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The Trends and Complexities of Provider-Administered Drugs

by Kristen Reimers November 3, 2016Biosimilars, Medicaid, Medical Specialty, Oncology, Pharmacy, Pharmacy Benefits Management, Specialty Pharmacy

The Trends and Complexity of Provider-Administered Drugs

With approximately 50 percent of the $124 billion annual specialty drug spend is billed on the medical benefit. Each year, we study this trend with commercial payers in our annual Medical Pharmacy Trend Report. This report continues to be the only publication of its kind to analyze high-cost injectable drugs paid under medical benefits.

Our latest report shows that the trends we’ve seen for more than five years now are continuing. Fifty provider-administered agents are driving 80 percent of medical pharmacy drug spend. This trend has been exacerbated by manufacturer price increases and site of service shifts from physicians’ offices to hospital outpatient settings, particularly as hospital systems purchase office-based practices.   In addition we are seeing:

  • Commercial per-member-per month (PMPM) allowed amounts of $23.60 and Medicare PMPM allowed amounts of $44.84 increased 11 and 5 percent, respectively, driven by inflation, utilization, drug mix and shifts in site of service.
  • The top 25 drugs by health plan spend cost $22,423 per patient per year for commercial and represented 64 percent of spend, while the top 25 drugs by Medicare spend cost $10,551 per patient per year and represented 69 percent of spend.
  • Although not always included on the top 25 drug listing by overall payer spend, the annual cost per patient per year across the top 10 most expensive agents averaged $353,000 for commercial and $271,000 for Medicare. These patients represented 0.02 percent of commercial and 0.04 percent of Medicare members.
  • Commercial medical benefit drug costs in the hospital outpatient setting were often double that of the physician office. Compared to the commercial population, Medicare saw much larger shifts in site of service from the physician office setting to the hospital outpatient facility since 2010, especially for oncology and biologic drugs for autoimmune disorders. Oftentimes, administrative code reimbursement is four times more expensive in the hospital than physician office setting for commercial members; for Medicare, it is frequently twice as costly in the hospital.

Payers who aren’t managing medical benefit drugs as rigorously as their pharmacy benefit drugs are missing out on a key opportunity to manage their pharmacy costs. We’ll continue to look closely at this area when our next Trend Report becomes available in February 2017.

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Tags: Injectable Drugs, Magellan Rx Management, Magellan Rx Trend Report, Medical Pharmacy, Site-of-Service, Specialty Pharmacy
Kristen Reimers
Kristen Reimers
Kristen Reimers is the senior vice president of specialty clinical solutions for Magellan Rx Management. In this role, Reimers focuses on analyzing and identifying medical pharmacy cost management and quality improvement initiatives for health plan clients and prospects. She is an integral part of the development and support of the company’s medical pharmacy strategy, and serves as a clinical resource across the organization. Reimers supports all clinical pharmacy programs involving medical specialty medications and additional clinical programs, as needed. Reimers has extensive health plan pharmacy management experience with a large Blues plan. Prior to joining Magellan Rx Management, she played a key role in developing and leading an integrated specialty drug program for pharmacy and medical benefits, leading utilization management clinical and process development across all lines of business, clinical criteria development and medication therapy management programs. Reimers is a graduate of the State University of New York at Buffalo’s School of Pharmacy and Pharmaceutical Sciences.
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Healthcare Op-ed: Infusion Site of Care Optimization - WeInfuse
April 30, 2019 2:42 PM

[…] Magellan Health Insights. The Trends and Complexities of Provider-Administered Drugs. https://magellanhealthinsights.com/2016/11/03/the-trends-and-complexities-of-provider-administered-d…. Published 2016. Accessed November 28, […]

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