Specialty Drug Management Initiatives

Published Online:February 06, 2014
With nearly half of specialty spending occurring on the medical benefit in 2012, and seeing that specialty spending is predicted to account for 50% of total pharmacy spend by 2019, Mike Waterbury, president, ICORE Healthcare, specialty division of Magellan Pharmacy Solutions, reports that specialty drug costs will surpass traditional spending in the next few years. Although the trend is well known to many employers, many are not prepared with management strategies that will deliver high-quality, cost-effective specialty care.

“Are you looking at the drug or the condition?” Mr Waterbury asked attendees. 90% of payers said they focused on specific drugs when asked if strategies focused more on specific drugs or cancer therapeutic category (such as breast cancer or lung cancer).

The 2013 Medical Pharmacy & Oncology Trend Report (www.icorehealthcare.com/icore-resources/trend-report.aspx) surveyed 48 top US commercial health plans that represent over 166 million lives. The report found that when implementing medical formulary, prior authorization was used in 76% of covered lives and physician reimbursement was used in about 54% of covered lives by payers.

Site of service was also found to be an ongoing and costly challenge. The survey respondents said that in 2013, 40% of all injectable medications were administered to their plan members in their provider’s offices and submitted for reimbursement under the traditional buy-and-bill process. This was significantly higher than in previous years.

As for whether or not these payers intend to join accountable care organizations, one-third of survey respondents said they had implemented an ACO strategy. Currently, cancer centers do not appear to be a major focus of ACO initiatives.

Mr Waterbury said that “Managing medical pharmacy spend demands a smarter approach.” He suggested that payers need the right tools to complement their strategies. These include:
  • Utilization management and reimbursement strategies that support physician buy and bill and reduce overall program costs
  • Formulary optimization programs, including supplemental rebate negotiation and optimized manufacturer contracts for preferred, lower cost drugs.
  • Site of service solutions that both mitigate and reverse the increasing trend of drugs being administered at higher-cost sites of service.
  • Medical pharmacy integration solutions offering savings of up to $9PMPM with $3PMPM attributed to integration with a PBM.