Healthcare Plan News asked Robert Ferraro, R.Ph., Vice President of Sales at Paydhealth, LLC, for a statement on costs facing healthcare plans. He echoed the concerns of employers regarding GLP-1 drugs, added some useful color to drug costs, and identified genetic therapies as a new potential cost driver:
“The surging cost of prescription drug benefits remains a primary concern for self-insured health plans. While medical benefit costs remain the biggest line item for these plans, specialty drugs are rapidly becoming another budget buster. Specialty drugs are pharmaceuticals that treat rare, chronic, and complex health conditions and are often considered much-needed breakthroughs for patients.
These complex and potent pharmaceuticals are a game-changer for certain patients. Still, they are only utilized by a minimal number of individuals in any group health plan. Estimates for specialty drug usage is around one percent of members covered by a health plan. Conversely, the cost of these drugs often comprises the majority of overall prescription drug expenditures–routinely exceeding 55 to 60 percent of a self-insured plan’s pharmaceutical spending.
This worrisome explosion in specialty drug costs is intensifying as novel genetic therapies are becoming more available for patients. These next-generation specialty drugs are a radical departure from most traditional treatments, as they are often single-administration therapies for ultra-rare diseases or diseases that are even less common than those treated by specialty drugs. These novel therapies carry single-claim costs anywhere from $700,000 to $4,200,000.
In the not-so-distant past, many self-insured plans believed that gene therapies were too few and that the number of patients needing these treatments would be very rare, given the ultra-low incidence of these conditions. However, this landscape is changing, as the number of gene therapies currently available, plus those in the pipeline that will be FDA-approved within the next two to three years, are translating into sustained cost pressures for self-insured plans in the foreseeable future.
Amidst this specialty drug cost surge, there has been some budgetary relief for self-insured plans due to many patients’ adoption of lower-cost generic drugs. Many medications used to treat more prevalent, non-specialty disease states such as diabetes, hypertension, and high cholesterol are now generic, and utilization rates are now around 80 to 90 percent of patients.
This budgetary relief was swiftly eclipsed by the explosion of GLP-1 drugs, such as Ozempic and Monjaro, which were initially intended for diabetes and are now being widely adopted as weight loss therapeutics. These drugs are not specialty drugs, but they are not inexpensive drugs. Because of the obesity epidemic, weight loss treatments will continue to be extremely common. Not surprisingly, self-insured plans have already seen costs skyrocket, and as these products garner additional FDA indications, cost increases have no end in sight.
There is little doubt that self-insured plans remain under financial assault in the current prescription drug environment. Time-tested cost containment strategies such as generic drug promotion, step therapies, and prior authorization are proving to be largely ineffective against these new challenges. This complex environment is leaving plans with unpalatable and non-employee-friendly alternatives such as wage stagnation, cost shifting, and steep premium increases.”