U.S. Will Waste $9 Billion on Non-Pharmacy Specialty Medications in 2015

Express Scripts' Medical Benefit Management Reduces Overall Specialty Drug Spend

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Aug 05, 2014, 08:30 ET

ST. LOUIS, Aug. 5, 2014 /PRNewswire/ -- Next year, U.S. health plan sponsors are projected to spend $9.07 billion on specialty medication services that provide no additional value, according to a new analysis released today by Express Scripts (NASDAQ: ESRX). This wasteful spending could be avoided if payers applied cost-saving techniques from the pharmacy benefit on medications that are administered through the medical benefit.

Specialty medications treat complex, chronic conditions, and many of these medications are administered in a hospital or outpatient setting. Nearly half of all specialty medications are currently billed through the medical benefit, which lacks the visibility and cost control tools of the pharmacy benefit. Express Scripts found that inefficient U.S. spending on specialty medications in the medical benefit led to $4.87 billion of waste in 2011 alone, and the company projects that this waste will reach $9.07 billion in 2015.

Express Scripts studied two, large national databases of paid medical claims to establish the industry's first comprehensive analysis of the wasteful spending on specialty drugs outside the pharmacy benefit.

"As the cost of specialty drugs continues to rise, payers will need to take action today to prevent unsustainable spending in the future," said Warren Davis, vice president, product management for Accredo. "Applying the cost control techniques available to payers in the pharmacy benefit to the medical benefit has been clearly shown to reduce or eliminate this waste."

Express Scripts data also show that plans that implement Medical Benefit Management services have, on average, saved 10 to 15 percent on their specialty spending. Care Continuum, an Express Scripts subsidiary, has been able to leverage decades of drug management experience to build clinical utilization and claims management solutions applicable to the medical benefit. Plans that implement a broad suite of solutions can drive out more waste and realize even greater savings. An effective Medical Benefit Management program offers services across disease states and sites of care and consists of three key components:

Utilization Management: Specialty drugs billed in the medical benefit lack clinical policies applied to drugs dispensed in the pharmacy benefit. Between 15 to 20 percent of drug requests billed through the medical benefit do not meet evidence-based treatment guidelines. Closing this gap can help save $1.3 billion annually and ensure patients are receiving clinically appropriate therapy.
Site of Care Management: Costs for specialty medication billed under the medical benefit vary by site of care. For instance, drugs administered in a hospital or an outpatient setting, are often significantly more expensive than at-home care. Site of care programs redirect patients and medications to the most clinically appropriate and lowest-cost channel and could save up to $1.7 billion a year.
Reimbursement Management: Having robust reimbursement management ensures that claims are paid accurately and at the contracted rate and improves rebate opportunities. Claims management tools could save payers $1.9 billion annually. These programs can also greatly improve the data available for health plan analysis.

"The tools and techniques that are part of a comprehensive Medical Benefit Management program have proven effective in keeping traditional drug costs at or below the rate of consumer inflation," said Davis. "These techniques have not yet been widely applied to the medical benefit and this analysis shows the price tag of failing to do so in the future."

The Express Scripts analysis was conducted using the Truven Health and MarketScan® Databases.

About Express Scripts

Express Scripts (NASDAQ: ESRX) manages more than a billion prescriptions each year for tens of millions of patients. On behalf of our clients — employers, health plans, unions and government health programs — we make the use of prescription drugs safer and more affordable. Express Scripts uniquely combines three capabilities — behavioral sciences, clinical specialization and actionable data — to create Health Decision Science^SM, our innovative approach to help individuals make the best drug choices, pharmacy choices and health choices. Better decisions mean healthier outcomes.

Headquartered in St. Louis, Express Scripts provides integrated pharmacy-benefit management services, including network-pharmacy claims processing, home delivery, specialty benefit management, benefit-design consultation, drug-utilization review, formulary management, and medical and drug data analysis services. The company also distributes a full range of biopharmaceutical products and provides extensive cost-management and patient-care services.

For more information, visit Lab.Express-Scripts.com or follow @ExpressScripts on Twitter.

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SOURCE Express Scripts