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Medical Benefit Pharmacy Trends

By March 28, 2018Commentary

Drugs that are injected or administered intravenously, whether in a doctor’s office or at a patient’s home are often considered part of outpatient medical benefits, not drug benefits.  With the advent of so many new high-priced specialty medications, management of this medical pharmacy benefit has become a nightmare and is a focus for health plans, PBMs and specialty pharmacies.  MagellanRx issues its annual report on trends in this drug category.   (MagellanRx Report)   About 5% of commercial members and 10% of Medicare members had a medical benefit drug claim in 2016.  Per member per month commercial spend rose to $26.26, an increase of 21% over 2015, and pmpm Medicare spend grew to $46.97, a 3% rise.  Oncology is 45% of commercial spend and 60% of Medicare’s.  The top 25 of commercial drugs account for 62% of the commercial spend and 69% of Medicare spend.  A substantial portion of spending was in hospital outpatient departments, which had twice the unit cost of drugs dispensed in other settings, once again demonstrating the need to stop this practice.

The vast majority of the spending increase is accounted for by price increases of 15.5% for commercial payers and 6% for Medicare.  Utilization actually had a slight drop.  Spending in several drug categories more than doubled.  Some drugs had annual per patient costs in excess of $400,000.  One item that appears to be a benefit to patients is that they paid only 3% of total spending on the commercial side and 8% in Medicare, but that is somewhat illusory given the price of the drugs.  In reaction to the growth of this category of spend over the last few years, payers have reacted by creating narrower networks of providers authorized to dispense the drugs, encouraging biosimilar use when available, and employing other utilization management tactics.  The cost of drugs under the medical benefit is projected by MagellanRx to continue to rise rapidly, partly because the number of such drugs that have a billion dollars a year in sales will grow to 34 in 2021 from 24 in 2016.  For oncology immunotherapy alone per member per month medical drug benefit costs will increase from $1.11 to $3.67 in this period, a 231% increase.  It really is past time to put the clamps on drug pricing, especially for this generally expensive category of medical benefit drugs.

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