Transition from medical to pharmacy benefit to save big


The cost of specialty medications is expected to rise to $235 billion by 2018, providing many cost-related challenges to payers. To off-set these costs, health insurers can move prescription benefits from medical to pharmacy coverage, according to a new Milliman report commissioned by CVS Caremark.

Such a transition would save up 19.7 percent on specialty drugs, while allowing payers to implement more effective management tools, such as formulary design, utilization management, and preferred or exclusive networks.

"Transitioning specialty medications from the medical benefit to the pharmacy benefit, as well as offering patients more convenient options by addressing where infusion care is administered, can produce significant savings," Alan Lotvin, M.D., executive vice president of Specialty Pharmacy for CVS Caremark, said in an announcement. "We are focused on finding ways to better manage the rising costs related to these complex and expensive drugs, while ensuring patients continue to receive high-quality care."

Insurers cite prescription drugs as one of the main drivers of ever-rising healthcare costs. "Spending on specialty drugs is growing rapidly," Clare Krusing, a spokeswoman for America's Health Insurance Plans, told the Associated Press last month. "It's unsustainable," she said, FierceHealthPayer previously reported.

Healthcare for specialty patients costs up to 8.5 times more than for nonspecialty patients, according to the Milliman report. Those costs add up--ER visits, hospitalization, multiple visits to specialists and filling prescriptions.

What's more, health plans continue to miss the mark on essential drug benefits. Although certain states received approval, their plans did not necessarily meet health benefits requirements, according to March research in the American Journal of Managed Care. "The key question for policy makers is how well an essential health benefits approach balances consumers' desire for an affordable and comprehensive benefit package, while offering flexibility with respect to formulary benefit design and hence leverage for competitive pricing," wrote the authors of the study.

To save money on soaring drug costs Cigna in 2011 created an internal IT tool that analyzes the pharmaceutical usage associated with 31 chronic illnesses and the communications these members have with their physicians. During the first year of implementation, Cigna saved about $1 million.

For more:
- here's the Millman report (.pdf)
- read the announcement

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