The risks of alternative funding for specialty medications
As specialty drug prices continue to rise, employers may want to consider how to manage costs without excluding them from their plans.
The escalation of specialty drug list prices is reaching a breaking point. With the average launch price of new specialty drugs exceeding $300,000,1 innovative employer-focused affordability solutions are critical.
- 62% of drug spend is for specialty drugs, even though they are under 2% of prescriptions2
- $370B estimated oncology spend by 20273
- 69% of the 2024 drug pipeline is specialty drugs4
One proposed solution is “alternative funding.” With this approach, employers elect to not offer coverage for select specialty drugs under their existing pharmacy or medical benefit. Instead, they work with a third-party vendor to supply these medications. These vendors advertise their ability to save employers money by connecting members with access to “free” specialty drug programs run by charities and drug manufacturers.
But the use of alternative funding can expose both the member and employer to new levels of uncertainty. This practice may create new barriers to care for people with serious and chronic conditions. Plus, employers with an alternative funding strategy may still end up covering these drugs under their pharmacy or medical benefit — often at higher cost.
What employers should know about alternative funding
Coverage is not universal. Most charity and manufacturer patient assistance programs are based on financial need. They’re intended for those who meet federal poverty guidelines, which may exclude some members.
Charities may stop providing funds. Assistance funding can run out. This means that funds used to cover a member may no longer be available – even while treatment is ongoing.
Coverage is not consistent. Eligibility criteria for charity or manufacturer patient assistance programs can change. Members may find that they no longer qualify for assistance that was previously secured.
Backtracking may occur. When alternative funding vendors can’t secure funding, employers generally need to carve drugs back into the original plan and cover their full cost.
How UnitedHealthcare is tackling rising specialty drug prices
UnitedHealthcare doesn’t support alternative funding or other practices that circumvent drug formularies, undermine plan benefits, and create potential tax and regulatory liabilities for employers and members. Rather, UnitedHealthcare is committed to working with foundations and drug manufacturers to ensure that appropriate members can utilize available charitable dollars.
Other steps the company is taking to blunt rising specialty prices include:
- Promoting copay card solutions and financial assistance that cut member and employer costs
- Advancing new market access programs that don’t compromise formulary, tax or regulatory concerns
- Creating tools that give members a simpler experience and eliminate the need to shop around for covered or non-covered drugs
- Increasing biosimilar and lowest net price adoption to address cost and value of specialty drugs
All of this is part of a broader strategy to deliver greater affordability, access and value by helping ensure members only pay the lowest available prices for specialty drugs, expanding access to therapies that are clinically appropriate and cost-effective, and working with employers to lower member out-of-pocket and premium costs.
Addressing employer and member needs is a shared responsibility. For UnitedHealthcare, helping make prescription drugs more affordable for employers and consumers is a universal focus. That includes working with stakeholders to create new solutions to rising specialty drug costs — all while maintaining the integrity and value of both pharmacy and medical benefits.
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