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Survey Report

Chapter 5 — Pharmacy: Reining in the cost and use of high-cost drugs

2018 Best Practices in Health Care Employer Survey

Benefits Administration and Outsourcing Solutions|Health and Benefits

January 3, 2019

Find out how U.S. employers are managing health care costs and addressing employee wellbeing to achieve a healthy, high-performing workforce.

Employers are aggressively trying to curtail the exorbitant growth in pharmacy costs. Today 42% of employers evaluate their pharmacy benefit contract terms, and that number is set to nearly double to 82% by 2020 (Figure 15). Employers have made progress promoting generic drugs and are now looking to continue that success with stemming the rising costs of specialty drug costs. For example:

  • More than a quarter (26%) of employers have implemented approaches that promote biosimilars as opposed to branded biologic medications, a number that is anticipated to increase to 64% by 2020.
  • Just under a quarter (23%) adopted coverage changes to influence site of care, and this will likely grow to 62% in two years.
  • Similar to the growth of HPNs in medical coverage, 22% are employing high-performance formularies with limited brand coverage and various brand exclusions, a trend that may rise to 47% in 2020.

Figure 15. Employers proactively manage pharmacy benefit costs with particular emphasis on specialty pharmacy utilization

Bar graphs: Employers proactively manage pharmacy benefit costs with particular emphasis on specialty pharmacy utilization

Sample: Based on respondents with at least 1,000 employees

Market disruption: biologics and biosimilars

Biologic drugs are different from typical “small molecule” drugs because they are produced by living organisms rather than chemical synthesis. In the past, biologics were usually associated with treatments administered by medical professionals such as vaccines, blood, tissue and gene therapies — the main exception being insulin. About 20 years ago, the Food and Drug Administration (FDA) approved the first biologic pharmaceutical that was packaged so that patients could administer it themselves: etanercept (Enbrel).

Biosimilars are more complex than “small molecule” drugs, and historically there can be small differences from batch to batch or from manufacturer to manufacturer. The U.S. does not allow interchange of biosimilars, although this is allowed or required in many other countries.

The FDA approved the first biosimilar in 2015, and by July 2018 the number had reached a dozen. However, because of patents, only five are currently available for sale in the U.S.


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