Health plans are seeing exponential growth in both the use and medical cost expense of specialty medications. In the past decade, the Food and Drug Administration (FDA) has approved more than 250 specialty medications. By 2020, specialty medications are estimated to cost $400 billion. Forty percent of that cost is expected to be paid under the medical coverage benefits as opposed to the pharmacy benefit. If projections hold true, specialty medications will have increased their overall cost revenue five times over from 2010 to 2020.
As if that weren’t enough, as of 2018, there were more than 900 specialty medications reported to be in development. Yet these only account for 1 to 2 percent of all prescriptions written. In 2019, the specialty medication pipeline will continue to focus on smaller patient populations with high-acuity, chronic conditions.
Traditionally, prior authorization helped control costs by determining medical necessity. However, prior authorization should not be the primary tactic in managing specialty medication costs. When it comes to specialty medications and the patients who are prescribed them, it’s more complicated.
There are three industry-wide drivers contributing to the overuse and/or misuse of expensive specialty medications under the medical spend of a health plan.
- Aggressive unit cost inflation — traditional market forces to regulate cost do not apply.
- Buy-and-bill bias — providers who are incented by prescription drug revenue will prescribe specialty medication more liberally.
- Prescription drugs are coming into the market faster with less clinical quality evidence. Less evidence puts the onus on the health plan to determine if a specialty medication prescribed to a member is appropriate for their condition.
Concerns for patient safety
Even more important than the exponential rise in costs of specialty medications is the concern for patient safety. Coverage often does not align with FDA-approved indications and other accepted treatment guidelines. As a result, these specialty medications can be clinically misused. Clinical misuse of specialty medications relates to:
- Inappropriate diagnoses
- Excessive dosing
- Frequency and duration of use
An innovative, multi-faceted solution
Current solutions to help control costs of specialty medication spend are unable to enforce appropriate billing practices for health plans. And any solution that helps control these costs must also ensure clinical patient safety. The solution needs to be:
- The most comprehensive, edit-based solution in the marketplace
- A flexible pre- and/or post-pay solution that enables review and action on specialty medication use and cost
- A supplement to a health plan’s prior authorization process
Optum has developed a solution that contains three essential components and their capabilities that a solution must contain to address specialty medical spend:
- Clinical library
- Decision support based on review of clinical literature and specialty medication clinical appropriateness
- Drug identifier
- Comprehensive mapping of HCPCS (J-Code) and National Drug Code (NDC) relationships
- NDC-capability ready
- Ensure claims submitted are matched to the appropriate medication category and clinical edits
- Drug pricing
- Ongoing evaluation of current average wholesale price (AWP) to provide accurate medication pricing
Learn how Optum Specialty Rx Analytics can potentially save up to 20 percent of annual specialty medication spend. Contact Optum to set up an assessment at no cost to you and learn about potential savings opportunities for your health plan.
About the author
Marie Nguyen, PharmD
Senior Director, Commercial R&D, Optum Payment Integrity
Marie Nguyen has more than 30 years’ experience with commercial, Medicare and Medicaid health plans, pharmacy benefits management, long-term care, and specialty pharmacy. At Optum, Marie leads the medical specialty drug and durable medical equipment programs for commercial research and development. Her professional expertise includes Medicare Part C and Part D operations and compliance, Stars ratings performance and claims processing improvement.