Specialty medications may blind plan sponsors to other cost drivers

By Chris Hanson-Ehlinger
Mon, Jan, 12, 2015 @ 10:01 AM

describe the imageRecently benefit managers have directed most of their attention towards specialty pharmacy products. That’s completely understandable. Every plan, whether large or small, has felt the cost impact of specialty pharmacy. However, managers should not overlook other cost centers by placing too much emphasis on specialty products.

One condition that cannot be ignored is diabetes

As a therapeutic category, diabetes (or, more specifically, the products used to treat and monitor diabetes) is already expensive and plans can anticipate significant increases.

There are two primary factors driving the increases in diabetes. First, the number of individuals being diagnosed as diabetics is increasing rapidly. This is especially true in the area of adult onset diabetes resulting from the high level of obesity observed in the United States.

The second factor driving expense is found in the array of products used to manage the diabetic patient. This is a category dominated by brand products and the manufacturers of these products have demonstrated that they are more than willing to drive prices considerably higher. In 2014, Bloomberg reported that among the top ten products as measured by percentage price increases, two were insulins.

Lantus is the best-selling diabetes product in the world. Sanofi Aventis – the manufacturer of Lantus – has a history of implementing double digit price increases with some occurring more than once each year. A recent real-world client example brought home the impact of this rapid rate of inflation. When comparing claims and costs in 2014 to the same period in 2013, this client experienced a 3.3 percent increase in the number of Lantus claims but a 103 percent increase in plan costs for this product. It would be unfair to single out Sanofi Aventis as the only manufacturer driving to higher costs in this category. The companies behind competitive insulins and second-line injectable products have also stepped forward with significant price increases.

 The reasons behind these increases are multiple

One thought is that this is an unintended consequence of aggressive formulary management strategies that have been pursued by pharmacy benefit managers (PBMs). For example, CVS Health and Express Scripts have eliminated one insulin manufacturer and its products from their formularies and granted exclusive positions to another product line. If a manufacturer suddenly finds itself cut off from a large segment of the market due to a formulary exclusion, one option is to increase the price for the balance of the population in an effort to preserve revenue and profits.

Anticipated competition is also a factor. Returning to the example of Lantus, the patent expires relatively soon and Sanofi Aventis is raising the price in advance of losing market share to new competitors.

Plan sponsor must recognize that when managing diabetes treatment costs, the answer is not found in implementing benefit restrictions for the sole purpose of saving dollars. The long-term implications in not effectively treating diabetes are significant and anything that creates a barrier for the patient to diabetic care can result in negative outcomes and increased cost. Diabetes is a category to implement strategies that removes barriers to care and fully engages patients in managing their condition.

Some plans have installed a value based insurance design (VBID), sometimes also known as a value based drug design (VBDD), in an effort to improve diabetes management. Frequently, this is observed as a reduction or elimination of the member’s co-payment or co-insurance for diabetic products. The assumption is that by reducing the patient’s personal expense, financial barriers are removed and the member will be more adherent to the therapy established by their doctor. Experience has taught us, however, that eliminating member contributions alone is not sufficient to deliver the desired outcome of optimized care. A more active level of participation on the part of the patient is required.

A client experience serves as an excellent example

Under this VBID approach, the member’s co-insurance is eliminated but only in exchange for the patient enrolling in a comprehensive diabetes education program. Diabetes nurse educators work one-on-one with the patient, directing care, monitoring progress and continually training the individual on how best to manage diabetes. To continue to receive the co-insurance waiver, the member must meet with his or her educator at least quarterly.

The results are extremely positive. A retrospective review of member adherence/compliance to glucose monitoring and utilization of medications and insulin is far superior in the group that is actively enrolled in the education program as compared with diabetics not enrolled in program. A second and unexpected benefit was also observed. Not only was compliance improved for diabetic therapies but compliance for all other medications was higher in the group engaged in the diabetes training program as compared to the remaining population. Plus, patient satisfaction in the program is high.

The cost associated with diabetics care is significant and will increase for the foreseeable future. It is inevitable that every plan will be making a significant financial investment to care for these patients. Plan managers are encouraged to seek out partners that can assist in the implementation of patient engagement strategies that improve outcomes and thereby reduce total medical expenditure. Unlike many other categories, diabetes is an area where patient education and participation can and do generate positive results.

Craig Oberg, RPh, is a managing consultant at The Burchfield Group. He works with national employers to develop PBM assessment and strategic management plans. For more information, please call 800-778-1359 or send a note to http://www.burchfieldgroup.com/contact/.

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