Specialty Drug Digest, Part 3

More from the latest EMD Serono Specialty Drug Digest (link in Monday’s post).  If you wondering why I am spending so much time on this, specialty drugs are probably the most significant contributor to health spending growth, a trend that is likely to continue or even worsen, and health plans devote an immense amount of effort to their management.  Today, we look at utilization and network management trends.  Prior authorization remains the single most common utilization control technique, used by over 90% of plans, followed by site of care restrictions/incentives at 61%, and partial fill restrictions at 58%.   Surprisingly, only 29% of plans are using an electronic prior authorization system, but an additional 34% said they planned to implement one in the next year.  Prior authorization tends to be conducted by either plan pharmacy staff for self-administered drugs or the medical director staff for medical benefit compounds, often infused or injected.  Some plans use outside vendors.  Plans give prior authorization relatively high marks for achieving the goal of ensuring appropriate utilization.  A number of plans also use the electronic prior authorization support to provide clinical decision support or share information regarding the member’s benefit status.

Partial fill programs are designed to limit the supply dispensed in case the medication does not work or has side effects for the patient.  Oral oncology drugs are the therapeutic class most commonly subject to partial fill limits, with 88% of plans using the tactic for those medications.  Some partial fill restrictions are applied to both the first fill and subsequent ones.  Plans again are fairly happy with the results from these restrictions.  Site of care strategies restrict where infused drugs may be dispensed and 61% of plans had such a restriction in 2017, up from 26% in 2013 and about 20% of plans intend to add this limit in the next year.  61% of plans with these restrictions limit reimbursement to the designated site of care and 39% use lower cost-sharing to incent use of the designated sites.  Therapeutic categories subject to site of care restrictions include IVIG with 89%, rheumatoid arthritis with 86% and MS, with 67%.

Providers of specialty medications may be reimbursed with a variety of methods.  Average wholesale price with a discount is used 66% of the time with specialty pharmacy providers and 39% with home infusion.  Average selling price and a markup are used in 49% of physician offices.  A discount from billed charges is used 51% of the time by hospital outpatient departments.  Plans are increasingly trying to use the same fee schedule for all physician dispensers and across sites of care.  Plans perceive hospitals to have the least competitive prices and specialty pharmacies the most competitive.  While insurers say they plan to try to negotiate lower prices, especially with hospitals, realistically they don’t have the leverage to get results.  Only 19% of plans use an episode of care-type reimbursement method for at least one disease category in 2017 and not many are planning to implement one, probably reflecting administrative complexity and dissatisfaction with cost-savings.  And only 8% of payers are using outcomes-based payment and few are also intending to implement one of these.  Plans are getting better at requiring NDC codes and other information for drugs billed under the medical benefits, which facilitates better management and cost control.