Bending the Cost Trend on Medical Specialty Drugs

Susan works as a quality manager for a large pharmaceutical company. She’s built a career on making life-enhancing specialty drugs for treating complex health conditions and diseases. A few years ago, she experienced a series of worrisome symptoms — vision problems, foot numbness, persistent fatigue and “brain fog.” Suddenly, she faced her own life-altering diagnosis: relapsing muscular sclerosis (MS).

The previously healthy 53-year-old became a candidate for the same class of infused or injected specialty medications her company develops and manufactures. Her doctor prescribed Ocrelizumab (brand name, Ocrevus), the first monoclonal antibody approved by the Food and Drug Administration (FDA) for treating both relapsing and primary-progressive forms of MS.

Susan began twice-yearly treatments administered by a clinician in an outpatient hospital setting. Since then, she’s slowly but steadily recovered from periodic MS attacks that come with severe muscle spasms and immobilizing leg stiffness.

Susan’s physical and mental wellbeing are her employer’s top concern. But both she and the company’s benefits team are painfully aware of her treatment’s cost: more than $176,000 annually. It’s a number that quickly consumes Susan’s $5,000 out-of-pocket maximum, leaving her self-insured plan to pay the rest.

The 'alarming' cost of specialty drugs

Susan’s name and biographic details have been changed to safeguard protected health information. The financial aspects of her story are real and increasingly common.

In a?survey by Business Group on Health (BGH), 91% of employers said they are concerned or very concerned about prescription drug costs, and 92% felt likewise about high-cost drugs in the pipeline. A previous BGH survey cited rising costs for specialty drugs in particular as “alarming.” In 2022, the median annual price of 37 specialty drugs approved by the FDA was $222,000.

For employers eager to control these costs, BGH’s survey points to a pair of most-used utilization management (UM) strategies: prior authorization and site-of-care management.

Employers typically rely on a pharmacy benefit manager for UM of pharmacy benefits. But specialty drugs also land on the medical benefit. There, employers need either their insurance carrier — or an independent partner with the right expertise and capabilities — to provide UM and much-needed cost containment.

Quantum Health provides medical specialty drugs UM within its core healthcare navigation and care coordination service. It recently studied its solution’s impact on clients’ medical specialty drug costs. The findings show how an effective UM approach can control costs, while still providing a positive member and provider experience.

How authorization review bends the specialty drugs trend

When employers contract with Quantum Health , it becomes the single point of contact for benefits information and education. That means the company’s Care Coordinators are?the?resource to contact when providers need to confirm a member’s benefits eligibility and submit service authorization requests for review and approval. This dynamic uniquely positions Quantum Health to inform and manage healthcare utilization early and as it happens.

For medical specialty drugs, “auth requests” get reviewed against several criteria, including whether:

• The prescribed dosage and frequency align with recognized clinical guidelines.
• The requested treatment is considered experimental and investigative (and thus restricted by an employer’s plan language).
• Alternative therapies have been attempted and failed (another potential plan requirement).
• Proper clinical documentation has been submitted with the request.

Quantum Health ’s 2023 analysis of more than 1.8 million plan members found that 98% of medical specialty drug requests were approved during November 2022 through March 2023. At the same time, UM mitigated wasteful, clinically inappropriate spending to the tune of $1.37 per member per month (PMPM) for the average employer. Annualized savings totaled more than $35 million across the 200-plus employers studied.

Controlling costs via site-of-care review

Quantum Health ’s UM includes a second line of defense: a rigorous site-of-care (SOC) review program.

The company’s Pharmacy Services team closely monitors the evolving drug marketplace. They’ve identified more than 220 drugs for which ongoing administration in an outpatient hospital setting is not clinically necessary, and where the total expense (including the drug cost, clinician fees and facility charges) is not cost-effective. Quantum Health’s study found that, during calendar year 2022, these drugs accounted for 63% of clients’ medical specialty drug costs.

The team’s clinicians and analysts review auth requests and drug claims, looking for opportunities to shift treatments to other clinically appropriate but more economical sites, such as a medical office or even the member’s home. The team then engages with providers and members to educate them on site options and cost implications.

In 91% of SOC opportunities during 2022, the team succeeded in guiding the shift. The average shift led to 48% lower treatment costs, or more than $12,500 in savings per dose.

Because many medical specialty drugs are administered as often as monthly, annual savings from a single SOC shift can quickly reach five or even six figures. The study found annualized savings across all clients of $16 million during 2022, or $0.71 PMPM. Combined, authorizations and SOC review delivered $2.08 PMPM in savings for the average employer.

Accounting for the experience

Self-insured employers strive to balance controlling costs and providing members with a caring, supportive benefits experience. Striking that balance with medical specialty drugs can be especially tricky. Traditional UM services often are highly transactional and impersonal. For example, automated denial letters typically get sent to providers and members with only minimal explanation offered.

By contrast, Quantum Health ’s UM model prioritizes the member and provider experience. For example:

• When missing clinical documentation threatens an authorization approval, providers receive proactive outreach, offering clarification of the required documentation.
• Quantum Health advises employers to exclude cancer treatments from SOC review. Moving a treatment that’s proving effective and well-tolerated by the member can be counterproductive, given the advanced monitoring and treatment support often involved.
• The study found that 30% of successful SOC shifts led to treatments moving to the ultimate convenience of the member’s home.

That last point was true with Susan, whose annual treatment costs fell from more than $176,000 to less than $74,000.

The dramatically lower cost still consumes more than her annual out-of-pocket maximum. But she’s grateful to her employer for the benefits — and the navigation support — that enable her to get life-enhancing MS treatments at home.

By Steven Knight , Chief Operating Officer, Quantum Health

Explore effective cost-management strategies such as utilization management and site-of-care optimization.