$9 Billion Wasted on Non-Pharmacy Specialty Medications

Aug 5, 2014

Express Scripts’ Medical Benefit Management (MBM) can reduce overall specialty drug spend by up to 15%.

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Next year, U.S. health plan sponsors are projected to spend $9.07 billion on specialty medication services that provide no additional value. This wasteful spending could be avoided if payers applied cost-saving techniques from the pharmacy benefit on medications that are administered through the medical benefit.

The Cost and Complexity of Specialty Medications

Specialty medications are those used to treat complex, chronic conditions and are often administered in a hospital or outpatient setting. According to the Express Scripts Drug Trend Report, nearly half of all specialty medications currently are billed through the medical benefit, which lacks the visibility and cost control tools of the pharmacy benefit. This led to $4.87 billion of waste in 2011 alone.

Spending Projected to Keep Rising

Spending on specialty medications is increasing at a rate of about 15% annually. Assuming a similar trend for specialty drugs in the medical benefit, the wasteful spending will increase to more than $9 billion by 2015. Applying the cost control techniques available to payers in the pharmacy benefit to the medical benefit can help reduce or eliminate this waste.

However, plan sponsors often lack the infrastructure to support such programs. Care ContinuumTM, an Express Scripts subsidiary, has been able to draw upon decades of drug management experience to build clinical utilization and claims management solutions applicable to the medical benefit. Our data also show that plans that implement Medical Benefit Management (MBM) services have, on average, saved 10% to 15% on their specialty spending.

An effective Medical Benefit Management program offers services across disease states and sites of care and consists of three key components:

  1. Utilization Management: Specialty drugs billed in the medical benefit lack clinical policies applied to drugs dispensed in the pharmacy benefit. Approximately 15% to 20% of drug requests billed through the medical benefit do not meet evidence-based treatment guidelines. Closing this gap can help save $1.3 billion annually and ensure patients are receiving clinically appropriate therapy.
  2. Site of Care Management: Costs for specialty medication billed under the medical benefit vary by site of care – for instance drugs administered in the outpatient setting are often significantly more expensive than at-home care. Site of care programs redirect patients and medications to the most clinically appropriate and lowest-cost channel and could save up to $1.7 billion a year.
  3. Reimbursement Management: Having robust reimbursement management ensures that claims are paid accurately and at the contracted rate and improves rebate opportunities. Claims management tools could save payers $1.9 billion annually. These programs also can greatly improve the data available for health plan analysis.

As the cost of specialty medication continues to rise, it is more critical than ever that plan sponsors use all available tools to rein in spending. The tools and techniques that are part of a comprehensive Medical Benefit Management program have proven effective in keeping traditional drug costs at or below the rate of consumer inflation. These techniques have not yet been widely applied to the medical benefit, and this analysis shows the high price tag of failing to do so in the future.

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Lab Staff
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