A Primer for Medical Specialty Drug Utilization Management Strategies

The United States spent approximately $577 billion in prescription drug expenditures in 2021.¹ Approximately half of this spend ($285 billion) was attributable to specialty medications.¹

Although specialty medications account for approximately 50% of the prescription drug spend, only 1%-2% of patients use specialty medications. Specialty medications are billed through the pharmacy and/or medical benefits depending on a variety of factors.

Given the significant costs associated with specialty drugs, it is important that these medications be used and managed appropriately. This article provides a high-level overview of utilization management strategies for specialty drugs obtained through the medical benefit.

Prior authorizations (PAs) are an essential tool to ensure that providers are complying to plan formularies, and members receive the medication that is safe, effective, and provides the greatest value. PA criteria are determined by a variety of factors.

First, providers are requested to establish clinical need and therapeutic rationale, especially for cases in which there may be a lower cost, equally effective alternative. Next, PAs can be used as a tool to promote appropriate drug use and prevention of misuse.

For example, many PAs for specialty medications are required to come through specialists, such as chemotherapy by oncologists. Doing so can reduce the likelihood of adverse events and potentially ensure treatment success given the expertise of the provider.

Finally, PAs can be used to mitigate safety concerns (e.g., REMS programs, drug interactions, lab tests) and prevent payments associated with cosmetic uses that are often benefit exclusions. In short, PAs, when done appropriately, can be a cost containment and outcomes optimization tool.

Site-of-care management is another tool to reduce costs associated with medical specialty drugs. Medical specialty drugs often need to be administered by a health care provider.

The site of administration could be home, physician office-based, or hospital outpatient settings, among others. When a drug is billed in hospital outpatient settings, the costs incurred for the plan are approximately 1.5 to twice those of physician office-based settings.²

Hence, strategies that enable drug administration at sites with lower costs can reduce drug spend for health plans. In an analysis using the IBM MarketScan database, researchers found that transitioning drug administration from hospital outpatient settings to physician office-based settings could save approximately $14.1 billion, which is about 1.5% of total health care spending for the members included in the analysis.²

This translates to a reduction of about $110.03 per member-per year savings.² PAs can be a tool to enable appropriate site-of-care management. Other strategies to generate savings from site-of-care include provider network management, benefit design changes, and adjusted fee schedules/incentive programs.

Vial rounding is another tool to reduce potential waste. Many medical specialty drugs are available in single-dose vials, with dosage determined by weight.

As a result, there can be variability in doses administered, which can result in waste. According to a study, the amount of waste per drug could range anywhere from 1% to 33%.³

With vial rounding, the dose to be administered is rounded off to the nearest dose of in a vial. Margins of + 5%/ + 10% are typically applied during vial rounding. In a recent analysis conducted at the Mayo Clinic, the health system was able to generate savings of approximately $7.3 million within 6 months post-implementation of automated vial-rounding program within their electronic medical record.⁴

Weight-based dosing programs leverage differences in dosing regimens to generate savings. Certain medications, such as pembrolizumab, are administered either as fixed-dose or weight-based regimens with similar efficacy. Pembrolizumab treats cancers such as melanoma, lung cancer, head and neck cancer, Hodgkin lymphoma, stomach cancer, cervical cancer, and certain types of breast cancer.

In a hypothetical budget impact analysis, researchers found that administering pembrolizumab using weight-based dosing could result in 24% reduction in medication costs compared to fixed-dosing regimens.⁵

In addition to the strategies listed above, other programs such as clinical pathways, claim edits (frequency and quantity), indication-based dosing, case management, and dose optimization help contain the increasing costs associated with medical specialty drugs.

However, with all these strategies, it is imperative to balance the access experience for members with any potentially restrictive cost containment strategies. Periodic evaluation of utilization management strategies is necessary.

Metrics such as member/provider disruption, savings, safety, and efficacy outcomes need to be evaluated to ensure that these strategies are implemented in a thoughtful manner. Medical specialty drugs have a critical role to play in improving outcomes.

Although cost containment strategies are necessary, it is also important to identify opportunities to optimize outcomes while patients are on these therapies. Hence, case management programs or pharmacist-delivered high-touch care are other critical components in medical specialty drug management.

References

1. Tichy EM, Hoffman JM, Suda KJ, et al. National trends in prescription drug expenditures and projections for 2022. Am J Health Syst Pharm. 2022;79(14):1158-1172. doi:10.1093/ajhp/zxac102
2. Fronstin P, Roebuck MC. Location, Location, Location: Spending Differences for Physician-Administered Outpatient Medications by Site of Treatment. EBRI Issue Brief. Accessed from https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_536_locationx3-19aug21.pdf?sfvrsn=cf6c3b2f_4
3. Bach PB, Conti RM, Muller RJ, Schnorr GC, Saltz LB. Overspending driven by oversized single dose vials of cancer drugs. BMJ. 2016;352:i788. Published 2016 Feb 29. doi:10.1136/bmj.i788
4. Shah V, Spence A, Bartels T, Betcher J, Soefje S. Decreasing drug waste, reducing drug costs, and improving workflow efficiency through the implementation of automated chemotherapy dose rounding rules in the electronic health record system. Am J Health Syst Pharm. 2022;79(8):676-682. doi:10.1093/ajhp/zxab479
5. Goldstein DA, Gordon N, Davidescu M, et al. A Phamacoeconomic Analysis of Personalized Dosing vs Fixed Dosing of Pembrolizumab in Firstline PD-L1-Positive Non-Small Cell Lung Cancer. J Natl Cancer Inst. 2017;109(11):10.1093/jnci/djx063. doi:10.1093/jnci/djx063