Employer Trends in Oncology and Specialty Pharmacy

Wednesday, September 2, 2015

Recently, our members took part in a FLHCC webinar focusing on the trends in specialty pharmacy and the growth in oncology medications.  The information shared by our hosts from Magellan Rx Management and the Midwest Business Group on Health (MGBH) provided a glimpse into the future of pharmacy costs as part of overall benefit spending by employers.

The prescribing and use of specialty medications is on the rise, with no end in sight.  There are several factors contributing to this trend.  One of the most apparent is our growing, aging population who have illnesses or conditions that require a variety of specialty medications.  In the U.S. 20% of patients now take at least five or more prescriptions on a daily basis.  Another is the number of specialty drugs in the pipeline that are scheduled to come online in the next few years.

Drug costs are rising faster than the U.S. inflation rate.  The research, development and manufacturing involved in bringing a specialty drug to market costs much more than traditional drugs, making for a higher cost per unit.  It is predicted that by 2020 specialty drug costs will account for almost $225 billion, with nearly $74 billion of that going toward oncology spend.  Based on data from the Magellan Rx Management 2014 Medical Pharmacy Trend Report, the total drug costs for overall oncology care today account for more than 52% of all medical drug spending.  Still, most employers groups - almost 64% - do not have a good grasp of how much are spending in this area.

In the 2014 Annual Employer Member Survey conducted by the MBGH, when asked about their priorities in the next 12 to 24 months, 92% of respondents indicated that reducing costs was their highest priority, followed closely by managing specialty drugs, avoiding the 2018 Excise Tax, and creating a culture of health.  When it came to specialty drugs, 96% of respondents indicated that their increasing pharmacy costs were the number one concern, 90% said that new and innovative solutions are needed to control spending, and 78% were planning to shift more of the cost to employees.

As the MBGH stated, “Employers continue to seek solutions to better manage health care costs and the health of their covered populations.  Some are focused on streamlining business processes, while others are looking at an overall strategy that includes benefit design innovation that supports improved outcomes.”

We’ll continue to follow this issue and keep you, our valued members, informed of trends and the work FLHCC and our partner organizations throughout the U.S. are doing to keep specialty drugs affordable and accessible for those we cover. 

Karen van Caulil 9/2/2015

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