Medicaid Health Plans Need to Address Growing Specialty Drug Costs


Specialty drugs comprised 36.5% of the total Medicaid 2015 drug spend.

Medicaid is the largest health insurance program in the United States for individuals with low incomes and those who are elderly or disabled.

Since Express Scripts partnered with their first Medicaid client in 1995, the company expanded their line of business to more than 35 health plan in 25 states.

In the recent Express Scripts annual Drug Trend Report, there were 3 components found to drive Medicaid trend:

1. Specialty Medications

The total per member per year (PMPY) specialty drug spend accounted for almost 36.5% of the total Medicaid 2015 drug spend, despite the small proportion of the Medicaid population that utilizes specialty medications.

HIV and hepatitis C therapy classes are the leading Medicaid specialty drug trend for 2015, with 8 of these drugs accounting for the top 10 specialty medications. Currently, it’s estimated that Medicaid is the largest source of coverage for HIV, covering half of all HIV patients in the United States.

Since there are many serious financial concerns on the price of specialty drugs, state Medicaid agencies and Medicaid health plans will continue to incorporate a diverse set of benefit designs, formulary administration techniques, and utilization management.

Additionally, the approvals of new specialty medications for traditional disease conditions and new therapies and approvals for expanded indications of existing therapies are influencing the upward trend in specialty drug spending in Medicaid in the future.

2. Continuing Expansion of State Medicaid Programs and Medicaid Managed Care

The recent gains in the amount of people with Medicaid coverage has been driven by changes in the Medicaid Drug Rebate Program and the use of Medicaid Managed Care (MMC) in states that haven’t enrolled Medicaid beneficiaries in managed care.

CMS data has shown that newly enrolled beneficiaries had higher benefit costs than previously believed because of the surge in the amount of newly enrolled patients without health insurance and who had previously unmet health care needs and untreated conditions.

Although there is an impending decrease in federal funding for Medicaid expansion, the federal government will continue to find new ways to provide incentives for states to expand their programs.

Furthermore, Alternative Benefit Plans (ABPs) influence state decisions regarding Medicaid expansion, while a majority of ABP proposals now encourage the use of benefit designs that promote personal responsibility and helps enrollees make smart health care decisions based on quality and cost. States that use MMC are able to help new enrollees receive the care they need while effectively limiting costs.

To overcome these challenges, Medicaid must implement advanced clinical and utilization management solutions to help ensure the right access to care and control spiraling health care costs.

3. Mental health and controlled substances

A large amount of Medicaid beneficiaries are affected by mental health issues, making Medicaid the largest payer for mental health services in the United States.

Drugs that treat mental and neurological disorders, attention disorders, pain and inflammation, depression, and chemical dependence were among the top 10 traditional therapy classes in 2015 and accounted for 33.4% of the total traditional drug spend in Medicaid.

In a previous Express Scripts study in 2012, it was reported that children who used psychotropic drugs accounted for 16% of total Medicaid drug costs. The increase in the utilization of psychotropic medications among children in Medicaid is a growing concern today.

Currently, overdoses and prescription drug abuse runs rampant throughout the United States. A report from the CDC found rising prevalence of hepatitis C and HIV due to injectable opioid abuse.

Additionally, prior research found unfortunate trends that showed almost 60% of patients taking painkiller opioids were prescribed potentially dangerous combinations of medications.

Furthermore, two-thirds of patients taking these medication combinations were prescribed drugs by 2 or more physicians and almost 40% of patients had prescriptions filled at more than 1 pharmacy.

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