Study Finds Better Management of Specialty Drugs Could Provide Savings

CVS Caremark report projects that transition of specialty drugs from the medical benefit to the pharmacy benefit could provide significant cost relief to payers.

Better management of spending on specialty drugs can help reduce the financial burden on health care payers, according to the recently released annual Insights report from CVS Caremark.

The report finds spending on specialty medications grew by 15.6% in 2013. Specialty drugs now represent approximately 22.5% of total drug spending among CVS Caremark customers, which is a relative increase of more than 10% over 2012. In contrast, spending on traditional medications increased by just 0.8% in 2013 after declining 3.8% in 2012.

"This year's Insights report outlines 7 sure things that our clients should keep in mind," said Jon Roberts, president of CVS Caremark's pharmacy benefit management business, in a press release. "These include: prescription trend is up, generics have peaked, specialty drives trend, price is king, money matters to members, adherence is the answer, and past performance is no guarantee of future results. This is not just a catchy list of factors that impact drug trend, these are key concepts for our clients to consider when determining how to maximize their prescription drug benefit in the complex and changing health care landscape."

As a result of the escalating cost of specialty drugs, which are projected to increase from $92 billion in 2012 to $235 billion by 2018, the report estimates that transferring specialty drugs from the medical benefit to the pharmacy benefit can save health care payers an average of 19% per year.

An independent analysis by Milliman Inc cited in the report finds that 53% of specialty medication costs were paid under the medical benefit in 2012.

Patients who use specialty drugs carry a total health care cost that is up to 8.5 times more than the cost for patients who do not use specialty drugs. This disparity in health care costs is driven by the fact that patients who use specialty drugs are more likely to have multiple diagnoses, see more specialists, fill more prescriptions, and have more lab tests, ER visits and hospitalizations than the average patient, the report states.

To reduce payer costs, CVS recommends a channel transition strategy to expand areas covered under the pharmacy benefit. The report notes that placing injectable drugs administered in hospital outpatient settings under the pharmacy benefit would yield estimated average savings of 34% per year on the medications. Likewise, placing provider-administered infusion medications under the pharmacy benefit could generate estimated average savings of 12.3%.

The report also finds that the specialty drug pipeline is expected to dominate FDA approvals in the coming years, while the pipelines for generic and traditional medications remain thin.

"With the continued rise in utilization and spend related to specialty medications, health care payers have a tremendous opportunity to reduce costs and improve care through a variety of approaches," said Alan Lotvin, MD, executive vice president of specialty pharmacy for CVS Caremark, in a press release. "Transitioning specialty medications from the medical benefit to the pharmacy benefit, as well as offering patients more convenient options by addressing where infusion care is administered, can produce significant savings.”