Specialty Drug Spending Up 62.3 Percent Over Four years

Prescription Costs Represent 29 Percent of All Health Care Spending

On Nov 14, 2018

Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) revealed that spending on branded specialty drugs – those used to treat complex, chronic health conditions that can require special handling, administration or monitoring – increased by 62.3 percent between 2013 and 2017. While those specialty drugs represent between 4-6 percent of prescriptions issued for branded drugs, they account for between 32 percent and 44 percent of the total spend on branded drugs.  Prescription costs overall now account for 29 percent on average of Horizon’s total health care spending and are rising faster than any other component of claims (physician services, inpatient, outpatient, prescriptions) driven by the substantial increase in spending on these branded specialty drugs.

Horizon BCBSNJ’s findings are consistent with those contained in a “Health of America Report” on Prescription Drug Costs, released by the Blue Cross Blue Shield Association. The Association found that among commercially-insured members of Blue plans nationally, branded specialty drugs made up 3% of branded drug prescriptions filled, but accounted for 34 percent of total branded drug spending.

“Prescription drugs play an essential role in effectively treating people with very serious and significant illnesses, but their high cost is felt by everyone who pays a health insurance premium. Horizon has devoted considerable resources to programs designed to manage and contain overall drug spending, but this challenge requires that everyone who plays a role in health care join the effort to lower drug costs,” said Kevin P. Conlin, chief executive officer at Horizon BCBSNJ. “Just as we are collaborating with our value based providers to improve quality and lower costs, effectively addressing the cost of prescription drugs requires a multi-stakeholder approach that includes pharmaceutical companies, policymakers, payers, doctors, employers, and patients.”

“Pharmaceutical discoveries have changed medicine for the better.  But we are going to have to come together to find a better way to pay for drugs that cost tens of thousands of dollars a month or hundreds of thousands of dollars for a course of treatment,”  added Allen Karp, Horizon’s executive vice president for Health Care and Transformation Management.  “Patients can play a critical role in controlling drug costs by asking their doctor or pharmacist whether generic or other lower cost drugs are available when getting a new prescription.  For the overwhelming majority of prescriptions written, a lower cost alternative is available.”

Horizon BCBSNJ has implemented programs to manage and contain drug costs that approach the challenge from every direction:  supplier, prescriber, and patient. The company is also exploring new ways to reduce confusion in the drug distribution chain including a shift that would enable members and not just plan sponsors to directly benefit from discounts and rebates offered by wholesalers, and manufacturers. A recently launched drug price transparency tool provides patient-specific drug and alternative cost information to prescribers at the point of care to lower drug and administrative costs. These programs exist in addition to those aimed at combatting New Jersey’s opioid crisis.

Other programs in place include:

• Health system collaboration — Horizon BCBSNJ works collaboratively with value-based providers to align drug formularies, develop biosimilar strategies, engage in case management for high risk patients, and promote lower-cost agents to reduce total cost of care.
• Case management — Horizon BCBSNJ pharmacists identify high-risk/high-cost members and deliver effective clinical, intervention to help improve health outcomes.
• Fee schedules —  Horizon BCBSNJ aligns interests with prescribing physicians and to move the drug mix towards more cost-effective cost agents when clinically appropriate.
• Pipeline and trend management – A Pharmacy and Therapeutics (P&T) Committee meets quarterly to manage drug pipeline and trend through selection of drugs on formulary, approval of policies, utilization reviews and drug safety updates.
• Pharmacy and medical drug formulary – Horizon BCBSNJ utilizes a drug formulary for prescription drugs through both the pharmacy and medical benefit to promote utilization of drugs that offer the greatest overall value based on clinical evidence and safety.
• Drug utilization evaluations (DUEs) — Horizon BCBSNJ conducts retrospective analyses to review utilization of medications to better understand real-world efficacy, adherence, and safety in the Horizon BCBSNJ population. DUEs can also identify trends in prescribing, utilization changes, members that may benefit from case management, and health outcomes with particular medications.

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