Wednesday, June 01, 2016

Health Plans Are Confused about Specialty Drug Management

It’s time to review the recently released EMD Serono Specialty Digest (12th edition), which provides an updated look at health plans’ specialty drug management strategies and tools. You can view it for free with site registration at specialtydigest.emdserono.com. (For some bizarre reason, you can’t download the report.)

The latest digest has some useful facts on specialty drug spending under the pharmacy and medical benefits. The report is also chock full of data about health plans’ busy oversight of specialty drugs.

This year's edition, however, reveals some troubling news lurking just below the cheerily colorful charts. As I highlight below, a few of the survey questions inadvertently reveal that even health plan executives lack confidence in the effectiveness of their own specialty drug management tools. Read on to see if I’m barking up the wrong tree.

THE DATA

The new EMD Serono Specialty Digest draws on responses from 58 commercial health plans representing 146.5 million covered lives—98.7 million fully-insured lives and 47.7 million self-insured lives. National plans accounted for 16% of plans, but 72% of lives.

Here are links to my previous Drug Channels articles on earlier editions:
Unfortunately, the previous editions are not available on the website. That’s especially unfortunate since you can’t download the 2016 edition.

FUN AND TROUBLING FACTS

1) Specialty drug spending is a much greater share of pharmacy benefit spending than medical benefit spending.

As the chart below shows, health plans estimated that specialty drugs accounted for a median of 29% of pharmacy benefit spending and 11% of medical benefit spending. As far as I know, these data have not been reported in previous editions.

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The report notes that most respondents estimated these figures rather than relying on quantitative claim analyses. We don’t know whether each plan used the same list of specialty vs. non-specialty drugs, and whether rebates were included in the estimates. (UPDATE: See comment below.)

Note that these figures do not necessarily correspond to pharmacy and provider revenues, as we explain in Chapter 3 of our 2016 Economic Report on Retail, Mail, and Specialty Pharmacies.

Don't forget that the medical benefit spending is inflated by huge hospital markups. See New Data: How Outrageous Hospital Markups Hike Drug Spending for details.

2) Specialty drug spending is split almost evenly between medical and pharmacy benefits.

Overall medical benefit spending is much larger than pharmacy benefit spending. Consequently, the smaller percentage of drug spending under the medical benefit corresponds to almost half of total specialty drug spending. The following chart (from the report’s page 24) shows that only 54% of specialty drug spending was paid under the pharmacy benefit.

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The report’s page 50 lists the benefit coverage—pharmacy only, medical only, or both—for injectable and infusible drugs across 17 therapeutic classes. In general, products that can be self-administered subcutaneously (SC) are more likely to be covered under the pharmacy benefit only. Those administered intravenously (IV) are more likely to be covered under the medical benefit only.

3) Health plans are struggling to identify successful strategies for managing specialty drugs.

Pages 21 to 56 of the Specialty Digest provide a dizzying array of exhibits that describe what plans are doing to manage specialty drugs under the medical and pharmacy benefits. These are helpfully organized into four categories:
  1. Network management and reimbursement
  2. Utilization and clinical management
  3. Distribution and ancillary services
  4. Benefit design
I found it difficult, however, to identify which of these many activities had the most significant impact.

Health plan executives also seem confused. Most of respondents (58%) indicated that their plans were successful at “ensuring clinically appropriate use.” Respondents were otherwise unenthusiastic about their plan’s ability to address self-identified key challenges for specialty drugs. (See chart below, from the report’s page 18.) Prominent areas perceived to be unsuccessful include: determining value; managing infusion sites of care; and managing oncology. Yikes!

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A separate survey question about each plan’s “single most important initiative” yielded the following grab bag of tactics. (See page 19.) The many pie slices show a distinct lack of consensus.

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Perhaps next year’s edition should be subtitled: Confidence is the feeling you have before you fully understand the situation.

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