Biotechnology Healthcare - June 2008 - (Page 54) ics are introduced for less essential conditions, such as psoriasis.” Looking at 15 large companies — the kind that would be expected to have deep pockets that could cover generous benefits — the study also found that, in 2006, more than 10 percent of cancer patients were left on the hook for an average of $18,585; 5 percent had to cover an average of more than $35,000, with the same experience repeated for kidney disease and RA. “We found that coinsurance did not significantly affect the level of spending once a patient initiated specialty drug use,” the study concluded. “What is most striking about these results is how inelastic demand is— that is, how insensitive patients are to price — in comparison to traditional pharmaceuticals, for which it is not uncommon to see responses of 30 to 50 percent when copayments are doubled.” The best way to manage biologics, Rand’s study concluded, was to make an extra effort to ensure that the right person was getting the right therapeutic. But, as increased cost sharing didn’t reduce the utilization of drugs — steering people away from expensive therapies they might not need — it made no sense to simply transfer the financial burden to the patient. But that’s just what benefit consultants are seeing. CARVE IN OR OUT Pennie Hinds has seen employers grapple with the biologics trend first hand. And most simply don’t have a clue how to proceed. “The employers in the middle market, those with 250 to several thousand workers, don’t have the internal means to evaluate the effectiveness of these injectables,” says Hinds, senior vice president of A “clinically nuanced” approach will make it easier for employees to gain access to high-value therapeutics that consistently have produced health benefits, says Mark Fendrick, MD, of the University of Michigan. Hilb Rogal & Hobbs, a national insurance brokerage group based in Hunt Valley, Md. “They’re relying on pharma benefit managers and health insurers to make those decisions.” Most of the companies Hinds works with have evaluated, but not taken, coinsurance arrangements that can leave employees shouldering a heavy cost. Often, that coinsurance shifts 20 percent of the drug cost to workers. Sometimes there’s a cap, and sometimes there isn’t. “It’s not ideal. Most employers want to provide their employees with coverage that improves health outcomes and limits their financial exposure, which is the whole point of why we have insurance,” adds Hinds. “Arbitrarily passing along higher costs to employees for drugs seems counterintuitive to that type of strategy. Most of the reaction in terms of isolating these drugs — coinsurance with workers paying a greater percentage — is driven primarily by cost and not health outcomes. Some employers have to make these decisions based strictly on economics. At HRH, our approach is to balance the cost and benefit, but it’s a tough question. There’s no easy answer.” “The knee-jerk reaction for a lot of employers is to try and extract more member share because of their cost,” offers Kevin DeStefino, a pharmacist and consultant with Watson Wyatt, a global benefits consulting firm. “I’ve seen employers create a fourth tier specifically for biotech medicines. It flies con- 54 BIOTECHNOLOGY HEALTHCARE · MAY/JUNE 2008 Ben Colman
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