Leading Employers Share Strategies for Managing Promising, High-cost Biotech Medications

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Supplements and Featured Publications, Biologics and Benefit Design, Volume 14, Issue 8 Suppl

Companies and organizations nationwide struggle to find the best way to address the complex, multifaceted challenges involved in providing their employees with access to necessary—and often expensive—medications. The introduction of new bio-derived medications has compounded these challenges. Biotech medications offer a high level of therapeutic value, but do so at a high monthly cost per patient. Employers are developing new and innovative approaches to benefit design in an effort to protect their organization’s assets, yet develop a benefit design that provides therapeutic value to all employees. This article outlines strategies that some of the nation’s leading employers have incorporated into their benefit programs.

(Am J Manag Care. 2008;14:S264-S268)

Biotechnological advances and bio-derived medications offer highly promising new therapies. Biotech medications provide employers with an opportunity to improve their workers’ health status and functionality, thereby increasing productivity and decreasing presenteeism. Some biotech medications are costly, and it is predicted that the number of biotech drugs on the market will double in the next decade. To ensure that employers and employees derive optimal value from these medications, employers must seek innovative approaches to benefit design and coverage options for newer drug therapies. Pitney Bowes, Eastman Kodak, and El Paso Corporation are some of the organizations currently developing innovative benefit design programs. The insights offered by these organizations will help employers of any size better understand the issues and challenges and integrate proven solutions for obtaining maximum value from biotech medications.

Managing Health and Costs Through Strategic Investments

David Hom and Jack Mahoney, MD

The use of high-cost biotech medications has increased substantially in the past several years and is expected to accelerate. As more biotech medications for chronic conditions enter the market, the effectiveness and appropriateness of copayments have come into question. Copayments are a classic cost-sharing tool, but they may not work when trying to manage costs for employees with chronic conditions.

Internal studies show that larger copayments prompt members to take fewer medications or forgo them altogether; this can translate to more illness or higher healthcare costs. These studies suggest that the higher the copayment, the less likely it is that patients who stand to gain the most from appropriate biotech therapies will use them. If this is true, how do employers establish the right balance? The following case study describes one way employers might be able to incorporate these therapeutic agents into their healthcare plan in a focused, prudent manner.

Creating a Balance

• …AND pharmaceuticals are an integral part of managing most chronic conditions,

• THEN companies can reduce future health claims by making sure employees with chronic disease remain on their medications.

When evaluating the best way to ensure that employees with chronic disease continued to take their medications, PB established the following:

• IF prescription drugs are subject to the price elasticity of demand,

• …AND medication adherence is a function of drug access and affordability,

for improving adherence to a disease management program.

What PB Achieved

• Decreased pharmacy costs;

• Fewer emergency department visits made by members with diabetes (disability costs

• Changes in the medication possession rate for patients with diabetes and those with asthma (improved adherence and the use of more controllers [49% vs 61%] was noted, as well as reduced use of rescue medications [51% vs 39%]).

By employing an investment strategy instead of a cost-containment strategy, PB has experienced a better return on its investment in terms of employees’ health. Since 2000, the compound annual growth rate of PB’s gross healthcare cost per employee has been 7%, versus 12% for benchmark companies. Overall savings in the first year were $1 million; overall savings in the third year were $2.5 million. Employees benefit from these savings in the form of reduced premium costs.

In its approach to managing biotech drugs, PB decided that data specific to the organization should be analyzed from a totally integrated perspective and the analysis used to target employers’ interventions. This should be a continuous process. PB concluded that using an investment strategy— not a cost-containment strategy—is key to returning value (ROI) in employee health and engagement. PB took a proactive approach to managing health issues and their associated costs, making strategic investments that facilitated access to appropriate care. By doing so, PB was able to employ important therapeutic agents (eg, biologic medications) in a better focused and more prudent manner.


Jack Mahoney and David Hom coauthored the 2006 book Total Value, Total Return: Seven Rules for Optimizing Employee Health Benefits for a Healthier and More Productive Workforce.

Revisiting Centers of Excellence: How the Concept Can Complement Future Benefit Strategies

Kenneth D. Wells, MD

The concept of Centers of Excellence (COE) dates back to the mid-1980s. Many institutions claim the “COE” title, but the designation has become commoditized and diluted over time. El Paso Corporation (EPC) has taken a fresh look at the COE approach, including its fundamental goals and the ways it can complement and supplement existing benefit strategies. EPC’s foray into COE has increased positive health outcomes and, more importantly, improved employee functionality and health status.

Overview of El Paso Corporation’s Approach

In its original iteration (pre–managed care in the 1980s), the program effected savings through contracting directly with COE providers. At times, this saved the company >40% above “reasonable and customary” fees. The magnitude of savings allowed the company to finance costs related to transporting employees and their family members to the COE and providing them with lodging.

El Paso Corporation’s Program

Following the program’s inception, it went from offering discounted rates on reasonable/customary fees to stipulating prenegotiated fees established by the third-party administrator (TPA)/carrier. Components remaining from the original program include the savings generated from the concept of “doing it right the first time,” superior outcomes, and shorter treatment durations, which allow employees to return to work sooner. In addition, employee satisfaction with their healthcare benefit has increased and presenteeism has improved.

In the past few years, the COE program began including biotech drugs, which often delay onset of some conditions and are used to treat many highcost diseases, such as lung cancer and transplants. Some TPAs might not approve certain biotech drugs because of their cost. However, EPC reviews applications for promising biotech drugs on a caseby- case basis and intervenes when it believes a treatment is valid. The company views biotech drugs as tools to keep employees healthy and prevent hospitalization, and they constitute a valueadded component of the COE program. EPC strongly believes in its approach to COE and plans to continue offering this program.

Defining a “Good” COE

The COE approach is a scalable concept. Even smaller employers can benefit from the model if they dedicate an employee to coordinating the program. An employer can take the following steps to develop a COE program:

• Maintain a strong relationship between the company and the COE provider; both must be committed to making the program work.

• Analyze existing claims data to identify the medical/COE resources employees will need. Focus efforts on finding centers that provide this care.

• Ensure that benefit design is appropriate. The COE component of the benefit should be accessible and affordable for all employees. It should complement other benefit components, such as coverage for biotech medications.

Targeting potentially disabling and life-threatening conditions with biotech medications limits their progression, decreasing the overall severity or effects of a disease. Biotech medications may allow employees with potentially disabling conditions to remain on the job and function more effectively, resulting in longer and more productive working lives. The employers’ experiences and recommendations outlined in this article highlight the value of developing an approach that facilitates employee access to biotech medications. Although the companies mentioned are all major employers, the lessons they learned can be applied by a company of virtually any size. Companies that successfully implement a comprehensive, multidisciplinary, rational policy for the use of biotech medications ensure that employers, health plans, and employees all benefit from advances in biotechnology and that limited healthcare benefit dollars continue to be spent properly.

• Acute myocardial infarction (MI) and depression (after acute MI)

• Congestive heart failure and diabetes

• Elevated cholesterol and hypothyroidism

What disorders in the beneficiary population can be treated with existing or soon-to-be-released biotech treatments?

Acknowledgment: The authors wish to acknowledge Brenna Harrington and Christe Bruderlin-Nelson for their contributions to this supplement.

Funding Source: This supplement is supported by funding from Amgen Inc.

Author Affiliations: Pitney Bowes, Stamford, Connecticut (DH, JM); El Paso Corporation, Houston, Texas (KDW); Eastman Kodak Company, Rochester, New York (WML).

Authorship Disclosures: Consultant/Advisory Board: Amgen Inc (KDW); Honoraria: Amgen Inc (KDW). These authors have nothing to disclose (DH, WML).

Authorship Information: Concept, design, and drafting of the manuscript and critical revision of the manuscript for important intellectual content (DH, JM, KDW, WML).

Address Correspondence to: Sofia B. Manoussakis, Director of Communications & PR, Integrated Therapeutics Institute, LLC, PO Box 416, Greenfield Center, NY 12833. E-mail: