Top 5 industry challenges of 2016
Challenge #3: Addressing rising pharmaceutical costs
It should come as no surprise that the rising cost of specialty pharmaceuticals is another top challenge for managed care executives. According to Connolly, these rising costs are, in many cases, the number one reason for rising premiums in 2016. And, she cautions, this is likely to remain a top problem in 2016 and beyond. "If you look at the FDA approval pipeline ... there are many more specialty drug approvals that are likely to be coming in the future months and years, so it is indeed a serious problem for everyone involved," she says.
Managed care executives are split, however, when it comes to the best way to address this problem. According to our survey:
24% of respondents said government interference is the best way to address these rising costs;
23% of respondents said integrated pharmacy and medical benefits;
19% said utilization management;
15% said cost-effective pharmacy plan design;
10% said prior authorizations; and
9% said pharmacy benefit managers and specialty pharmacies.
Scott says one response, which he believes might be the most effective solution, is missing from the choices. "... We almost need a new model because we are going to have exponential growth in the next decade of specialized and personalized therapeutic possibilities for really difficult disease states and conditions, and we're going to have to get better at this and public policy is certainly not keeping up with this," he says. "... Our current benefit designs, our current insurance products, our current government program payment mechanisms, they're not going to work and we need new business models to accommodate exponential therapeutic developments and innovations."
Scott says a public/private initiative or program that brings various stakeholders together to address this issue is critical. "I do think that in the short term, new financial arrangements between the key stakeholders—the manufacturers, the health insurance companies, the pharmacy benefit managers, the specialty pharmacies ... [and] new contractual arrangements are probably the best hope," he says. "But over the long term, I'd like to think that smart and well-intentioned people working together can come up with a combination of private sector and government policy moves that can spell the difference. This is a new world and today's PBM contracts, for example, aren't going to get it done."
Connolly says that in efforts to contain rising pharmaceutical costs, clinical outcomes goals for individual patients should be a major focus. For instance, one patient might want to be able to walk his daughter down the aisle at her wedding; another might want to be able to get up and go to work every day, says Connolly. "We need to key in much more on what the patient outcomes are and see that real-world evidence, and then once we understand that, we have the ability to target right therapy to the right patients at the right times," she says. "That means that not everybody is going to get every new thing, but hopefully it's going to be based on who is really going to be able to benefit from something and who's not necessarily, or who should be considering alternatives."