If recent events have taught us anything, it is to be prepared for the unexpected. While none of us could have fully predicted the dramatic impact of COVID-19 on our families, organizations, and the world economy, hindsight reveals safeguards we might have put in place to lessen the damage.

Ironically, this is a subject I had been wrestling with well before the coronavirus was receiving any attention from the international media. Those of you who follow our firm’s work know we have long been concerned about the growing economic threat posed by rising specialty drug costs to employer-funded health plans and their members. It actually dates back to 2005, when I first learned about a $125,000 oncology drug that didn’t save lives. On average, it only extended life by less than two months of sub-optimal living.

More recently, my concern has been heightened by a growing pipeline of million-dollar plus drugs currently going through clinical trials. Some of these may end up being “miracle drugs.” However, others are likely to be more experimental and questionable regarding their long-term efficacy and value. And I can’t help but wonder what manufacturers would charge for these medications if the Affordable Care Act hadn’t taken the lid off previous $1- and $2-million benefit plan maximums.This is already happening, and these drugs will be very hard for many employer-sponsored health plans to afford. In fact, three of our clients have already faced this challenging predicament.

I know many of you are probably thinking, “That’s why we have stop loss.” But because several of these mega-priced drugs are not one-and-done treatments, your stop loss may not provide the financial protection you think.

With lasering — the common practice of setting higher coverage attachment points for certain plan members based on their prior claims experience or the likelihood that they will become high-cost claimants in the future — this leaves a plan open to an ongoing burden for years to come.

Some of these conditions are also easy to spot before an individual becomes a candidate for a million dollar plus drug. For example, Zolgensma’s non-marked-up price is more than $2.1 million. It treats spinal muscular atrophy (SMA) — a rare disease impacting young children. Once a family has a child with SMA, there is a much greater probability of another child being born with the same condition (an easy exclusion in the next year’s stop loss policy). On top of that, SMA survivors are likely to be high-cost claimants for years to come.While “Be Prepared” may have stood the test of time as the Scout motto since the group was established in 1907, recent events prove we don’t always take that advice to heart. So, what can an employer do to prepare for the imminent surge of high-cost gene and cell therapies? Depending on your service vendors and agreement terms, maybe more than you think. Here are some suggestions to start future-proofing your plan:

    • Educate your executive team, so they understand what’s coming. Senior execs hate high cost surprises. Most HR and benefits people I know also hate to get called on the carpet for an emotional round of “How did this happen?”
    • Develop a management/mitigation strategy just like your company has for dealing with system hacks and data breaches. Odds are your plan will eventually get hit, and you don’t want to be caught flat-footed.
    • Develop an advance warning system with your TPA and PBM. The earlier you know, the better (less surprise equals more options). Being notified prior to approval is best, before it’s provided is still good, or even before it’s paid is still okay.
    • Even better is to develop an early intervention strategy. These are not your normal health plan claims. They are even more unusual than the ever more common six-digit specialty drug claims. Cell and gene therapy claims are seven-digit claims — even multiple seven digits. One stop loss carrier has even suffered a $15 million claim (that is being litigated). In any event, these are not everyday claims and they require special handling. It is kind of like other corporate expenses. A supervisor in accounting may approve most expense reports, but not the purchase of a new building or corporate jet. These things are only approved at the C-suite level.

But you probably don’t have medical or benefits professionals in your C-suite. And your executive team probably doesn’t feel any more qualified to manage these special claims any more than you do. That’s why qualified third-party review is so important.

Many medical providers like to use the “latest and greatest” technology even if it isn’t a perfect fit with the original purpose or better than established and much lower cost treatment alternatives. Some also like to be “the first” and see if a drug might deliver benefits beyond the original FDA-approved application.

Besides determining if it is the right medication for the right patient at the right time, there are often opportunities to source and pay for these drugs less expensively. We have already seen a number of situations where the baseline cost has been marked up by hundreds of thousands (even after so-called network discounts). And, in some situations, we’ve been able to intervene and secure hundreds of thousands in savings through alternative sourcing/pricing arrangements — without delaying needed care.

Other opportunities exist relative to the management of high-cost cell and gene therapies. While not without its complexities and technical challenges, with the right guidance, it is a great opportunity for you as a plan manger to demonstrate how your preparation made a big difference in handling these high-profile situations. Or, I would encourage you to get ready for some very uncomfortable executive team meetings.

Interested in learning more? Contact me at (440) 423-5102 or rchelko@chelkogroup.com.