Cost Saving Opportunities for Specialty Medications

Tampa—Specialty drug spending continues to rise in the United States, but more active management of the specialty drug spending that occurs under the medical benefit could create significant healthcare savings opportunities. Brenda Motheral, BSPharm, PhD, MBA, president, ARTEMETRX, discussed this during a session at the AMCP meeting.

Each year, the US healthcare system continues to spend more money on specialty medications than the year before. The annual yearly cost for specialty medications is currently growing by 17%, and that figure is only expected to rise over the next few years.

Based on findings from a recent trend study, Dr. Motheral reported that in 2013, the specialty drug spending in both the pharmacy and medical benefit accounted for a per-member, per-year cost (PMPY) of $348 compared to a cost of $676 for traditional medications. However, by 2018 that PMPY cost is expected to rise to $845 for specialty medications, surpassing traditional medication costs of $836 in the same year.

The current challenges surrounding the management of specialty drug spending fall into 3 categories: (1) transparency; (2) alignment; and (3) coordination. According to Dr. Motheral, there is no visibility in the specialty spending that is billed under revenue codes, and administration costs are not measured or managed. In addition, vendor priorities may not be aligned with the healthcare community, leading vendors to promote higher cost distribution channels or failing to support copay assistance programs. Finally, coordination challenges exist, including that cost-sharing is not historically coordinated and different departments are often responsible for medical and pharmacy benefits in a health plan.

Data from a recent study that was highlighted during the session found that, while the majority of employers (89%) report tracking specialty drug spending in the pharmacy benefit, only 39% do so under the medical benefit.

Looking at both the pharmacy and medical view of specialty drug spending can significantly increase the role that specialty drugs play in overall drug spending. For example, specialty drug spending for 1 sample client highlighted in the presentation represented 28% of total drug spending when only looking at the pharmacy benefit; however, it changed to 36% when the specialty drug spending under the medical benefit was also included.

A specialty drug scorecard has been developed to give plan sponsors an objective tool to help monitor and manage specialty drugs under the medical benefit. This scorecard gives plan sponsors the ability to measure their own performance against benchmark and client goals, identify management solutions, conduct an ongoing assessment of program interventions, and evaluate vendor performance. In addition, the scorecard can help employers empirically measure health plan vendors and offerings without bias and assess the financial impact of specialty medical drug spending within the company.

Dr. Motheral said that more active management of specialty drugs being billed under the medical benefit could yield significant positive changes. Savings opportunities can range from 10% for Medicaid to >40% for commercial retirees.

Dr. Motheral also noted that site of care and clinical management are typically the largest areas of improvement. According to the presentation, the physician’s office is typically the lowest cost site of care for most drugs. For example, while the cancer support drug pegfilgrastim has a median drug cost per unit of $2931 in a physician’s office, that cost jumps to $5498 in an outpatient hospital.

Successful management of specialty drugs requires integrated analytics and reporting that includes analysis into the areas of clinical management, reimbursement management, site of care management, and plan design.

Dr. Motheral said the decision of whether to move drugs out of the medical benefit and into the pharmacy benefit will depend on each company's own data.