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Specialty Drugs Paid Under Medical Benefit Thwart Cost Control Measures

Analysis  |  By Gregory A. Freeman  
   November 22, 2017

Expensive specialty drugs are increasingly falling under medical benefits rather than pharmacy. This means health plans end up paying more for overutilization that could have been avoided.

Health plans are facing increased costs from specialty drugs, which are expected to represent 55% of all drug costs in a few years, with about half of that managed under the medical benefit and paid for the same way as medical services, according to claims data that was analyzed by CVS Health and cited in its publication Insightsfeature. That means many of those pricey medications are skirting the safeguards put in place to manage the cost of other drugs.

Drugs that are injected or infused in a medical facility often are billed under the medical benefit portion of a health plan rather than the pharmacy benefit, and that can complicate cost-saving utilization management programs, says Trip Hofer, vice president of CVS Health and president of Accordant, the company's disease management operation. The issue first arose about 10 years ago and has become more problematic each year with the development of improved medications that must be administered by clinicians, he says.

"This is a little-known phenomenon that continues to grow, with more of these specialty drugs managed under the medical benefit. The majority of these drugs are from oncology but also other categories like autoimmune," Hofer says. "Unlike the pharmacy benefit, which is fairly well managed through formulary, prior authorization, and other cost-utilization techniques, the medical benefit is more like the Wild West. It's not been managed as closely and health plans don't know what's happening until the claims come in and, even then, they don't really know if it was clinically appropriate."

One example is Remicade, an infusion therapy with multiple specialty indications such as ulcerative colitis. In its analysis of claims data, CVS found significant variation in dosing and medical claims pricing for the same indication, with dosing often exceeding clinically appropriate levels, Hofer says.

CVS is working with health plans to improve the process of prior authorization, Hofer says.  The prior authorization process has typically been a manual process, but CVS has been refining its digital portals to improve effective dosing. Hofer says the improvements have the potential to save up to significant sums for a health plan.


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Gregory A. Freeman is a contributing writer for HealthLeaders.

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