Enormous Spend Hidden in the Medical Benefit, Report Finds

Forecasted spend amounts in the specialty category often do not account for the spend that occurs under the medical benefit in the outpatient hospital setting.

Specialty drug spend is underreported by as much as 10% to 15%, according to data included in a new report from Artemetrx.

According to the report, studies claiming that the total drug spend for the typical commercial plan sponsor is around 15% to 20% do not account for the drugs billed in the Healthcare Common Procedure Coding System. When these drugs—which are usually infusible or injectable and fall under the medical benefit—are included, specialty drugs really account for 30% of the total spend. This translates into a nearly 51% increase in specialty plan sponsor spend, according to their research.

By identifying the spend under the medical benefit, plans are better able to uncover savings opportunities. “Identification of lower cost sites of care under the medical benefit is often the most significant area of opportunity in terms of total dollars,” asserted the report.

The researchers forecasted that total specialty drug spend will grow from $290 per member per year (PMPY) to $845 PMPY by 2018 due to the strong specialty pipeline, price inflation, and expanded indications.

Over the next 6 years, specialty spend will surpass traditional drug spend, and this transition will happen more quickly for employer and labor groups, notes the report—especially if new management strategies to handle this spend are not implemented.

“Given these findings, plan sponsors need visibility into their entire specialty drug spend, not just that residing under the pharmacy benefit,” said Brenda Motheral, PhD, president of Artemetrx. “When specialty medication use goes unmeasured, plans cannot effectively manage their specialty benefit.”

Taken from the Artemetrx report, "Specialty Trend Across the Pharmacy and Medical Benefit."