Transforming Biologic Spend: A Proactive Payer Approach

Biologic therapies represent monumental scientific breakthroughs, providing life-changing treatments for complex ailments ranging from advanced cancers to persistent autoimmune disorders. However, the triumph of innovation is shadowed by a steep financial reality: these therapies are consuming a disproportionate and rapidly expanding share of U.S. drug expenditure.

Despite comprising a mere 2% of all available medications, biologics are responsible for nearly 40% of the nation’s drug spending. This enormous cost is driven by several factors: their high introductory prices, consistent price increases over time, and the significant delay in adopting lower-cost biosimilar alternatives.

This situation presents a complex financial challenge. payers and pharmacy benefit managers (PBMs) may find themselves inadvertently favoring expensive brand-name biologics — a result of the sizable rebates attached — rather than actively promoting less expensive biosimilar equivalents. Furthermore, many organizations lack the necessary, data-backed management strategies required to effectively control rising utilization and guide patients toward more cost-efficient therapeutic options.

Unlocking Savings Through Data Intelligence

Fortunately, the solution to reversing this trend is often hidden within the payers’ existing operational data. By thoroughly interrogating claims data and utilization management (UM) patterns, organizations can precisely identify when, where, and how biologic spending can be optimized without compromising the quality or efficacy of patient care. Merging these data streams is essential for containing healthcare costs, strategically allocating resources, and curbing fraud, waste, and abuse (FWA).

A Case Study in Part B Cost Containment

A recent consulting engagement by Sagility with a smaller northeastern plan showcased the dramatic savings possible through meticulous data analysis. The Sagility Consulting Team — a collaboration of clinicians, data scientists, and UM experts — applied specialty-specific metrics to their Part B drug spend to ensure all treatments adhered to optimal, evidence-based outcomes.

The initial analysis of the plan’s $68 million Part B drug expenditure revealed a critical concentration of spending:

• Monoclonal antibodies (mAbs) alone accounted for a staggering $42 million, representing more than two-thirds of the total Part B drug costs.
• The drug pembrolizumab was identified as the single highest cost driver, consuming 12.5% of the total Part B drug budget.
• Significant issues with appropriate utilization were uncovered, even within a relatively small patient cohort (under 800 members). For example, excessive dose units were administered for 10 out of 12 of the top-spend mAbs.
• Furthermore, treatment regimens were found to deviate from established US Food and Drug Administration (FDA) guidelines for efficacy and safety, as well as from national standards of care.

Designing an Effective Cost Optimization Strategy

By applying targeted, evidence-based intervention levers to address these utilization discrepancies, the study projected potential savings of $10 million for the plan, achieved primarily through reducing mAb overutilization.

• Appropriately managing the utilization of pembrolizumab alone was projected to save $3.3 million.
• A strategic conversion from brand-name products to biosimilar equivalents would yield an additional $1 million in cost recovery.

Controlling this spend necessitates a comprehensive, holistic approach. Payers must move beyond simple management by implementing key levers, including:

• Customized population analysis: Employing a combined claims and UM data review to identify specific areas of abuse and pinpoint the most effective intervention strategies.
• Evidence-based pathways: Establishing and enforcing clinical criteria that optimize medication choice, review intensity, and reduce deviations from normalized provider behavior.
  Strategic biosimilar adoption: Leveraging step therapy and proactive conversion programs to transition members to clinically equivalent, less expensive biosimilar options.
• Advanced management techniques: Considering a broader set of management initiatives such as concomitant therapy alignment, vial optimization (maximizing product use per vial), and shifting appropriate treatments to lower-cost home infusion settings.
• Provider engagement: Utilizing peer education to address outlier behavior and ensure the long-term sustainability of adherence to new, evidence-based treatment pathways.

By adopting a proactive, intelligence-led strategy, healthcare payers can effectively mitigate the steep costs associated with biologics, optimize their financial performance, and secure the continued provision of high-quality care.