News & Commentary

Variety of Cost-Cutting Tools Used for Specialty Medications

Location, location, location should be the mantra of those trying to figure out a way to lower the costs of specialty medications. A study in the October issue of Health Affairs says that a small group of specialty drugs could make up about half of total pharmacy spending by 2018.

“These medications are no longer only for patients with life-threatening conditions. Patients across the spectrum of disease severity are receiving specialty medications,” says the study, “Specialty Medications: Traditional and Novel Tools Can Address Rising Spending on These Costly Drugs.”

But there are plenty of obstacles to containing costs. For instance, “The economic incentive for physicians to administer more medications and select the higher cost option remains intact.”

In addition, generics have traditionally put a brake on the cost of medications. However, legislation allowing for generics “does not apply to biologics, which are the most costly subset of specialty pharmaceuticals.” Biosimilars are not generic versions of other biotech drugs.

So how to manage? “The fees paid to providers using the buy-and-bill method vary significantly by the site of care. In most instances, the highest-cost site of drug administration is the hospital outpatient center.”

Drugs administered there can cost up to 50% more than when administered in a doctor’s office or patient’s home.

“This discrepancy has led many payers and pharmacy benefit managers to develop programs that limit the use of hospital outpatient centers for infusions,” the study states. “However, hospitals’ acquisition of specialist physician practices has made it difficult for payers to transition patients to community providers.”

Pharmacy benefit managers and insurers focus more on patient self-injection and nurse-assisted home infusion “for a limited spectrum of clinically appropriate agents.”

There is no magic bullet, but help is on the way, say researchers. “The introduction of meaningful specialty generics and the subsequent introduction of the first biosimilars during the remainder of the 2010s should provide new opportunities for the application of traditional pharmacy tools such as tiered formularies and step therapy.”

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