Specialty Pharmacy

Optimizing SP Programs Is Key to Clinical, Financial Success

Reprinted from the December 2007 issue of SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers manage costs more aggressively and deliver biotechs and injectables more effectively.

For health plans, getting a specialty pharmacy program up and running is only half the battle in controlling the rising costs of specialty pharmaceuticals. Ensuring that the programs are running as effectively as possible in order to produce the best outcomes — and making changes when they are needed — is critical to success.

According to Debbie Stern, vice president of managed care consulting firm Rxperts, payers have four overarching goals in specialty pharmacy management: optimizing cost management, ensuring appropriate use, improving clinical management, and equalizing the pharmacy and medical benefits. Insurers must "focus on what's most important to them, but these are applicable overall," she said.

Stern, one of the speakers in the Oct. 17 AIS audioconference "Optimizing Specialty Pharmacy Benefits: Strategies for Health Plans," discussed various cost-control tactics — including network management, member cost share, quantity restrictions and managed formularies — and utilization methods — such as prior authorization, therapy or case management, and patient, physician and employer education — that plans can use to manage specialty pharmacy drugs.

"Managing specialty drug cost and utilization is challenging and time-consuming, but implementing proactive strategies now will yield significant long-term results," Stern said.

Citing data from the third annual edition of the EMD Serono Injectables Digest, Stern noted that while plan use of specialty pharmacy providers remains high — at about 75% in 2005 and 2006 — the actual percentage of prescriptions driven to these vendors remains low. "Mandatory specialty pharmacy provider [use] is typically found in more highly managed plans," she said. But, she added, she has begun to see this changing, as "more payers are looking at mandating use [of specialty pharmacy providers] for some or all of the specialty pharmacy therapies."

BlueCross BlueShield of Tennessee (BCBST) has about 2.4 million members, and about 1.4 million of those have pharmacy benefits, according to Robert Giles, Pharm.D., senior manager of formularies and specialty pharmacy. In 2006, BCBST spent $219.3 million on specialty pharmacy costs.

The plan has overcome various "bumps in the road" as it has fine-tuned its specialty pharmacy program, said Giles. As new specialty pharmaceuticals hit the market and already-approved drugs gain new indications, the plan is constantly updating its list of available therapies. "Getting out information to physicians is critical," he said. Educating new staff members — especially those at the three specialty vendors the plan uses — on the variations in how BCBST's benefits are applied has been a challenge as well, he said. In order to test staffers' benefits knowledge, Giles said he has called the vendors' customer service departments and pretended to be a member calling about his benefits. Sometimes BCBST made calls with a representative from those companies listening in as well. "That caused some embarrassing moments, but it allowed them to make some changes," he said. Performance guarantees — with monetary penalties imposed if the guarantees are not met — are also part of the vendors' contracts.

Marketing the program's incentives to plan members and physicians has also been key to its success - "spin the positive," said Michael White, Pharm.D., manager of pharmacy care management at BCBST. The plan offers a copayment incentive for patients who use preferred vendors, but it applies a penalty of a double copay when patients use a non-preferred vendor. On provider-administered specialty drugs, when physicians purchase drugs through buy and bill, the physician is responsible for collecting both an office copay and a drug copay. If, however, the provider purchases the drug through one of the insurer's preferred specialty pharmacy vendors, the vendor collects the drug copay.

"It is important for physicians to realize that they don't need to stock these high-cost medications," said White. He said he's found that "many [physicians] don't want to do this anymore anyway." "They are reluctant to inventory a product when they don't know if they'll get paid for it," Giles said.

BlueCross BlueShield of Minnesota (BCBSMN) took somewhat of a different approach to its specialty pharmacy program than other plans take, said Al Heaton, Pharm.D., director of pharmacy. But education was just as important to BCBSMN as it was to BCBST.

In prescriptions per member per year (PMPY), BCBSMN sees about 98.8% utilization of its drug benefit on the non-specialty side, with an average cost per prescription of $51.03. But while specialty utilization is "not much," he said —1.2% — the PMPY average cost per prescription is $733.61, an amount that "gets everyone's attention," Heaton said.

"About four years ago, we started looking at the medical side rather than just the pharmacy side," said Heaton. Based on the analysis, the Minnesota Blues plan decided against changing its benefit design — an approach that many plans choose to take — and instead found it was easier to create an exclusive network of specialty pharmacy providers, he said.

In BCBSMN Network, Drug Is Commodity

In this structure, "the drug becomes the commodity. We want to pay the same for the drug regardless of where it's administered," he said. The network, which includes four specialty pharmacy providers, was "built on clinical criteria, not medical costs," he said. Joint Commission International accreditation was the first attribute that the insurer looked for in potential vendors. According to Heaton, "some physicians were surprised to see that the vendors they were using were not accredited."

Members utilize a closed network of pharmacies. If a member were to go to a pharmacy outside the network for a specialty drug, the claim would be rejected and the member would be informed of the pharmacies he or she could use. If the member still chooses to go outside the network, he or she would be responsible for 100% of the cost of the drug, said Heaton.

Heaton shared data on the combined medical and pharmacy benefit specialty trend over the past few years. In 2004, specialty drugs that fell on the pharmacy side had a per-member-per-month (PMPM) average cost of $5.84, compared with $7.57 on the medical side, he said. In 2005, pharmacy was at $6.61 PMPM, while medical was at $7.89 PMPM, and in 2006 pharmacy was $7.22 PMPM, with medical at $8.10 PMPM. "In the first half of 2007," said Heaton, "the numbers are pretty much 50-50." In 2004, the combined total paid from the two benefits for specialty drugs PMPM was $13.41, which increased to $14.50 in 2005 and $15.33 in 2006.

BCBSMN, he said, must "balance the fact that we want the drug to be seamless across all administrative sites and that we may pay more for administrative services at any one of these providers."

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