A recent article in Managed Healthcare Executive posed the question, “Are Payers Optimistic About Biosimilars’ Savings?”

The answer, it seems, is a tentative “yes.”

Biosimilars are lower cost version of expensive biologics. The first biosimilar approved by the FDA in the U.S. was Zarxio, a generic of Amgen’s Neupogen, back in March of 2015. This approval opened the door for many others.

What remains to be seen is how companies and their pharmacy benefit managers (PBMs) will handle this new class of drugs when managing their drug formularies. One mistake they should avoid is treating biosimilars like generics, says Willis Towers Watson North American Pharmacy Practice Leader, Nadina Rosier.

Quoted in the article, Rosier said, “Biosimilars are not the same as generic specialty drugs, so strategies that ‘auto-substitute’ in similar ways to how generics substitute for traditional drugs are not appropriate. Instead, many PBMs have indicated they are considering formulary approaches that are similar to how traditional and specialty drugs are managed today.”

For the complete article in Managed Healthcare Executive, click here.

A recent headline in Politico Pulse pointed to a drug price transparency report from the state of Vermont that identified 10 prescription drugs that are “eating up state spending.” The top three drugs, Abilify, Lantus, and Humira, saw growth in wholesale acquisition costs over five years of 55%, 90%, and 114% respectively.

The report noted that while percentage increases in the price of generic drugs were higher, the actual dollar amounts were higher for name-brand drugs.

The top 10 drugs identified in the Vermont report are as follows:

  1. Abilify – an antipsychotic, for depression, bipolar disorder, and other conditions
  2. Lantus – name-brand insulin for treating diabetes
  3. Humira – an immunosuppressant for treating arthritis and Crohn’s Disease
  4. Enbrel – acts as TNF inhibitor to treat rheumatoid arthritis, among other diseases
  5. Crestor – a statin for treating high cholesterol
  6. Epipen – epinephrine for allergic attacks and asthma
  7. Latuda – an antipsychotic for treating schizophrenia
  8. Prevacid – a proton-pump inhibitor for treating acid reflux and heartburn
  9. Doxycycline Hyclate – an antibiotic for treating infections such as acne and gonorrhea
  10. Permethrin – an anti-parasite drug for treating lice and scabies

Among these, the Epipen has been in the headlines most recently for price hikes and a subsequent backlash against Epipen maker Mylan.

As health care costs–and especially pharma costs–continue to rise, awareness of which drugs are experiencing the largest price increases and which are most expensive is key to managing cost. Vermont’s experience with prescription drugs provides visibility into what is going on in other states and with health insurers and employers offering health insurance.

The issue is clearly on employers’ minds. According to Willis Towers Watson’s 21st annual Best Practices in Health Care Employer Survey, 88% of large employers identified managing pharmacy spending as a top priority in the next three years.

In June of 2016, Vermont became the first state to pass a drug price transparency law, Act 165, which mandates this report.

To read the entire report, click here.

There’s more good news for employers that have chosen to self-insure rather than fully insure their employee health insurance plan offerings. According to recent Willis Towers Watson data, the projected cost increases for self-insured plans for 2017 are just 4-5% instead of 7-8%, which is the rate at which costs for fully insured plans are projected to grow.

These findings are from the Willis Towers Watson’s 2017 Marketplace Realities report, which was cited in a recent article in Employee Benefit News. While the article featured rising health costs generally, it also acknowledged employers’ increasing concern about rising pharmacy costs.

According to the Willis Towers Watson 21st annual Best Practices in Health Care Employer Survey, nearly nine out of 10 (88%) of large employers identified pharmacy spending on high cost specialty drugs as a top priority in the next three years.

“Employers… are motivated because prescription drugs overall account for about 25% of the total cost of employer-sponsored medical benefits and an even larger percentage of growth in the cost of medical benefits,” said Nadina Rosier, North American Pharmacy practice leader for Willis Towers Watson. “Failure to act now could cost employers hundreds of millions of dollars over the next few years and for the foreseeable future.”

The takeaway is that with medical and pharmacy costs continuing to rise, employers that self-insure have more control over plan and program designs and can take action to keep cost increases down. Whether employers’ increased focus on pharma manages to rein in spending growth in that area remains to be seen.

For the complete article in Employee Benefit News, click here.

Employers are increasing their focus on managing prescription drug spending, especially high-cost specialty medications used to treat chronic illnesses.

This finding comes from the 21st annual Willis Towers Watson Best Practices in Health Care Employer Survey, which surveyed 600 U.S. employers about their health program decisions and strategies.

“High price tags for specialty drugs are the main driver of employers more carefully examining their spending on pharmaceuticals and how they manage their employee pharmacy benefit programs,” said Nadina Rosier, North American pharmacy practice leader for Willis Towers Watson.

Previous Willis Towers Watson survey data revealed that nearly 90% of employers have identified managing pharmacy spending as their top priority over the next three years, so we will no doubt see more on this topic as employers seek solutions to manage cost.

For six common strategies employers are using to combat the rising cost of prescription drugs, see the complete press release from Willis Towers Watson here.

According to the Willis Towers Watson 21st annual Best Practices in Health Care Employer Survey, U.S. employers expect their health care costs to increase 5% this year and next with plan changes, and 6% without plan changes. These increases are at historical lows, but slightly higher than in 2015 and still more than twice the rate of inflation.

The survey also found that in the face of these continuing cost pressures, employers will make modest to moderate changes to their plans and programs to manage costs. However, according to Julie Stone, a national health care practice leader for Willis Towers Watson, given employee affordability concerns, most employers will focus on changes to high-cost benefits rather than on changes that would add to employees’ out-of-pocket costs.

The high-cost services that will get the most attention are pharmacy and especially specialty pharmacy, and surcharges for coverage of working spouses who are eligible for coverage from their own employers.

Employers also are encouraging employees to use centers of excellence for specialty care that have proven track records of delivering quality services at less cost. Telemedicine is being adopted by employers as another source of cost savings. In an article in Politico reporting on the survey and employer adoption of telemedicine, Allan Khoury, a senior consultant for Willis Towers Watson, said, “We think the savings are real.”

To read the press release announcing survey results, click here.

To read two articles on the findings, click here for Kaiser Health News and here for Politico.

A trend toward coinsurance over copays results in Medicare beneficiaries paying higher out-of-pocket prices for their prescription drugs. It also makes it harder for seniors to predict costs because drug prices fluctuate.

Unlike copays, which are flat rates, coinsurance rates are based on a percentage of total costs. Coinsurance was previously limited to higher cost specialty drugs, but its adoption in other drug tiers now is increasing.

According to an analysis from Avalere Health, reported in a recent article in Kaiser Health News, more than half (56%) of drugs covered under the Part D Medicare benefit will use a coinsurance model in 2016. Medicare Advantage plans are also making the change, but at a much lower pace. Just 26% of drugs offered through Medicare Advantage plans will require coinsurance in 2016.

Rising pharmacy costs have been a concern not just for seniors on Medicare, but for health care consumers and providers generally. Pharmacy Benefit Managers (PBMs) have been working to manage the rising cost of drugs to avoid passing on higher costs to employees.

To learn more about the Avalere analysis, click here. To read the complete article in Kaiser Health News, click here.

Disease sufferers are increasingly forgoing necessary drugs as the percentage of the cost they are expected to pay continues to rise, according to a recent USA Today article.

This is just one more example of the problems associated with the rising cost of prescription drugs. While headlines tend to focus on the rising cost of specialty pharmaceuticals, such as the Hepatitis C drug Sovaldi and the price hiking of the HIV drug Daraprim by much-maligned former Turing CEO Martin Shkreli, more common drugs are experiencing costs spike as well.

According to Nadina Rosier, North America health and benefits practice leader of pharmacy for Willis Towers Watson, employers that cover these drugs are trying to manage the costs of pharmacy both to protect their bottom line and to avoid having to pass these costs on to employees who need the medications and might not be able to pay.

One strategy for employers, according to Rosier, is to exclude certain expensive, name-brand medications from coverage in order to shift people to less expensive but equally effective generic drugs.

According to the 2016 Willis Towers Watson/NBGH Best Practices in Health Care Survey, ways employers can manage the rising cost of pharmacy include:

  • Adopting a high performance formulary with limited brand coverage (the preference for generics alluded to above)
  • Evaluating and addressing specialty drug cost through the medical benefit (which is often unaccounted for, compared to costs that go through the pharmacy benefit)
  • Excluding compound drugs.

To read the complete article in USA Today, click here.