MANAGED CARE June 2011. ©MediMedia USA
Express Scripts’ program manages biologics dispensed under the pharmacy and the medical benefit
Market forces and the implementation of parts of the Affordable Care Act force insurers to adjust their strategies constantly, but they’re not the only health care stakeholders doing so. A recent effort by Express Scripts, the giant PBM, illustrates how quickly the terrain changes.
Express Scripts recently launched a program called “specialty benefit services” that manages the distribution of biologics under both pharmacy and medical benefits. Officials at Express Scripts say they’re bringing together the three functions needed to manage specialty benefits: pharmacy benefit management, specialty pharmacy and distribution, and medical benefit management.
“Ten years ago, the industry reacted to the need for managing biologics by creating specialty pharmacies,” says Matt Totterdale, the vice president who oversees the effort. “But as costs associated with specialty medications continued to rise, it became clear that specialty pharmacy only gets you so far.”
One of the pro-physician services that traditional specialty pharmacies cannot provide is the buy-and-bill function, says Totterdale. “It’s very necessary that a physician be able to draw labs in his office, or that a hospital be able to draw labs,” says Totterdale. “They need to be able to make decisions in real time and administer drugs. Specialty pharmacy cannot, and has not, solved that problem. We can’t ship the drug in an hour; we ship the drug overnight. So buy-and-bill is very necessary. Our program offers buy-and-bill to physicians through access to wholesale drug prices and expedited reimbursement processes.”
F. Randy Vogenberg, PhD, RPh, a principal at the Institute for Integrated Healthcare and member of the MANAGED CARE Editorial Board, says that “PBMs have been trying to figure out how to get a piece of the specialty action in the doctor’s office. Since CAP blew up in the feds’ face, it really hasn’t been solved.”
Totterdale also cites the Competitive Acquisition Program (CAP) under Medicare Part B. Created under the Medicare Modernization Act of 2003 (MMA), the program, launched in 2006, was expected to cover all injectables given in a physician’s office, outpatient treatment, and equipment. However, CAP didn’t ease physicians’ administrative burden, and in fact made it worse. “It was a retrospective approach,” says Totterdale. “It cut reimbursement, and made it harder for them to do business.”
The Express Scripts program, on the other hand, is prospective, says Totterdale. It uses utilization management to ensure that therapies are delivered to patients at the most cost-effective, clinically equivalent facility.
The new medical loss ratio rules in the Affordable Care Act must also be taken into account. “With the MLR there’s a bigger incentive to better coordinate medical and pharmacy benefits, where they have to look at the whole spend,” says Vogenberg.
Costs keep climbing
Spending on specialty drugs climbed 19.6 percent in the last year, according to the Express Scripts 2010 Drug Trend Report. The pharmacy and medical costs for specialty drugs are expected to total 40 percent of national spending on drugs by 2014.
Of the nation’s total spending on specialty drugs, only 45 percent is managed under the pharmacy benefit and therefore under the effective trend management programs offered by traditional PBMs, according to the report. The remaining 55 percent of costs are in the medical benefit.