Like the swallows returning to Capistrano or the monarchs to Mexico, every year certain reports show up. The 2018 version of the EMD Serono specialty drug digest appeared this week and has a tremendous amount of information on that rapidly growing category of care. (Serono Digest) The Digest was compiled by surveying 59 health plans covering over 76 million persons. Specialty drugs are odd in that many are paid for as a medical benefit, which may derive from Medicare’s treatment of drugs that have to be administered by a clinician, like many injected or infused compounds, as covered by Part B, or Medicare’s outpatient benefits. Instead of being reimbursed through the normal pharmacy benefit process, these medications often end up being marked up by doctors’ offices and hospital outpatient departments and submitted through that billing process. It has taken a while for even basics like coding to be worked out and payers have had difficulty getting information to help with the management of these drugs and especially with coordinating management across the drug and medical benefits. One reason payers may not have been eager to always put specialty drugs under the pharmacy benefit is that they have been able to charge higher cost-sharing by not doing so, although even on the pharmacy benefit side they have now often created special tiers of cost-sharing for these expensive drugs. The real problem, of course, is the truly outrageous pricing behavior by manufacturers of these medications, which has consumers and payers scrambling to figure out how they can possibly be paid for.
61% of specialty medication costs occur under the medical benefit and 37% of these costs are in hospital outpatient departments, where pricing tends to be much higher. 35% occurs in a physician office and 21% at home. There was some variation in these numbers depending on plan size. The plans listed their primary challenges in regard to specialty medications as oncology, cited by 79%; determining value, also cited by 79%; ensuring clinically appropriate use, by 83%; keeping track of the drug pipeline, by 72% and coordinating across the pharmacy and medical benefits by 57%. The ranking of challenges hasn’t changed much in recent years, which may indicate some lack of confidence in being able to successfully address them. Plans say they have been most successful in ensuring appropriate use, although only 32% responded that they were, and coordinating across the medical and pharmacy benefits, with 22%. They felt they were least successful at determining value, 25%, and managing oncology compounds, 22%. When asked to list their single most important initiative in the past year, 36% cited prior authorization or other utilization management efforts; 14% managed changes in the benefit status of compounds, and 12% mentioned using a new vendor. When asked their highest priorities for the next year or two, 20% said moving infusions to the lowest cost site of care, 19% said better coordinating management across medical and pharmacy benefits and 15% said improving pricing in the medical benefit. More tomorrow.