Managing the Specialty Drug Cost Challenge: Is Your Pharmacy Benefits Strategy Ready for 2025? – MedCity News

Medicine stands at a remarkable crossroads. The explosive growth in specialty drug development marks a new golden age of therapeutic innovation. In 1990 there were just 10 specialty drugs on the market. By the middle of 2024, the FDA had already approved 23 new drug therapies, with specialty medications now representing 75% of all drugs in development. These breakthroughs offer fresh hope for patients battling rare cancers, autoimmune conditions and other life-threatening diseases while transforming life for millions living with chronic conditions like Crohn’s Disease and rheumatoid arthritis.

Yet this medical renaissance comes with staggering costs. At a time when healthcare expenses are projected to surge 8% to historic highs, specialty drug prices are pushing many employers to their financial limits. The average annual cost per specialty drug now exceeds $5,000, while immunosuppressants like Humira^® (Adalimumab) — one of the world’s best-selling drugs — command on average $77,000 per patient annually. Many cutting-edge therapies now carry price tags in the hundreds of thousands, with the most costly one-time curative treatments topping $1 million.

Alongside these clinically validated specialty drugs — all designed to address serious, often life-threatening medical conditions — are a new set of high-priced drugs that blur the lines between medical and cosmetic treatment. Glucagon-like peptide-1 agonists (GLP-1s), originally developed for diabetes management and cardiovascular health, have rapidly become go-to treatments for weight loss and obesity, driven by celebrity endorsements and aggressive direct-to-consumer marketing. With an estimated 2% to 12% of the U.S. population already having tried GLP-1s, employers face a daunting challenge. Considering it costs $16,000 for a year’s supply of market-leading Wegovy®, it’s clear this trend threatens to overwhelm already-strained healthcare budgets.

An urgent need for strategic action

Employers across the spectrum are scrambling to develop benefits strategies that balance evolving member healthcare needs against increasingly unsustainable costs. Specifically, nearly two-thirds of consultants are seeing a rise in demand for guidance on specialty drug cost management, as revealed by the 2024 Benefits Consultants’ Sentiment Index (The Index), a survey conducted by MedCity News and Quantum Health.

The rapidly changing GLP-1 landscape only compounds this challenge. According to The Business Group on Health’s 2024 report, 67% of large employers now cover these medications, with more planning to add coverage within the year. 

Facing these pressures heading into 2025, what concrete strategies should employers pursue to control rising costs while ensuring the best member experience and clinical outcomes?

Independent utilization management: Bending the specialty drug trend

The cornerstone of any effective pharmacy benefits strategy lies in proactive utilization management. The right navigation platform with the right capabilities can go a long way to mitigating costs. You need to combine a robust navigation platform with independent care coordinators who serve as central connectors between employers, PBMs, prescribing providers and members. A platform with unique access to real-time data and insights makes it possible to intervene early for prior authorization reviews to proactively anticipate specialty drug requests and potentially change the trajectory of care before a claim is filed.

Through rigorous application of authorization protocols and armed with the right data, independent care coordinators can review medication requests against a strict set of criteria to ensure that dosage and frequency align with clinical guidelines; treatments meet established coverage criteria; alternative therapies have been thoroughly explored; and member-specific factors, including side effects and drug interactions, are carefully weighed. The resulting impact of this proactive utilization management strategy can be significant. A 2023 Quantum Health study of 1.8 million of its plan members across 200 employers demonstrated the potential for such a strategy. While 98% of reviewed specialty drug requests analyzed received approval, by mitigating wasteful, clinically inappropriate spending the average employer realized $1.37 per member per month (PMPM) in savings — for a total annualized savings of $35 million across employers.

Biosimilars — lower-priced medications that are highly similar and as safe and effective as reference biologic drugs — offer another powerful cost-control lever. These FDA-approved alternatives cost on average 50% less than reference drugs, potentially saving $180 billion industry-wide over the next five years. Independent healthcare navigation can leverage the unique ability to engage with both members and providers to accelerate adoption of these innovative alternatives, leading to significant cost savings.

Site of care: Shifting treatment to the right place for the best member experience

After ensuring appropriate specialty drug access through utilization management, determining the most optimal administration settings becomes crucial. In another analysis, 220 drugs were identified — representing 63% of clients’ specialty drug costs — where hospital-based administration isn’t clinically necessary or cost-effective. In 91% of eligible cases, transitioning member treatments to lower-cost settings like medical offices or homes was shown to reduce treatment costs by 48%. 

On top of cost savings, employers cannot undervalue the improved health experience and productivity impacts that result from shifting members’ sites of care. Consider a member we’ll call Edward who works as a clinical director for a large medical device company. At the age of 34, he began to experience worsening digestive issues, including abdominal pain, diarrhea, fever, fatigue and joint pains, and was diagnosed with Crohn’s disease — a life-altering diagnosis for a busy professional. He now needed treatment with a complex and costly specialty medication to manage his symptoms of abdominal pain and fatigue while staying focused and productive in his role and career. 

His gastroenterologist started Edward on Entyvio® (vedolizumab), which required him to travel every 8 weeks to an outpatient hospital setting. He responded well to the treatment and saw a dramatic improvement in his symptoms. Leveraging data from a healthcare navigation platform, independent care coordinators were able to identify an opportunity to move his treatments to his home. This shift not only reduced costs for both him and his employer but made it possible for Edward to live with and manage his condition without compromising his busy work schedule. 

The GLP-1 access challenge: Navigation and member engagement are critical

The unprecedented demand for GLP-1s presents benefits leaders with another set of complex utilization management challenges. While these drugs show remarkable promise — offering transformative benefits for diabetes, cardiovascular disease kidney disease and severe obesity, with potential applications in addiction treatment — their widespread adoption for general weight loss requires careful oversight. Recent research underscores the importance of thoughtful management: A recent JAMA study identified rare but serious risks, while another study revealed that early discontinuation can negate clinical benefits entirely. As GLP-1 demand grows, these and other complex considerations and variables can only be tracked and managed through an expert navigation partner and platform capable of wrap-around member and provider engagement. 

Preparing for a promising, but costly, new era of specialty drug development

Heading into 2025, the specialty drug pipeline continues to expand exponentially, driven particularly by emerging cell and gene therapies (CGTs). By 2027, projections suggest 2% to 3% of members will use specialty medications, accounting for 56% of employers’ total drug spend. GLP-1 development maintains similar momentum, with over 120 new formulations in development as of April 2024. Meanwhile the market for quick and easy weight loss solutions shows no sign of abating.

Success in the year ahead, and beyond, will require benefits leaders to rethink and future-proof their benefits programs and seek out navigation partners that have the capabilities required to manage both sides of their specialty pharmacy costs. By implementing robust utilization management, optimizing treatment settings, and partnering with independent navigation experts with wrap-around care management, employers can ensure members have access to revolutionary treatments while keeping costs sustainable.

Photo: JPLDesigns, Getty Images

Dr. Stanley Crittenden has an unwavering focus on clinical excellence and is deeply passionate about doing his part in improving the healthcare system for all. As chief medical officer for Quantum Health, Dr. Crittenden is responsible for Quantum Health’s Clinical Strategy including Utilization Management, Pharmacy and Clinical Programs, enhancing Quantum Health’s existing clinical operations and strategy along with its growing its value-based care programs and clinical focus.

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