Total cost of care is challenging to define. In general, we consider total cost of care to be the total cost of what it takes to treat a population. Is it direct provider fees and hospital fees? What about labs? Medications? Caregiver burden? Time away from work?

When I was in clinical practice—whether internal medicine or psychiatry out-patient clinics— I commonly saw what I called the Ziploc phenomenon—the arrival of a patient carrying a Ziploc bag of prescription drugs. We would spend time going through that bag to help me understand what the patient was actually taking. There would be medications from an ER visit, from an in-patient stay, and those that had been in the medicine cabinet at home. There would be brand names and generics of the same medication or different doses with different instructions. And despite all these medications, some patients invariably had ended up with higher total cost of care due to medication-related issues such as confusion, side-effects, falls, or just from not taking the medication at all because they did not feel better.

Typically, the total cost of care is the sum of in-patient, out-patient, clinic, ancillary, pharmacy, and all other types of direct care services and is defined as a per member per month expenditure. Members continuously enrolled in the health plan for at least a year make up the denominator. Groups who receive an intervention, like case management, are compared against a like-group that does not. The challenges really come when trying to attribute whether the intervention or some other occurrence made the difference in lowering the total cost of care. In order for comparisons to be statistically valid, techniques such as risk adjustment, case-matched controls, trend analyses, and regression analyses are used.

A couple of years ago, I took a role that focused on developing innovative clinical programs for Magellan Rx Management, a pharmacy benefits management company. The CEO challenged me with bringing forward clinical programs that looked different than what typical PBMs offered. I went back to my roots in med/psych and epidemiology. We drew on the interventions more commonly used in health plans. Surely, in the data, we could find the groups of people who needed support, whether in dealing with the Ziploc bag or in other areas at the intersection of medication and well-being. My teams focused on providing the right kinds of interventions to bring better clinical outcomes. As a side effect, we saw improvements in the total cost of care for those members.

Here are two innovative strategies to manage total cost of care

1. Having access to data is critical to address the total cost of care.

Unfortunately, it is often the case that PBMs don’t have access to medical claims or other data, including medical pharmacy spend. To hone in on the populations that could benefit from clinical programs, a combination of medical, behavioral, and pharmacy claims is necessary. My team works with a data science company, Arine, to support our work. Arine ingests all sorts of data, including the typical claims data and information from health risk assessments, social determinants factors, and remote monitoring data from devices such as blood pressure monitors. Arine’s technology includes hundreds of algorithms that can help identify individuals at risk for gaps in care, non-adherence, and even heightened suicide risk.

2. Identifying at-risk individuals and offering provider academic detailing services

Navigate Whole Health is one of our signature programs directed at improving quality and addressing spend. The original idea behind Navigate Whole Health was to find individuals who were prescribed potentially lethal combinations of opioids and other drugs, high doses of opioids, or poly-pharmacy with behavioral health medications. Using a set of algorithms running through pharmacy, behavioral and medical claims, we can identify individuals who fall into one of the target groups. With Arine’s support, we have expanded the number of algorithms we use to identify at-risk individuals and prescribers.

In fact, provider outreach with academic detailing is the salient intervention. The pharmacists providing the academic detailing have nearly universally found that the providers welcome our input. Our approach has never been threatening or punitive. Rather, the team approaches each case with an attitude of “How can I help you?” Many providers do not know all the medications an individual is taking, including prescriptions written by other providers, medications coming from an in-patient stay, an ER visit, or even the dentist. For one Medicaid client, the team’s work with providers resulted in significant reductions in combinations of opioids and benzodiazepines, reduction in the number of prescribers, and reduction in pharmacy spend, in-patient spend and emergency department utilization during the measurement period. This is one program that I unequivocally believe saves lives. And here is the thing, in doing the right thing, the positive outcome is that we also save total cost of care dollars.

I have a hard time supporting the logic that buckets cost in such a way that could adversely affect overall health outcomes. It is a privilege to bring forward clinical programs that save total cost of care dollars which in turn promote positive health outcomes. What is even better is knowing that these programs positively affect the well-being of those we serve.

Understanding pharmacy trend is important for developing robust, cost-saving specialty drug management strategies. But did you know you can’t really compare one trend number to another? Every PBM uses different methodologies, data sets, and calculations to arrive at their pharmacy trend number.

Additionally, one of the largest cost drivers of specialty spend today—prescriptions drugs dispensed through the medical benefit—is typically missing from pharmacy trend statistics. When you combine pharmacy benefit with medical benefit spend, you get what we like to call big ‘T’ Trend. In fact, you need to combine both to see there is as much, if not more, specialty spend going through the medical benefit today that is going unmanaged.

The ninth edition of the Magellan Rx Management Medical Pharmacy Trend Report includes a comprehensive medical pharmacy trend analysis and data benchmarking for provider-administered drugs which are infused or injected and paid under the medical benefit.

What are the top medical pharmacy trends you need to know to stay current with your organization’s management strategies?

1. Per-member-per-month (PMPM) spend on provider-administered drugs increased by 18% for commercial members in one year, reaching nearly $30 PMPM. The five-year trend is 68% — the highest jump in 9 years of reporting.
2. Across all lines of business (LOB), more than 90% of total drug spend on the medical benefit is being driven by a fraction of members who are taking specialty medications.
   
3. Emerging oncology treatments, particularly immunotherapy, are a major medical pharmacy trend driver. Keytruda had an impactful increase in utilization, with PMPM trend rising upwards of 200% and breaking into the top 15 drugs across all LOBs.
4. In Medicare, oncology and oncology-support drugs accounted for 58% ($30.17) of the medical benefit drug PMPM spend.
5. Chimeric antigen receptor (CAR) T cell gene therapies are predicted to grow 530% by the year 2022.
6. Factor products to treat hemophilia demonstrated the highest trend in both commercial (62%) and Medicare (185%), ranking #5 and #6, respectively. The average cost per claim is close to $20,000 across both LOBs.
7. Although 68% of payers are now using a site of service (SOS) program, SOS continues to be a concern with drugs administered in the hospital outpatient setting continuing to cost 2-3 times more than physician offices and home infusion.
8. When it comes to biosimilars, 64% of payers stated that the price of the biosimilar most impacted reimbursement decisions.
9. The top five drugs in commercial (Remicade, Neulasta, Rituxan, Herceptin, and Avastin) have remained consistent over the last nine years of reporting. However, all of these drugs have FDA-approved biosimilars that should all be available on the market in the next few months and, looking ahead, this landscape may look different over the next few years with this increased competition.
10. The number of billion-dollar drugs in 2017 was 34 and is projected to grow 26% to 43 drugs by 2022. All 43 are currently available on the market today, representing increased utilization and growth of these products in the next five years and reinforcing the need for proper utilization management, targeted dosing optimization and other management tactics of these high cost medical specialty drugs which will help to promote quality of care and prudent savings of healthcare dollars.

For more in-depth analysis on the latest in medical pharmacy trend and spend, watch our on-demand webinar!

Specialty drug spend made up 41% of all drug spend ($318 billion) for the United States and European countries in 2017(1). New projections show specialty drugs will contribute to ALL of 2018 total drug spend growth due to a combination of explosive pharmacy trend in the specialty drug arena as well as declines in traditional medications(1). With thousands of specialty products in the pipeline expected to drive a significant portion of future medication costs and inflationary trends,(2) specialty growth has exceeded that of traditional drugs for the tenth consecutive year(1). Not only does specialty pharmacy trend continue to soar, these medications are now being created with remarkable biotechnology and gene-altering techniques to treat the most complex, high-cost healthcare conditions such as cancer, rheumatoid arthritis, and unique rare diseases.

Many of these specialty medications are billed under the medical benefit, which makes management even more challenging when considering complex medical benefit structures, numerous places of service, varied payment models, bundled claims, and complicated data.  Payers also cite several management concerns: determining the value of specialty drugs, ensuring clinically appropriate use, and responding to the specialty pipeline(3).

Spend trend and growing payer concerns emphasize the importance of developing strategies to stay ahead of the trend and pipeline. 

The Magellan Rx Management Medical Pharmacy Trend Report , in its ninth edition, includes a comprehensive view of medical pharmacy trends in claims data, including all major lines of business (commercial, Medicare, and Medicaid). According to the report, the 5-year pharmacy trend for specialty drugs on the medical benefit is 68%, 22%, and 17% (4) for Commercial, Medicare, and Medicaid lines of business, respectively. Driven by inflation, utilization, drug mix, and shifts in site of service, medical benefit drug spend has been identified as allowed amounts of $29.97 per-member-per-month (PMPM) for Commercial members, with Medicare PMPM allowed amounts of $52.19 (an increase of 18 and 12 percent, respectively, over the last year)(4). Yet visibility into this spend has been generally limited, given the management challenges addressed above.

It is critical for payers to stay current with evolving management strategies and marketplace conditions impacting medical pharmacy utilization and spend, especially as these specialty drug costs continue to be a leading driver of overall pharmacy trends. At Magellan Rx, we understand medical benefit drug spend, pharmacy trend, pipeline, and impact—all of which is imperative to formulating innovative, effective solutions for managing specialty drug costs. Get a more detailed analysis on the latest in pharmacy trends by signing up for our free webinar on March 14 at 1:00 pm Eastern.

1. IQVIA Institute 2018 and Beyond: Outlook and Turning Points. March 2018. Available at: https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/2018-and-beyond-outlook-and-turning-points.pdf
2. Commercial Specialty Medication Research: 2016 Benchmark Projections, Milliman Research Report. December 2015. Available at: http://us.milliman.com/uploadedFiles/insight/2016/commercial-specialty-medication-research.pdf
3. EMD Serono. Specialty Drug Digest 14th Edition. 2018
4. Magellan Rx Management. Medical Pharmacy Trend Report. 9th Edition. 2019. Available at: https://www1.magellanrx.com/magellan-rx/publications/medical-pharmacy-trend-report.aspx

In today’s complex healthcare environment, we continue to see a dynamic shift in managing complex chronic conditions with life-saving drugs. This introduces additional challenges for employers and their employees, especially in terms of access and affordability.

With the evolution of prescription benefit management, it’s a critical best practice for employers to plan today for tomorrow’s challenges. This will help identify opportunities and strategies to ensure the best clinical and economic outcomes for their company and their employees while delivering high-value, cost-effective prescription benefits.

Now is the time when most employers are planning for 2019 budgets. Understanding what will drive costs creates the opportunity for strategies to ensure the right drug is used for the right patient at the right time.

We are noticing three key themes related to 2019 expected pharmacy costs:

1. Overall drug costs will continue to grow by single digits primarily through generic competition and slower growth of specialty drugs. Specialty drugs will continue to drive the overall drug trend, continuing to increase by double digits (around 11%).
2. Two conditions: Autoimmune (anti-inflammatory) and Diabetes – account for 30-35% of all pharmacy costs. Drugs used to treat complex chronic conditions such as rheumatoid arthritis, psoriasis, Crohn’s disease, and other autoimmune diseases, along with cancer and HIV/AIDS drugs, will account for about 60% of all specialty drug costs.
3. Specialty costs on the medical benefit are the most significant cost drivers today with little management. Injectable and infused drugs administered by providers to address conditions such as cancer and autoimmune disorders present unique challenges, with cancer and cancer-associated supportive drugs having a trend up to 25%; however, with less than 60% of employers having care management and prior-authorization programs for these top conditions.

Privacy is a funny thing, and peoples’ choices about privacy when technology is involved is often hard to explain. We don’t think twice about letting companies track what we like and don’t; what we search for and when we search; the photos we like and the ones we don’t; our shopping patterns and our wish lists; where we go and when; and now, we welcome full-time listening devices into our homes. I often wonder if these listening devices would find their way into our kitchens if they looked more like a reel-to-reel recording device versus a cute little modern orb with fancy LEDs.

Despite how comfortable we are with technology in some parts of our lives, there seems to be a line that many won’t cross. For some reason, discussing our finances while the orb is listening is okay, but using technology to help us manage our healthcare strikes some people as going too far.

This line is moving, albeit slowly.

There are real challenges in advancing technology in healthcare. But most importantly, we need to allow consumers to choose how they want to see their health information.

Texting is common in healthcare today, but it is inefficient, and often, confusing. Most healthcare-related texts contain either redacted information, such as, “You have not filled AtorXXXXXXXX prescription,” or contain links on which you have to click to take you to another message. Amazon doesn’t make a customer guess at the contents of their message or follow a clunky process to share information, so why do we do it in healthcare?

There are a number of regulations that govern Protected Health Information (PHI), and it’s critical that we take them seriously. After all, we’re talking about very sensitive and private material about diagnoses, medication, diagnostics and other information.

But, with careful planning and execution we can balance what is required of us by law while providing consumers with information that will help make their healthcare journey more efficient and tech-enabled. For example, we were able to craft, on behalf of our clients, end-user agreements that allow us to send texts that look like this:

“Your health is important to [Insert Client Name], please take your cholesterol medication as prescribed.”

The results from this texting pilot were nothing short of amazing. 26 percent of the people who received this message, none of whom were previously following their doctor’s orders, promptly filled the prescription. Interestingly, we saw similar results in every category we piloted. Why? It’s simple: nothing had to be decoded, no incremental steps needed to be taken, no password had to reset, etc. The best part of the pilot? 87 percent of the people who started, stayed in the program.

With pilots like this, we moved the line a smidge.

Texting was one of our first pilots and it was critical to challenging our thinking and finding new ways to solve old problems. The line needs to keep moving forward and we welcome the challenge.

A major trend in the pharmacy space continues to be increasing specialty drug spend, which is expected to continue with the introduction of new specialty agents for oncology, autoimmune disorders and rare diseases. In this year’s Medical Pharmacy Trend Report Employer Group Supplement, we found that 88 percent of employers reported a medical benefit spend of less than $10 million, and a year-over-year drug trend between 1-20 percent. For the few employer groups with spend above $10 million, it was due to a higher number of lives, and may be assumed that the employee mix for these groups may have included those with more costly health expenditures.

The Employer Group Supplement assists employer groups and third-party administrators in determining specialty drug trends and strategies to solve complex challenges impacting the medical benefit drug landscape. Our goal is to expand the information shared with employer groups to create a more dynamic picture of specialty drug management and help employers make more effective healthcare decisions. Building an effective medical benefit drug management strategy requires an in-depth knowledge of and expertise in this complex area, but it’s essential to help employers rein in costs and improve the quality of care for members. It is our hope that the survey data presented in this report helps employer groups begin to think about and investigate escalating medical pharmacy costs.

Download the full report or listen to our webinar to learn more.

On March 22, Magellan Rx Management released its seventh annual Medical Pharmacy Trend Report, which continues to be a leading source for payers and other industry stakeholders to analyze high-cost injectable drugs paid under the medical benefit. It’s clear that specialty spend on the medical benefit accounts for a significant expenditure for both members and payers alike and it is continuing to grow rapidly, particularly for commercial health plans. Ensuring a sound medical benefit drug management structure is in place is necessary to rein in costs in both the short- and long-term, particularly as new drugs come to market.

This year’s report highlights the member and payer impact of high-cost specialty drugs billed on the medical benefit. Often unrecognized, but a critical component of total drug spend, this segment of drug utilization is especially important considering that by 2018, it’s expected that 50 percent of total United States drug spend will be composed of specialty medications. Additionally, half of specialty drug spend is billed through the pharmacy benefit and half through the medical benefit, or “medical pharmacy.” Specifically, the report found:

• Commercial medical pharmacy spend increased by an average of 12 percent each year from 2011-2015, while Medicare Advantage remained relatively stable with only a 5 percent increase over the same five-year period.
• The majority of oncology drugs are still infused or injected and the largest portion of their costs are covered through the insured’s medical benefit. Oncology and supportive care agents represent nearly 50 percent of commercial medical benefit drug spend and nearly 60 percent for Medicare Advantage.
• The leading cause of blindness in senior populations is treated with injections that are exclusively covered through the medical benefit, and this was the highest trending category on the medical benefit in 2015 (30 percent for commercial and 39 percent for Medicare Advantage).
• On average, the 10 most expensive commercial medical benefit drugs averaged $421,220 annually per patient and affected two per 100,000 members. The 10 costliest Medicare medical benefit drugs averaged $268,780 and affected eight per 100,000 members.
• In total, taking into account coinsurance, copay and deductible, members using a medical benefit drug paid 3 percent of total medical pharmacy costs in commercial (97 percent for the payer) and 5 percent in Medicare Advantage  (95 percent for the payer). While the member percentage may seem small in comparison to payer percentage, many members have trouble affording their medications or reach their maximum out-of-pocket costs, oftentimes at thousands of dollars.

Key strategies for the effective management of medical benefit drug spend outlined in the report include:

• Clinically and operationally managing drugs billed with unclassified Healthcare Common Procedure Coding System codes;
• Improving claims system capabilities to capture and report National Drug Codes;
• Employing provider network strategies for commercial members to remove disparities in cost by outpatient site of service;
• Implementing benefit design strategies, and
• Bringing transparency of medical benefit drug costs and therapeutic options to members.

Building an effective medical benefit drug management strategy requires an in-depth knowledge of and expertise in this complex area, but it’s essential to help payers rein in costs and improve the quality of care for members.

Download the full report to learn more.

Learn more about ways to keep specialty spend, an important — and quickly growing — area of pharmacy spend, from Matt Ward, Magellan Rx Management’s general manager of the employer segment. Ward’s op-ed on the subject was recently published in WorldatWork’s magazine. WorldatWork is a nonprofit human resources association and compensation authority for professionals and organizations focused on compensation, benefits and total rewards.

Read more here: Six Ways to Keep Specialty Spend Under Control