It was good because I actually heard things that I’d never heard discussed around specialty pharmacy before. And, as he pointed out, specialty will represent 50% of the pharmacy spend and about $235B in total spend by 2018. This is where everyone is focused and the opportunity for differentiation exists.
- He talked about how to get to zero trend in specialty.
- He talked about the consumer experience in specialty.
- He talked about care coordination and its value in specialty.
- He talked about the need for a beyond the pill approach by the specialty pharmacy.
So, what does all this mean? Let me share some highlights:
- Specialty pricing is starting higher based on government pricing constraints. You can’t raise price. It’s easier to start high, discount, and/or come down over time.
- Pharma is beginning to price based on Quality Adjusted Life Year (QALY).
- 3.6% of patients drive 25% of costs (not a surprise)…but 43% of their total costs are not from the specialty condition but from their co-morbidities. (Why treating the patient not the condition is critical.)
- Site of care (which is the hot buzz today) can save you 17% or more.
- Developing an exclusion formulary is important to counteract copay cards and help reduce costs.
- They are moving from 12-month contracting with pharma to 2-3 month contracts to really keep on top of market conditions.
- Coordinated care can drive lower costs in terms of readmissions and other total medical costs.
- You can use generics to replace biologics. For example, he showed switching out an HIV biologic costing almost $3,000 / month with 3 generics costing $101 per month. (I’ve never heard anyone else talk about this.)
- He also reinforced the fact that today’s specialty benefits are not coordinated across medical and pharmacy. For example, he used the RA example where there are 9 drugs with 4 of them commonly used under the medical benefit and 5 under the pharmacy benefit.
But, the most important thing was their strategy to get clients to ZERO TREND for specialty pharmacy. (It reminded me of the program I developed at Express Scripts where we actually guaranteed a 3-year zero trend…if you followed our very aggressive recommendations.) He outlined the following:
- 1.5% savings from their formulary
- 0.5% savings from an exclusive specialty network
- 1.9% savings from an aggressive generic policy
- 1.0% savings from innovative pricing
- 3.6% savings from optimizing site of care
- 2.5% savings from medical claims editing and repricing
- 6.0% savings from enhanced prior authorization
He also went on to talk about the consumer experience. I think a lot of specialty pharmacies are thinking about the same things, but there were several things he shared that were new to me. It was exciting.
As I’ve said before, as specialty pharmacies really start to think about the patient and focus on the experience over time, we will start to see more coordination with pharma about going beyond the pill and driving lower total costs.