It’s no secret that rising pharmacy costs are a serious challenge for the health plans, health systems, sponsors and individuals on the hook for paying for them. Our healthcare executive members ranked “Addressing Pharmacy Costs” as #9 on the 2018 HCEG Top 10 list.
How Can Health Plans and Health Systems Address Rising Pharmacy Costs?
On Wednesday, November 13, 2017, Pete Biagioni, Managing Partner at Cumberland Consulting Group, and Marcia Lambert, Partner at Cumberland Consulting Group presented “Strategies to Address Rising Pharmacy Costs,” Cumberland Consulting Group’s entry in this month’s HCEG Webinar Series.
The webinar provided attendees with a lot of great insight and information on the following:
- An overview of trends in growth of pharmacy costs
- Pharmaceutical Distribution Channels
- Drivers of specialty pharmacy spend
- Drug cost management strategies
- What strategies health plans and health systems can implement to address rising pharmacy costs
Trends in Rising Pharmacy Costs
Pete Biagioni kicked off the presentation by highlighting that prescription drug spending is now the largest category in healthcare benefit spending – outpacing specialty care, inpatient and outpatient costs. Pete added that not only is prescription drug spending the largest healthcare expense but it’s also the fastest-growing category of benefit spending!
Largest contributor to increases in rising pharmacy costs are Specialty Drugs – with a 95% increase* in just two years!
How Drug Prices are Determined in the United States
One interesting part of the presentation was Marcia Lambert’s overview of the Pharmacy Distribution and Reimbursement System for Patient-Administered vs. Provider Administered, Outpatient Prescription Drugs in the U.S. Several very detailed and informative slides were shared. These slides identified the product flow, contractual arrangements and financial payments between the myriad of entities involved with pharmacy distribution in the U.S.
Specialty Pharmacy Trends & Drivers of Specialty Pharmacy Spend
A good part of the presentation covered specialty pharmaceuticals, which are growing at a CAGR of 17% as more products are being developed to treat orphan diseases and provide newer therapies. Some specialty pharmacy trends include:
- As more specialty drugs are dispensed, a shift away from the buy-and-bill system (reimbursement through medical benefit) to the pharmacy (reimbursement through prescription drug benefit) can be expected.
- As SPs gain more revenue and market share, they’ll come under more scrutiny and attempts at cost containments from payers.
- The healthcare system’s grudging acceptance of high-priced orphan disease drugs has given manufacturers more incentive to develop low-volume SP drugs.
- The high cost of SP’s will demand more Value-Based/Outcomes-Based evidence
The Cumberland presenters provided an overview of traditional Strategies to Manage Rising Pharmacy Costs and then dived into a LOT of detailed information on the pros and cons of newer, novel strategies for managing pharmacy costs including:
- Comprehensive Medication Review / Medication Therapy Management
- Specialty Pharmacy Coordination & Management
- Outcomes-based Contracting
- ‘DIR’ Fees – Direct and Indirect Reimbursement
The Future – Pharmacy Trends and Government Intervention
This rapid paced presentation moved toward its conclusion with Pete Biagioni sharing a few slides listing some ways that government intervention might impact prescription drug prices. And the webinar completed with a short listing of future trends for prescription drugs in the U.S. The entry of Amazon and mega deals like CVS buying Aetna being two likely major impacts.
The Recording, The Content and More Insight from Cumberland Consulting Group
The above is just a portion of the information presented by our sponsor partner Cumberland Consulting Group. You can learn more about “Strategies to Address Rising Pharmacy Costs” by reviewing the entire recording of the webinar available here. If you’d like more information or if you have any questions on the content of this webinar, please feel free to contact Cumberland Consulting Group. You may also want to follow Cumberland on Twitter.