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How to avoid surprises in pharmacy spend

Old strategies and new challenges don’t mix. Future-proof your plan and get better predictability with new pricing models and risk management tools.

May 17, 2024

It is often said that nobody likes surprises. This is especially true for those paying for prescription drug benefits. 

Yet a mix of factors has made pharmacy trend more unpredictable than ever. Where once only a few drugs cost six figures, a flood of new medications entering the market has drastically altered the status quo. The median launch prices for newly marketed drugs in 2023 has risen to over $300,000, a 14,000% increase from 2008.1

While many of these new-to-market drugs are specialty medications intended for relatively small populations, other traditional drug classes are also emerging as drivers of increased spending. GLP-1 medications are a prime example. 

First approved as a treatment for type 2 diabetes in 2005, GLP-1 medications have recently become a standard of care. However, usage of these drugs, which cost more than $1000 per month in the U.S., has surged in recent years as they gained approval for weight loss indications. Moreover, GLP-1 drugs are currently being investigated for new indications including sleep apnea, chronic kidney disease and heart diseases. This could add millions of new users and trigger additional uncertainty for plan sponsors.

Clear Trend Guarantee pricing model

Without question, the marketplace urgently needs bold new ideas. That’s why Optum Rx is dedicated to evolving and creating innovative new choices for plan sponsors.

Nothing shows our commitment to make spending on high-cost prescription drugs more predictable and affordable than our newest pricing model, Optum Rx Clear Trend Guarantee™. This value-based model is designed for clients who want to manage to the lowest net cost with greater predictability in overall plan spend. While clients have historically had separate guarantees for retail discounts, mail service, specialty pharmacy and manufacturer rebates under traditional pricing models, Clear Trend Guarantee combines all of these into a single, transparent client guarantee. 

By synthesizing network contracts, formulary strategy and clinical program guarantees, it affords plan sponsors a clear and consolidated view of pharmacy spend, letting them know exactly what they’re paying on a per member per month or per member per year basis. This new model promotes affordability and unprecedented transparency and is now available for a broad array of Optum Rx clients.

Clear Trend Guarantee is the latest addition to the suite of Optum Rx Cost Made Clear™ models. Introduced in 2023 to complement our traditional payment solutions, these first-to-market models give plan sponsors new options when configuring the pharmacy benefit.

While they differ in composition, all Cost Made Clear models use a simple administration fee. This covers member care and support, benefit setup and administration, client consultation, formulary design, clinical expertise, and safe and affordable medication access. They are designed to better align incentives across the supply chain while providing even greater transparency, simplifying the pharmacy benefit and focusing on lowest net cost. 

"It is more important now than ever before to be an innovator in health care and to drive affordability and value for plan sponsors and members,” says Dr. Patrick Conway, CEO of Optum Rx. “We are not stopping with Clear Trend Guarantee and will continue to deliver clear information, transparent and lowest net cost, choice, and a simplified pharmacy benefit for everyone.”

Risk management approach to gene therapies 

Cost Made Clear models offer new choices for plan sponsors looking to rethink how they address overall pharmacy spend. But Optum Rx is also offering new options that focus on other areas of acute need.

Perhaps no area of pharmacy is in greater need of new thinking than gene therapies. Gene therapies are single-dose treatments with the potential to cure rare and fatal monogenetic diseases, many of which have no cure today. 

Yet this potential comes at a cost. For example, the gene therapy Roctavian was approved in June 2023 for the treatment of adults with hemophilia A, an inherited blood clotting disease estimated to occur in 12 per 100,000 males in the U.S.2 The cost of Roctavian is $2.9 million for a one-time dose.3 Lyfgenia, a gene therapy approved for patients with sickle cell disease approved in December 2023, has a $3.1 million list price.4 

Since the first FDA-approved gene therapy launched in 2017, only a handful have come to market. Most of these gene therapies are for relatively rare diseases, but this may soon change. The drug development pipeline now includes gene therapies aimed at more common diseases, such as macular degeneration and diabetic retinopathy. 

As the number of gene therapies in the market grows, so too does the likelihood that a plan sponsor will incur a multimillion-dollar claim for one of them. The Optum Rx Gene Therapy Risk Protection solution helps plan sponsors manage this risk exposure by replacing the cost of an unexpected, million-dollar therapy with a per member per month (PMPM) fee. Much like homeowners pay fire insurance premiums in lieu of a catastrophic one-time loss, a risk management approach to gene therapies eliminates unwelcome surprises and is more manageable and predictable. Since the risk exposure of each plan sponsor will vary according to the unique compositions of their members, Gene Therapy Risk Protection features client-specific analytics and risk modeling. 

In addition to gene therapies, we are also applying this insurance-based, risk mitigation approach to other expensive drug categories. Optum Rx Specialty Risk Protection is a solution for expensive specialty medications and features a fixed PMPM premium in exchange for specialty claim coverage and cost management programs.

How Optum Rx can help

Our dedication to innovation gives plan sponsors new ways to limit the volatility of covering prescription drugs. Our new breed of pricing models and solutions are designed to help you better manage risk while enabling new levels of transparency and predictability.

Let us help you manage uncertainty in your pharmacy benefit

Related content

Orphan drugs market: Can we afford them?

We examine key questions around orphan drugs such as why they're so expensive, how they're being used and what plan sponsors should do next.

Gene therapies: Can we afford the future of medicine?

Learn how to manage financial risk as gene therapies become more commonplace.

3 steps to slash medication costs

This is your guide to reducing your health care spending.

References

  1. Reuters. Prices for new US drugs rose 35% in 2023, more than the previous year. Feb. 23, 2024.
  2. Thornburg, Courtney D., Simmons, Dana H., Von Drygalski, Annette. Evaluating Gene Therapy as a Potential Paradigm Shift in Treating Severe Hemophilia. BioDrugs, U.S. National Library of Medicine. July 25, 2023.
  3. Liu, Angus. BioMarin's hemophilia gene therapy Roctavian lands FDA nod with 'glimmers' of enthusiasm among doctors. Fierce Pharma. June 29, 2023.
  4. Patchen, Tyler. Bluebird Bio Secures Deal with Large Commercial Payer for Lyfgenia Amid Price Concerns. BioSpace. Dec. 15, 2023.