Medco launches program to improve management of costs for specialty drugs

February 17, 2012

Medco Health Solutions and its Accredo Health Group specialty pharmacy have launched a program for employers to better manage specialty-drug costs within major medical coverage.

Medco Health Solutions and its Accredo Health Group specialty pharmacy have launched a program for employers to better manage specialty-drug costs within major medical coverage. 

The program is an expansion of their service that has traditionally managed these treatments under pharmacy benefits, and will create greater cost transparency for health plans and employers, the company said.

Medco is implementing the new product in partnership with NovoLogix, a manager of specialty medications within the medical benefit. NovoLogix's software, which has been used to manage medical specialty for more than 18 million patients, will provide the infrastructure inside Medco's medical benefit management program.

Expensive specialty drugs, which are used to treat rare or complex medical conditions, have been among the fastest growing categories in healthcare for nearly a decade, as price inflation and higher utilization continue to increase, according to Medco.

“Major medical plans often have limited means to manage the channel of specialty drugs, which include treatments for cancer, HIV, hemophilia, rheumatoid arthritis, multiple sclerosis, and other complex medical conditions,” Ben Slen, director, product development, Accredo, told Formulary.  “The emergence of these medications during the past decade has escalated the annual cost of these drugs, which start at approximately $6,000 and reach as high as hundreds of thousands of dollars for treatments of rare conditions.”   

Through this new program, Medco and Accredo will provide greater cost transparency to health plans and employers that wish to continue coverage of specialty drugs under their medical plans (instead of the pharmacy benefit). The program also will help to ensure these medicines are used correctly, work to limit waste, coordinate coverage, and engage clinicians about the care being provided for those receiving specialty drugs. 

Historically, health insurers and other payers have not focused on the prevention of waste or the management of specialty drugs that fall within the medical benefit, according to Slen. This has cost them an estimated $8 billion annually from lack of compliance, over-utilization, non-formulary drug use, and other inefficiencies.

“Through this program, Medco and Accredo are offering to reduce an administrative burden for health plan sponsors, while also providing an elevated standard of care,” Slen said. “Also, the program will allow plans to extend their formulary controls into the medical benefit leveraging what has already been done on the pharmacy benefit, which allows plans to maximize rebates and reduce their overall specialty plan cost.”

He cited some examples:

Transparency. “Very often the costs for these drugs are buried within the bills for visits to the doctor or outpatient clinics,” Slen said.  “The doctors or other providers will include a big mark-up on the costs of the drugs and include it in the visit. When managed through the pharmacy benefit, the payer has insight into these costs. Now, through this program, major medical will have that same insight.”

Waste of the drugs. Specialty pharmacies can track how much of the drug is used for patients, according to Slen. “For example, hemophilia patients get clotting factor prescribed to them in specific doses. The specialty pharmacy will dispense the drugs in vials that are very close to the prescribed amount rather than wasting a half a vial of a medication that might cost $1,000 or more per dose. A major medical plan may not notice the difference, but the specialty pharmacy tracks this sort of thing to prevent the waste. Now, through this program, the major medical can track and manage use,” he said.

Prior authorization. This is to make sure patients are getting the drug properly, according to Slen. “The easiest example is the use of human growth hormone. Does it make sense to give a $6,000-a-year drug to a 50-year-old man who is healthy?” he asked.

Proper management of specialty drugs is essential, given their costs.

The drug trend in this category grew 17.4% in 2010, the fastest pace since 2004. Utilization of specialty drugs grew almost 3 times faster than overall utilization. Specialty unit cost grew more than 7 times faster than overall unit costs. The expanded patient populations taking these drugs are among the variables that drove the 5.9% utilization increase seen in 2010. Unit cost increases for these drugs surged 11.5% during 2010.