You can’t control what you can’t see: Managing medical-side specialty drug spend

“Managing both sides is a lot like a set of twins separated at birth,” said David Lassen, Prime’s chief clinical officer. When it comes to controlling specialty drug spend, the focus for pharmacy benefit managers has traditionally been on drugs paid under the pharmacy benefit.[1] But managing medicines paid under the medical benefit is just as important — and it may be one of the greatest opportunities today to help conquer rising drug trend.

We all know specialty drugs are incredibly expensive. What you may not realize is that more than half of specialty drug spend falls under the medical benefit. If you can’t see these costs clearly, you may be missing out on opportunities to manage them.

Dr. Lassen recently presented strategies for managing medical-side drug spend at the Armada Specialty Pharmacy Summit in Las Vegas. His session detailed three key areas of focus:

  • Site-of-care management
  • Clinical management
  • Reimbursement management

The “where” is just as important as the “what.”

Medicines administered in a hospital outpatient setting cost a whole lot more than those given at a clinic. Prime researched site-of-care savings opportunities and found it would be appropriate for 20 percent of members receiving infusible/injectable drugs in a hospital setting to receive these medicines in a clinic.[2] For Prime’s clients, transitioning members to a less expensive setting would result in more than $80 million in annual savings. The return on investment adds up, but it’s important to remember that adjusting the site of care should also include high-touch, expert transition support for members.

On top of steeper facility price tags, costs for drugs administered in a hospital setting are also less predictable. Our research shows drug pricing can vary greatly, hindering your ability to forecast accurately.[3] Prime recommends shifting reimbursement for drugs on the facility side to an average sale price (ASP)+ model to standardize prices and improve predictability.

Active clinical management drives measurable savings.

Prime recommends several key components for effective clinical management of specialty drugs paid under the medical benefit:

  • Doctor/specialist advisory board: A variety of regional opinion leaders and specialists provide regular, early input, creating champions among providers.
  • Key clinical requirements documentation: Deep clinical detail is documented consistently for streamlined reviews and approvals.
  • Multi-faceted health plan committee: A cohort of pharmacy and medical directors from both the plan and PBM meet regularly to review and approve strategies around utilization, fee schedules and site of care.
  • Robust medical drug review (MDR) process: MDR should be simple and effective. It should leverage automation, and make it easy for doctors to submit requests and receive responses.
  • Education, training and support services: Plans need “feet on the street,” externally to educate providers and internally to educate employees involved in MDR review.
  • Savings reports: Plans need a strong, robust ability to show actual savings at both the plan and group level.

If you can’t compare the price, think twice.

Wouldn’t it be simpler to just move more drugs under the pharmacy benefit? Not necessarily. A channel transition strategy doesn’t always make sense. Dr. Lassen says, “If you can’t compare the price, you should think twice.” Recent studies have shown that some medicines are actually more expensive under the pharmacy benefit.[4] Before implementing a channel transition strategy, it’s critical to understand actual drug costs.

When it makes sense to pay for drugs under the medical benefit, reimbursement methodology can make a difference. Again, it’s crucial to understand real costs. Average wholesale price paired with a negative margin can seem to be a better value than ASP paired with a positive margin. But it isn’t an apples-to-apples comparison, and ASP+ pricing is often less expensive.

Prime recommends using an ASP plus fee schedule based on flat rates or a sliding scale. ASP plus a percentage of price can incent use of higher-cost medicines. Using a flat fee neutralizes this. And incorporating a sliding reimbursement model can incent the use of lower-cost generics or preferred drugs. Prime also recommends regularly benchmarking the reimbursement rates of clients and providing savings opportunities that may be present from fee adjustment.

Ready to explore opportunities to improve your plan’s medical-side specialty drug management? Call your Prime representative.

Drug Watch List now available online.


[1] Prime Therapeutics. (June 17, 2014). Spotlight on specialty. Retrieved from http://blog.primetherapeutics.com/blog/prime-therapeuticsmicrosites/infographic%3a-spotlight-on-specialty.

[2] Home infusion eligible Prime medical benefits data, annualized (July–December 2013).

[3] Prime Therapeutics internal data. (2015).

[4] Artemetrx Specialty Drug Solutions. (2014).

 

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