with offering dependable prescription drug coverage to their employees.

In recent years, a number of niche vendors have entered the market, promising significant savings for payers if they “carve-out” specialty pharmacy services from integrated pharmacy benefits management (PBM). While the savings they claim to provide sound undeniably attractive, they are often greatly exaggerated.

A Flawed Approach That Hides True “Costs”

First and foremost, it is often unclear how these vendors are arriving at their estimated promised savings – and if those estimates are rooted in the unlikely assumption that the payer is not currently employing any form of specialty management. In addition, a key component of many of these “carve-out” approaches is aggressive utilization management – in other words, denying medications to as many people as possible. This means even those who should be on certain medications can be denied access. Because such decisions are not supported by clinical evidence or treatment guidelines, they are likely to be overturned on appeal meaning the savings are not true, lasting cost reductions. This is compounded by the fact that the appeals process itself adds cost in the form of fees as well as administrative burden.

Often, there are also hidden costs to the payer that they may not be aware of either. One is in the form of loss of rebates – the discounts PBMs negotiate from pharmaceutical manufacturers on behalf of their clients.

Similarly, carving-out a component of pharmacy benefit management can also affect overall pricing and guarantees and carry additional fees. What’s more, having multiple vendors can mean higher administrative costs that further lower any perceived savings.

Carving out components of specialty pharmacy also risks jeopardizing member outcomes by fragmenting care in service of chasing perceived cost savings. Keep in mind that a majority of those who are on specialty medications are people with complex, chronic conditions who need these treatments to effectively manage them and prevent costly, long-term health complications. Appropriate utilization management to ensure effective cost control with decisions rooted in rigorous criteria and clinical treatment guidelines not only ensures better outcomes but delivers lasting savings for payers.

An Integrated Approach Guided by Connectivity and Clinical Rigor

The best way to manage specialty costs, while also improving outcomes is with an integrated approach that leverages clinically sound decision making, sophisticated data analytics and digital infrastructures, and interoperability that breaks down silos in health care. When combined with holistic nurse care support and engagement efforts, such an approach eliminates waste and ensures appropriate utilization of cost-effective treatments for each individual’s diagnosis.

For instance, many specialty treatments with multiple indications now have weight- and indication-based dosing recommendations from the U.S. Food and Drug Administration. By leveraging our connectivity, we can verify the member’s diagnosis information through their electronic health records – rather than through prescriber attestation alone, to confirm the therapy being prescribed, as well as the dosing, is appropriate for their specific diagnosis. Many medications also have significant side-effects, which could lead to non-adherence. Digital tools like messaging and symptom tracking through wearable devices or smart phones can ensure a medication is working for an individual, they are not experiencing severe side-effects, and that they are staying adherent to treatment. This eliminates wasted spend on high-cost medications that may not be delivering clinical value.

What We Owe to Employees and Members

Ultimately, health care is about making sure people have access to appropriate treatment options that help them stay healthy. No employer would want to sacrifice that in the interest of cost savings. The plain fact is siloed carve-out approaches often betray the commitment to patient care and outcomes in pursuit of savings that are – in many cases – illusory.

Employers should look to work with organizations that take an integrated and thoughtful approach to member care and cost savings. Clinically rigorous therapy decisions and a focus on eliminating waste by leveraging the latest in technology and digital tools, can deliver specialty cost savings effectively, without comprising member care. The best way to ensure cost savings in a member-centric way that supports affordability and care is to ensure a coordinated approach that addresses inappropriate utilization from the start and throughout therapy, while using competition within each therapeutic area to lower unit cost.

Photo: cagkansayin, Getty Images




Prem Shah, is Executive Vice President of Specialty and Product Innovation at CVS Health.

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