The pharmacy industry has undergone significant transformations over the years, particularly with the rise of specialty medications. This has accentuated the distinction between traditional and specialized treatments. Specialty pharmacy now encompasses both traditional and specialty drugs as well as medical procedures such as cancer infusions, multiple sclerosis treatments, and gene therapies. Understanding and managing the medical side of specialty drugs is crucial, as 40–50% of these expenditures are on the medical benefit.
Recently, we sat down with Optum Health and Optum Rx product teams to assess some of the key themes impacting the specialty pharmacy space today and understand what health plans can do to prepare for tomorrow.
Redefining “Specialty Pharmacy”
Specialty medications are designed to address complex and uncommon medical conditions, often requiring specialized handling, administration, and monitoring. Unlike traditional drugs obtained from local pharmacies, specialty drugs are typically acquired through specialty pharmacies, which conveniently mail prescriptions to patients. Specialty drugs now account for approximately 50% of total drug costs in the United States.
Specialty pharmacy encompasses traditional and specialty drugs and medical procedures, such as cancer infusions, multiple sclerosis treatments, and gene therapies. Understanding and managing the medical aspect is crucial, as 40–50% of certain specialty drug expenditure is in the medical benefit. Every year, 30–40 new specialty drugs are approved. Last year, the average cost of an oncology drug was around $250,000. Not only are there more treatment options for cancer now, but the clinical sophistication of these treatments has also exponentially increased.
Medical Benefit Coverage
Historically, the pharmacy industry has seen a division in addressing these costs, with a separation between medical and pharmacy benefits due to increasing pharmaceutical claims. As self-administration of drugs became more prevalent, the pharmacy benefit emerged as a separate entity. However, drugs requiring professional administration, such as infusions, were billed as part of medical procedures and covered under the medical benefit.
Today, determining whether a drug should be covered under the medical or pharmacy benefit is no longer solely based on the mode of administration. Instead, contract agreements, drug characteristics, and coverage rules contribute to this decision-making process. This complexity is further compounded by different price points associated with various healthcare settings such as physician offices, home infusions, and outpatient hospitals.
Challenges Posed by Specialty Medications
Specialty medications, including cutting-edge therapies like gene therapy, present unique challenges to the pharmacy industry. The high cost of specialty medications can strain healthcare budgets and limit patient access to necessary treatments. For instance, the price of the same $10,000 drug can soar to $20,000 or $30,000 when administered in outpatient hospitals due to the billing practices employed by these facilities. These rising costs can strain healthcare budgets and limit patient access to necessary treatments.
Additionally, the complex nature of these medications necessitates specialized handling, storage, and administration processes. The historical payment model characterized by post-service claim reimbursement has shifted to a more proactive approach. The Optum team emphasized that technology solutions like Specialty Fusion enable upfront utilization management across all strategies, including payment integrity, through its prior authorization platform. This shift from reactive to proactive strategies empowers healthcare plans to make informed decisions regarding their strategies before services are rendered, promoting cost control and adherence to medical policies.
Health plans leveraging cross-benefit solutions like Specialty Fusion experience better coordination and optimization of specialty medication utilization. This ensures patients receive the most appropriate and cost-effective treatments while reducing the provider's administrative burden.
The Role of Technology in Enhancing Patient Care
With the continuous influx of new drugs and advances in clinical sophistication, staying updated with the latest developments is a constant challenge for healthcare professionals. Technology solutions enable companies to consolidate medical recommendations such as National Comprehensive Cancer Network guidelines, FDA labels, and peer-reviewed literature into a platform that gathers the best evidence for new and existing products.
Consolidating this information across medical and pharmacy benefits into a single platform helps healthcare providers to make well-informed treatment and patient care decisions. Solutions with a cross-benefit approach provide physicians with a comprehensive overview of available treatments, incorporating evidence-based data and contractual price information. By having this information readily accessible, physicians can make informed decisions that align with both clinical efficacy and cost considerations. Technology solutions like this also help foster the partnership between health plan and provider to enable better patient care.
Specialty medications bring unique challenges, including high costs and specialized handling requirements. However, integrating technology solutions like Specialty Fusion allow for proactive management of specialty medication utilization, promoting cost control and adherence to medical policies. By adopting these technological advancements, the pharmacy industry can more effectively manage the intricacies of pharmaceutical trends and lay the groundwork for a future that increasingly prioritizes efficiency and patient well-being.
