1. 2018 Public Sector HealthCare Roundtable
Specialty Drug Survey
Assessing the impact of Specialty Drugs
on Public Sector health plans
June 12, 2018
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2. Agenda The impact of Specialty Pharmacy Specialty drug pipeline
Public Sector overview
The Public Sector HealthCare Roundtable survey
Specialty Pharmacy framework – Action steps
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3. The impact of Specialty Pharmacy
Specialty Pharmacy is the fastest growing trend in health care
Gene therapy treatments can cost $300,000-$850,000, and 4,000 diseases are linked to genetic disorders
Recent approval of a self-injectable migraine product that costs 10 times more than available oral products
Specialty Pharmacy spend will exceed what employers pay for inpatient hospitalizations
Specialty spend can account for 10% of total health care benefit costs, and will likely double in 3 years
Biosimilars are approved, but are not available due to patent litigation
Traditional utilization management approaches alone will not manage % inflation year over year
Specialty will account for 50% ‒ 60% of Pharmacy Benefit costs
90+% of Specialty claims are approved due to medical necessity
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4. Gene therapies Kymriah Yescarta Luxturna
Emerging approach to treat cancer and other life-threatening conditions
Treatment is customized to each patient through genetic modification of their own cells
Typically one-dose treatments, administered by only select medical centers
Kymriah
Yescarta
Luxturna
Acute Lymphoblastic Leukemia
$475,000 / treatment
B-Cell Non-Hodgkin’s Lymphoma
$373,000 / treatment
Specific variation of retinal dystrophy
$850,000 / treatment
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5. Specialty drug pipeline, first half 2018
Drug Name
Condition
Approval Date
Medical/Pharmacy
Estimated Annual Cost
Fostamatinib
ITP
4/17/18
Pharmacy (oral)
$300,000
Entinostat
Breast cancer
6/30/18
$120,000
Binimetinib/Encorafenib
Melanoma
$110,000
Tildrakizumab
Plaque Psoriasis
3/24/18
Pharmacy (injectable)
$55,000
Baricitinib
Rheumatoid arthritis
Erenumab (Aimovig)
Migraine
5/17/18
$10,000 - $20,000
Elagolix
Endometriosis
4/28/18
$7,000
Andexanet alfa
Factor Xa inhibitor antidote
5/4/18
Medical (IV infusion)
$3,500
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6. Public sector overview
22.3 million Public Sector workers are employed at the Federal, State and Local level
Over 15% of the American workforce is employed by the public sector
Offer health care coverage to employees and retirees at a higher rate than other domestic industries
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7. 2015-2018 Public Sector HealthCare Roundtable Surveys
Conducted in partnership with the Michigan Office of Retirement Services, Willis Towers Watson, and the Public Sector HealthCare Roundtable
Formally conducted twice over the last three years
Plan Sponsors
health insurance plans
Over 95
in pharmacy drug spend 19
$6.7 billion
lives
in Specialty drug spend
5,000,000
$2 billion
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8. Reasons for conducting these surveys
Quantify the impact of Specialty Drugs
Share results and experiences with similar plans
Collaborate on innovative strategies to address the challenge
Convey the scope of the environment to those in a position to make a change
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9. Most recent survey results
2015 to 2016 trends
Total Drug trend averaged 7.9%
Traditional Drug trend averaged 2.4%
Less than 2.0% of claims were for Specialty Drugs
Specialty Drug trend averaged 17.1%, but a quarter of plans exceeded 24%
Three year average for Specialty Drug trend exceeded 26% annually
This Specialty Drug trend adds more than $210 million in additional costs for 11 plan sponsors
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10. Specialty Drug trends for 2018 Survey
3 year average exceeds 26.7% annually
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11. Most recent survey results
Plan Sponsor Concerns
of plans are concerned about increased financial hardship of members due to higher cost sharing
of plans are worried about the uncertainty of their organization’s ability to continue providing a high-quality health plan
of plans are concerned about medical complications due to decreased medication adherence
91%
82%
82%
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12. Most recent survey results
Controlling costs
Respondents already using targeted strategies to control Specialty drug costs
100%
Use Prior Authorization across all, or some, Specialty Categories
100%
Use exclusive or carve-out Specialty Distribution
82%
Use a separate copay or coinsurance tier for Specialty Medications
63%
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13. Specialty Pharmacy framework — Action steps
Managing the high cost of Specialty pharmaceuticals requires Plan sponsors take a multi-prong approach in addressing all of the levers influencing the price of these products, what products patients take, and where they access them
Negotiate Price
Tighten Formulary
Optimize Site of Care
Negotiate aggressive exclusive discount guarantees
All inclusive rebate guarantees with disclosed inflation caps
Trend and savings guarantees
Performance guarantees
Exclude “me too” products in high-cost therapy categories (e.g., rheumatoid arthritis, multiple sclerosis, anemia)
Cover all generics and biosimilars with limited brand coverage
Step therapy protocols requiring use of generics or biosimilars
Route prescriptions to the lowest net cost site of care across major infusible therapy classes (e.g., IVIG)
Specialty Pharmacy
Narrow Retail Network
Physician Office
Home Infusion
Restrict access to high-cost sites of care to pre-certification approved exceptions
Ensuring that patients are receiving the right drug at the right time at the right dose is essential to managing total health care costs associated with these products and conditions
Ensure Quality Care
Manage Utilization
Narrow Physician Network
Leverage outreach to members who are filling prescriptions for the first time
Establish regular follow ups to ensure members are leveraging low-cost drug options
Review co-morbidities and route patients to wellness and disease management programs, as appropriate
Require prior authorization for all specialty drugs
Develop consistent criteria and pre-certification protocols across medical and pharmacy benefits
Introduce split fill protocols across oral products
Reduce self injectable days supply to 30 – 60 days
Develop low-cost physician network with aggressive fee schedule to dispense select specialty medications
Members are routed through plan design and health plan protocols to Preferred Physician Specialty Network
Monitor regular physician benchmarking
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14. Policy Considerations
Fast-tracking of biosimilar or generic alternative drugs to market to promote further competition at a lower cost.
Reduce the market exclusivity period for brand biologic products to allow for increased competition (Improving Access to Affordable Prescription Drugs Act, S. 771).
Increase funding for private and public research efforts on comparative effectiveness
Bring greater transparency to prescription drug pricing to encourage pharmaceutical manufacturers to publicly disclose production costs, including research and development investments, and discounts to various payers for specific high-cost drugs.
Ensure public programs can take advantage of recent developments in value-based purchasing to ensure all parts of the U.S. health care system can benefit from market-based negotiating efforts to lower drug prices. 
Address spending on direct-to-consumer advertising by pharmaceutical companies to eliminate unnecessary and inappropriate utilization.
Encourage contingent pricing for drugs, tying cost to effectiveness and focusing on reimbursing based on efficacy where it truly exists.
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15. Disclaimer
Willis Towers Watson and members of the Public Sector HealthCare Roundtable have prepared this document for the Public Sector HealthCare Roundtable. This document contains proprietary material and should not be reproduced, either in total or in part, circulated, or quoted from without the express permission of Willis Towers Watson.
© 2018 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.