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August 22, 2017

How Specialty Drugs Affect Your Rx Spend (And What You Can Do About It)

Artemis Health

As prescription drug prices rise year after year, it seems like everyone within the healthcare industry is finding creative ways to save money. Hospitals are teaming up to use their purchasing power and negotiate on pricing, employers are asking for more transparency from their Pharmacy Benefit Managers, and consumers are shopping around to find the lowest prices.

Specialty drugs are a top concern—they’re growing rapidly as a percentage of pharmacy spend. Experts are estimating that specialty Rx will account for 50% of total spending by 2018! Let’s take a closer look at this segment of spending and how employers can help stop the rising tide.

First, some definitions. What are specialty drugs?

  • They’re used to treat catastrophic or chronic illnesses, such as certain cancers, some forms of arthritis, multiple sclerosis, etc.
  • They often require special handling (like refrigeration) or special administration methods (injections)
  • They need to be ordered through a specialty pharmacy, and aren’t available at the patient’s corner pharmacy

While these definitions are helpful, there is no “single definition” of a specialty drug. But they all have one thing in common: they’re expensive for both patients and employers. Employers can usually identify specialty drugs in their spend by sorting Rx claims by cost, seeking clinical input from on-staff clinicians or consultants, or relying on Pharmacy Benefit Manager definitions.

Speaking of PBMs, most specialty drugs are still billed through pharmacy benefits, so employers will need to tap these relationships to control costs. They should ask key questions and work closely with their PBM to find waste and ensure their dollars are being managed appropriately.

So let’s jump in—here’s what can be done to limit waste in specialty pharmacy spending without compromising member care.

Determine Extent of Use

Once you’ve defined specialty drugs, you can find out what they’re costing your organization by analyzing your data. Mine your Rx claims data to find out:

  • Which specialty meds are being used by your members
  • How many members are affected
  • How they fit into your overall spend

Eliminate Inappropriate Use

One of the most effective ways to control wasted specialty spending is by identifying and eliminating inappropriate use (i.e. used for a non-approved medical condition or for the wrong gender/age). Smart employers are comparing specialty pharmacy claims against diagnosis codes in medical claims to make sure these drugs are being prescribed for the right patients.

Work with PBMs to put prior authorizations in place to restrict specialty medications to FDA-approved indications. You can also address inappropriate use by asking consultants or PBMs to audit prior authorizations for specialty drugs.

Eliminate Inappropriate Dosing

Specialty drugs should be prescribed with specific dose ranges (minimum and maximum dose), specific intervals (number of doses per day/week/month) and specific durations of care (10 days, 30 days, etc.). However, the appropriate dosing isn’t always communicated from doctor to pharmacy, and patients can end up with more medication than they need or should take.

PBMs and employers can collaborate to establish clear quantity limits on specialty pharmaceuticals. They can also put appropriate end dates on prior authorizations so patients cannot refill without the added step of doctor authorization and review.

Address Duplicate Billing

Did you know that you can be charged twice for the same drug depending on the site of service? For example, certain forms of birth control need to be inserted by a physician at their offices. The device could be ordered through the pharmacy benefit, but the doctor may inadvertently charge for the device again in his/her medical claim.

Since medical and Rx claims are paid separately, it’s possible for the employer and member to be double billed. Employers can control for this possibility by comparing pharmacy and medical claims for specialty drugs.

Avoid OHI Errors

OHI stand for “other health insurance,” and patients can mistakenly use their secondary insurance (meant for copays) when they should direct claims through their primary insurance (meant for treatment).

PBMs and employers can work together to flag patients who carry secondary insurance. They can compare specialty pharmacy claims against patients who have other health insurance to make sure these drugs are being billed to the appropriate carrier.

Specialty drugs are just one piece of overall benefits spend, and doing the due diligence to control spending is time-consuming. Many employers tap consultants to get this level of detail and analysis, but it takes time and expertise. Artemis can help. Artemis Health’s Benefits Optimization Platform makes it quick and easy for employers, consultants or brokers to find wins like this in benefits data. 

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