Facing high price tags of tens of thousands of dollars, businesses are looking for unorthodox ways to pay for pricey, specialty drugs for their workers.
A recent survey of large corporations found that spending on specialty drugs that treat cancer, hepatitis C or other maladies has increased and will continue to do so next year. In light of these results, businesses are thinking over new reimbursement models.
The survey of 140 large corporations with 100,000 or more employees gave insight into the toll of high drug prices. In 2016, companies will spend about 10 percent more per employee per month on pharmaceuticals, according to the survey from the National Business Group on Health.
Specialty drugs that treat chronic conditions such as cancer, multiple sclerosis or hepatitis C are a big reason. The companies will spend nearly 4 percent on traditional drugs and 22 percent on special drugs, the survey found.
One such strategy to reduce these costs is to pursue new models for reimbursing drug companies. A model being bandied about by several companies is to pay for drugs in installments instead of one lump sum, said Brian Marcotte, president and CEO of the group representing large employers such as Boeing and American Express.
Take the expensive hepatitis C cure Harvoni, where an entire treatment regimen can cost up to $100,000. Instead of a company paying that entire amount, it would pay in installments.
The model could help companies that were “caught off guard by how expensive the hepatitis C drugs were going to be,” Marcotte told the Washington Examiner. “There wasn’t really good notification early on and [they] weren’t able to plan accordingly.”
Right now, the reimbursement model is just being considered by corporations and there is no concrete plan to move to it. Marcotte said pharmacy benefit managers that administer the pharmacy portions of insurance plan would have to get on board.
But the biggest one in the country, Express Scripts, was hesitant to embrace the idea. That company fears an employer or insurer could be on the hook paying for the drug of an employee who no longer works there, said spokesman David Whitrap.
“Further, converting high-cost drugs to long-term debt may not be financially helpful for the plan sponsor,” he said.
The benefits manager said negotiating with drug companies for a lower price is a better approach, one Express Scripts has used for several high-cost products.
Express Scripts also floated a different reimbursement model for cancer drugs, which have also skyrocketed in cost.
A company or insurer would establish one price for a cancer medication for a specific type of cancer that has demonstrated significant value. On the flip side, they would pay less for a drug whose value isn’t as clear, said Whitrap.
The model tries to deal with a specific criticism from advocates on the cost of cancer drugs. Some products only offer a marginal boost to overall survival over existing treatments, but are charged much more.
The Pharmaceutical Research and Manufacturers of America declined to comment on the specific reimbursement models. The trade group said that the U.S. marketplace has a history of controlling costs without discouraging innovation.
Companies already use a variety of techniques to try and contain drug costs. The most popular is step therapy, where employees use the most cost-effective drug for a treatment and then only step up to the expensive drug if necessary. About 77 percent of companies surveyed planned to use step therapy in 2016.
About 70 percent of companies next year plan on using quantity limits, which sets a ceiling on pharmaceuticals a patient can take over time.
But while companies may seek to control the costs of such products, Marcotte doubts that they will stop providing the life-saving drugs altogether.
“It is really trying to manage to ensure the right people get them,” he said at a press conference earlier this week. “If you have the drug that is a cure that is a good thing. You want to make sure that it is affordable.”
