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Specialty Drug Trend

By January 10, 2012Commentary

Tracking and managing the pharmacy costs of a health plan used to be relatively simple, because most drugs were pills or other forms dispensed through a retail or mail-order pharmacy.  With the advent of more complex biologics, particularly in the cancer arena, that need physician or other provider assistance for administration, tracking drug use has become more difficult, especially since many of these provider administered drugs are paid for under the medical benefits of a patient’s health plan, not the drug benefits.  A subsidiary of Magellan Health, iCore, has released its second annual report on trends in drugs covered by the medical benefit, with data gathered from both claims and interviews.   (iCore Report)

The report is focused solely on injectables and finds that almost every payer has some form of management in regard to the cost or utilization of these products and most get rebates on at least one injectable product.  Average sales price has largely supplanted average wholesale price as the basis for reimbursement in this category.  About half of payers use a copay for injectables, but only about 18% use only a copay for cost-sharing on these products.  Where there is just a copay, it averages $46.  About 41% of payers use coinsurance, with the most common being 20% and many payers use both a copay and coinsurance.  Since in some cases drugs may also be subject to increasingly common deductibles and since these drugs are sometimes thousands of dollars a year, consumers are bearing a lot of cost-sharing on deductibles, which may affect their uptake.

Because of more intensive management, medical benefit injectable costs don’t appear to have risen much in 2011 but will likely rise faster in 2012 due to new drug introductions.  The top ten medical injectables account for 55% of total cost in the category and cancer drugs are half of total injectable costs.  If the drug is delivered in a hospital outpatient setting, the claim is around twice as high as if delivered in a doctor’s office, which is a growing problem given hospital acquisitions of physician practices and reimbursement changes that make doctors less interested in administering injectables.  It is also unjustifiable from a cost basis.  Genomic testing in association with injectable use is increasing and companion diagnostics are common for many new biologic injectables.  Legislation which limits cost-sharing may increase payer costs and insurance premiums.  An excellent report for a growing category.

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