Dive Brief:

• Willis Towers Watson's Rx Collaborative, an employer-based pharmacy benefit group purchasing coalition, disclosed in a statement to HR Dive that 40% of its total drug costs were spent on specialty drugs that accounted for less than 1% of its prescriptions in 2018. It also noted that the top 10 drugs by cost made up a fifth of its pharmacy spend that year.
• At 20% of the employers' overall healthcare costs, pharmaceutical costs represent a large portion of their spend, Nadina Rosier, head of WTW's pharmacy practice, said in the statement. The coalition reported a steady decrease in drug price inflation rates over the last three years: 3.5% in 2018, 4.2% in 2017 and 6.8% in 2016.
• The top three drugs ranked in total cost were "specialty injectable immunotherapy drugs indicated for conditions that include psoriatic arthritis, rheumatoid arthritis and Crohn's disease," per WTW. "It's the specialty drugs that ultimately drive higher costs," Rosier said. "Across our coalition, half of the top 10 medical conditions by drug spend were treated with specialty drugs."

Dive Insight:

A tension in healthcare strategy has emerged as businesses deal with increasingly higher costs while ensuring the well-being of their employees. "Companies are making more investments in the health and well-being of their employees," National Business Group on Health (NBGH) president and CEO Brian Marcotte told reporters at a press briefing last week. Healthcare spend isn't just about rising prices — it's about making sure workforces are engaged and productive, Marcotte said.

Specialty pharmacy has long been a persistent high-cost component of healthcare plans. Such drugs account for as much as 36% of all drug costs, according to 2018 research from the Employee Benefit Research Institute. Employers often struggle to get these costs down, though research released last week by NBGH found employers are looking to specific strategies, such as prior authorization for specialty medications and site-of-care management, as part of their efforts.

Pharmaceutical rebates may also play a role in addressing costs: 18% of employers surveyed by NBGH said they had rebate programs that passed on savings to employees at the point of sale as of 2019, and 40% said they were considering implementing such programs for 2021 or 2022.

Still, expenses are driving employers to adopt other creative solutions to control healthcare costs. A survey from the International Foundation of Employee Benefit Plans revealed employers' top cost-cutting methods include: 24-hour nurse advice lines for employees; prior authorization requirements to determine whether a treatment is medically necessary; telemedicine; and healthcare claims utilization analysis, which helps identify the top health concerns for employees.