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Opportunities to Reduce Spending on Costly Specialty Drugs

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The costs for specialty drugs consume an increasing portion of overall healthcare spending, but a new report found possible savings by transitioning these medications from the medical to the pharmacy benefit.

This article published with permission from The Burrill Report.

Specialty drugs present a challenge for payers as costs for these complex and expensive drugs consume an increasing portion of overall healthcare spending. In fact, specialty pharmacy spend is expected to rise from $92 billion in 2012 to $235 billion by 2018. And more than half of specialty medication spending currently occurs under the medical benefit of insurance plans. Moving that benefit to a pharmacy benefit can produce significant savings for healthcare payers by improving management of specialty drugs, according to a new report.

The report, produced by Milliman and commissioned by pharmacy benefits manager CVS Caremark, finds the transition from the medical to the pharmacy benefit can save payers an average of 19% across 14 classes of self- or provider-administered injectable specialty drugs for the treatment of conditions such as multiple sclerosis and autoimmune disorders. By moving coverage to the pharmacy benefit, payers are able to implement more effective management tools such as formulary design, utilization management, and preferred or exclusive networks.

“Transitioning specialty medications from the medical benefit to the pharmacy benefit, as well as offering patients more convenient options by addressing where infusion care is administered, can produce significant savings” says Alan Lotvin, executive vice president of Specialty Pharmacy for CVS Caremark.

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At the same time the end-to-end pharmacy management and delivery solution for pharmacy patients can help patients better manage their medications and their disease, ensuring that “patients continue to receive high-quality care.”

Compared to the average patient, specialty patients are more likely to have multiple diagnoses, see more specialists, fill more prescriptions and have more lab tests, ER visits and hospitalizations, resulting in overall healthcare costs as much as 8.5 times higher than non-specialty patients, according to Milliman.

Milliman provides consulting and actuarial products and services to the insurance industry. The study was based on 2012 claims data for a commercially insured population as reported in Milliman's Consolidated Health Cost Guidelines database.

The study included plans with a variety of commercial plan designs. CVS Caremark runs more than 7,600 pharmacies nationwide, including more than 800 with MinuteClinic retail clinics.

Copyright 2014 Burrill & Company. For more life sciences news and information, visit The Burrill Report.


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