Smarter Decisions, Superior Outcomes

Controlling Specialty Drug Spend through the Coverage Determination Process

Posted by Kathleen Sabo on January 26, 2016 at 8:00 AM

iStock_000016535503Large-1.jpgAccording to United Health Center for Health Reform and Modernization the United States spent $87 billion on specialty drugs in 2012, and that number is estimated to reach $400 billion by 2020. In 2014 alone the cost of specialty products alone has risen 13.1%. Specialty drugs now cost more than the median household income.

The rise in the use of these drugs has dramatically changed the healthcare industry and the drug therapy landscape. Change is particularly evident in regards to authorizing and paying for these types of drugs. Specialty drugs often require special handling and increased monitoring. 

Approximately 30% of a plan’s pharmacy costs are represented by less than 1% of all prescriptions. And, this is a number on the rise exponentially. In 5 years, pharmacy spend is expected to increase to nearly 50% of healthcare expenditures. It is more important than ever to control pharmacy costs without sacrificing high-quality healthcare and appropriate therapy regimens.

Here are three important ways to control the costs of specialty drugs:

Ensuring alternative therapies are tried first.

For some chronic health conditions, treatment with a specialty drug for one year can cost $100,000 or more. That’s an unsustainable trend, especially since the median American household income is more than half of that figure. One of the most efficient ways to bring down the cost is the implementation of step therapy guidelines, within the coverage determination process, to require that less expensive, alternative therapies are tried and failed prior to prescribing the newer, more expensive drug.

While new specialty drugs for many orphan conditions are being released without previous, current market alternatives, there are current therapy options for many other specialty drugs, such as Enbrel® and Humira®. Standard clinical practice guidelines from the American College of Rheumatology even recommend such conventions. While the new specialty medications may be essential for successful, efficacious treatment of some patients, this method of controlling costs should be managed on a case-by-case basis. The plan’s coverage determination process should stipulate the conditions by which a lower cost, but evidence-based alternative therapy should be required and the requirements for allowing approval of the higher-cost drug.

Strengthening coverage determination rules.

Try and fail coverage determination rules are often implemented to control the cost of specialty drugs. This means a patient must try one or more inexpensive drugs before the cost of a more expensive prescription will be covered. These business rules are often referred to as step therapy edits.

Implementing step therapy edits can be used to build a patient's medical profile as well as a way to more effectively monitor treatment. Since more expensive price tag does not always mean better outcomes, in many cases, it simply makes sense to start with a less expensive drug.

Another cost-effective approach that would fall under determination rules would include a partial fill requirement for expensive specialty drugs whereby the quantity of medication approved for the patient is initially  limited to only a portion of the treatment period, say 30 days, in order to see if the medication is actually effective for that particular patient and to ensure that patients are following treatment guidelines appropriately.

Additionally, prescription abandonment rates comes into play when building coverage determination rules. According to the Journal of Managed Care pharmacy, more than 1 in 4 members abandon prescriptions costing more than $200 per month. The abandonment rate increased exponentially as the monthly cost of the prescriptions increased above $100. Odds of abandonment for prescriptions over $500 is seven hold higher.

Creating a comprehensive program.

A comprehensive coverage determination program provides health plans with the necessary tools to control specialty drug spend. This also includes independent and objective oversight so there is no relationship with drug manufacturers and a process is in place that allows decisions to be made in a systematic algorithm-based manner. It is important to work with an independent, objective, clinical services company that provides sound expertise and data-driven information.

Health Information Designs’ (HID) solutions strategically increase a plan’s control of the coverage determination process while ensuring therapy appropriateness. We are dedicated to deepening the strength of coverage programs by maximizing efficiency, auditability, and consistency and reducing administrative burdens. Our commitment to these principles means expanded criteria sets, lower approval rates, improved data access, proven CMS compliance, and decreased ingredient cost for a healthier bottom-line.

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Sources

  1. http://www.shrm.org/hrdisciplines/benefits/articles/pages/specialty-drugs-costs.aspx
  2. http://www.cnbc.com/id/100392819
  3.  http://www.hidesigns.com/about.html
  4. http://acsh.org/2012/11/all-generics-are-equal-but-some-generics-are-more-equal-than-others/

 

 

Topics: High Cost Medications, Controlling Pharmacy Expenditures, Coverage Determination Process, Specialty Drug Cost Control, Prior Authorization Processing

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