The City's partially self-funded health care plan covers medical services and pharmacy benefits for employees and their families. Each year, City staff evaluate plan performance versus industry benchmarks and look for opportunities for both service enhancement and cost containment.
One area where the City has struggled to contain costs was in the provision of specialty drugs to our plan members. Specialty drugs are those with a price in excess of $1,000 per month. In 2023, the City altered the plan in an effort to bring costs down by eliminating, or "carving out," specialty drugs from the plan altogether. As a result, the plan no longer covers specialty drugs, and the City now contracts with a prescription advocacy firm, RxHelp Centers, to help plan members enroll in manufacturer programs and/or obtain financial assistance from foundations and other sources for their specialty drug needs. For any costs not covered by available programs, the City established a separate Health Reimbursement Account (HRA) specifically to pay for those expenses. The specialty drug HRA is the ultimate backstop for specialty drug coverage.
To effectuate this change to the plan for specialty drugs, the pharmacy component of the plan was moved to MedBen, a third party administrator (TPA), and Ventegra serves as the Pharmacy Benefits Manager through its own contract with MedBen. Administration of the overall medical plan remains with BCBS. As the TPA, MedBen coordinates and manages the majority of the administrative aspects of the pharmacy plan such as processing and adjudicating all pharmacy claims, coordinating a pharmacy benefit plan, performing utilization review and handling many compliance issues. MedBen also manages the Specialty Drug HRA which covers specialty drugs not covered by other funding sources. Under the 2023 specialty drug carve-out plan, the City experienced a savings of 37.5% in total specialty drug costs compared to 2022 costs.
In October 2023, MedBen advised the City of a biosimilar product as a treatment option for the popular and expensive anti-inflammatory therapy, Humira, which was released on July 1, 2023. A biosimilar product is a medicine that is very close in structure and function to a biologic medicine but not an exact copy of its brand name due to its being derived from a natural, living source that cannot be copied exactly. Biosimilars are tested and compared to a brand name drug (already approved by the FDA) in studies, they go through a thorough but shortened FDA review process, and they are as safe and effective as their brand name companion but at a lower price point.
At the time of the biosimilar advisement, a 30-day supply of Humira, used to treat a variety of conditions from Crohn's to rheumatoid arthritis and psoriatic arthritis, would cost between $6,000 and $12,000 per month depending on the dose. Through the proposed program arranged by MedBen, the biosimilar can now be directly obtained from one of the biosimilar manufacturers at the significantly discounted price of under $1,000 a month. Depending on the usage of the drug, this can result in significant savings for both the plan and plan members.
After consulting with MedBen and the City's insurance consultant, Sherrill Morgan, the City elected to transition to the cost-saving program effective January 1, 2024. At the time, there were no active prescriptions for Humira so the transition had zero impact on current plan members. The staff is now recommending the City adopt Amendment No. 1 to the City of Brentwood Health Plan for Prescription Benefits, Section 7.4 entitled "Limitations and Exclusions under the Prescription Drug Programs" to include Humira as an exclusion under the plan adopted by the Commission in 2023.
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