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Board hears experts: specialty drugs driving pharmacy cost growth, recommends management strategies
Summary
A panel for the Health Service System warned specialty medications are a fast‑growing cost driver — averaging thousands of dollars per month and, in some cases, $100,000 per course — and recommended strategies including specialty formularies, partial fills and clinical management to limit inappropriate utilization.
San Francisco’s Health Service System board heard a detailed briefing March 9 on specialty‑pharmacy trends and strategies to manage rapidly rising costs.
Aon/Huitt, Kaiser, UnitedHealthcare/OptumRx and Blue Shield described specialty medications as biologic, clinically complex and expensive. Aon/Huitt’s presentation cited averages of roughly $3,000 per month for many specialty drugs and noted certain treatments can cost the plan more than $100,000 for a single course. The consultants warned specialty drug spend, driven by new classes of medicines (for example hepatitis C therapies in prior years), is expected to make up an increasing share of pharmacy spend and recommended partial fills, prior authorization, step therapy and a specialty formulary as mitigation tools.
Kaiser described its integrated approach to drug management — physician‑driven clinical guidelines, strategic purchasing and market‑share negotiation — and said shifting high usage to a single preferred product can improve negotiating leverage. UnitedHealthcare/OptumRx provided plan‑specific data, reporting about $6–7 million in total pharmacy spend to OptumRx with nearly half attributable to specialty medications; OptumRx noted offsets on the medical side when high‑cost therapies reduce hospital utilization.
Presenters flagged biosimilars as a future downward pressure on prices but said biosimilar adoption will produce limited near‑term savings. Panelists recommended employer strategies that include specialty tiers, targeted clinical oversight, partial initial fills to avoid waste and development of a specialty formulary. Staff said the board will continue to consider specialty pharmacy design as part of upcoming rate negotiations and renewals.
"Specialty medications are typically biologic in nature...they're very high cost," an Aon presenter said. "We have one drug that treats a hereditary disease that can run a million dollars a year," illustrating the scale of the risk.
Board members asked for peer benchmark comparisons and plan‑specific aggregate dollars; staff and the panel agreed to return with more detailed cost figures and modeling in a future meeting.
