Webinar Recap: How Employers Can Curb the Cost of Specialty Drugs

By Todd Peterson — AVP, Health & Wellness Services December 14th, 2023

As new specialty drugs continue to enter the marketplace, drug expenses are becoming a real threat to mid-market companies that self-fund their health insurance. With this in mind, we invited Leaf Health Founding Partner Robert Shelley to join our monthly Health Risk Webinar Series to discuss how employers can implement strategies to curb the cost of specialty drugs, specifically related to cell and gene therapy treatments.  

Continue reading for a recap of Shelley’s presentation.

What is Cell and Gene Therapy?

To kick things off, let’s start by defining both cell and gene therapy. 

Cell therapy restores or alters a certain set of cells that are “misbehaving” to carry a therapy through the body. According to Shelley, cell therapy is currently being used to treat different forms of cancer and has been producing promising results.  

Gene therapy aims to treat diseases by replacing a mutated gene with a healthy copy of the gene, inactivating a mutated version of the gene, or introducing a new gene into the body. This type of therapy can be performed either inside (In Vivo) or outside the body (Ex Vivo). Shelly describes gene therapy as adding new code to your body to eliminate diseases.  

Your Medical RX Toolbox

Using data from CVS Health, Shelley states that only 2.5% of the population utilizes specialty medication, even as specialty medications drive about 50% of total pharmacy spend.

According to Shelley, there are several different routes employers can take to curb the extreme costs of specialty drugs.

  1. Deeper Clinical Review: A well-trained pharmacist should closely review the patient’s condition and course of treatment to ensure the patient is on the correct path.
  2. Drug Sourcing Analysis: It’s important to consider different sourcing options for specialty medications: 1) Some medications can be sourced internationally at a lower cost. 2) The “White Bag” method involves purchasing the medication outside of the hospital or medical provider’s office. The medication is shipped independently at a lower cost and without additional fees.
  3. Site of Care: Facility charges can significantly impact the total cost of specialty drugs. According to Shelley, home healthcare options and infusion centers can bring significant savings.
  4. Alternative Funding: If the patient meets specific criteria, it is possible to have the manufacturer pick up the cost of the medication through its various charitable trust programs. According to Shelley, this option is more limited than in years past, as manufacturers are pushing back on alternative funding programs.
  5. Medical Rebates: It’s important to ensure your program allows for the recoupment of rebates, especially when it comes to Pharmacy Benefit Management (PBM).
  6. Warranties: A new option that was introduced this year allows for refunds when medications don’t perform as they should. (We will dive further into warranty solutions below.)

It’s important to note that while Shelley recommends exploring all the solutions above, several are not viable options for gene and cell therapy drugs. We’ll explore why below.   

Cell and Gene Therapy Funding Solutions

According to Shelley, cell and gene therapy expenses are increasingly falling outside of PBM benefits and under medical benefits, which has limited visibility. Shelley puts an emphasis on three funding solutions that are seeing success in today’s specialty marketplace:

  • Warranties: Protection in the event an expensive therapy does not work. It’s important to note that there are currently 3,649 new therapies in the development pipeline (40 of which are likely to launch in the next 36 months). In some cases, drugs may be approved quickly as a last line of treatment for extremely rare diseases. Given the rapid growth in innovation and cost, warranties are an important protection against the unpredictability of new specialty drugs.
  • Pools: Members make consistent payments to an entity to spread the cost of treatment across the entire group.
  • Annuity Outcomes: Treatment costs are spread out over a specified period and are contingent on the attainment of clinical outcomes.

In conclusion, Shelley states that it is important for plan sponsors to implement cohesive PBM and Medical Rx Strategies. As innovation and costs continue to rise, it’s important to be aware of the emerging solutions available to plan sponsors. If you have any questions about Shelley’s presentation, please contact our team. For more information on PBM cost-containment solutions, please visit our case study.

About the Webinar

This presentation was part of Captive Resources’ Medical Stop Loss Webinar Series — regular installments of webinars to educate medical stop loss group captive members. The thoughts and opinions expressed in these webinars are those of the presenters and do not necessarily reflect Captive Resources’ positions on any of the above topics.

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