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Evaluating "Hidden" Specialty Drug Spend

Submitted by CVS Caremark, June 2011

Evaluating “Hidden” Specialty Spend
It’s estimated that as much as 50 percent of specialty pharmaceuticals are administered in the physician’s office or in other clinical environments. These drugs are commonly purchased by the clinician and billed under the member’s medical benefit (“buy and bill”) resulting in reduced opportunity for cost or clinical management.

To gain clarity on this utilization, CVS Caremark analytics evaluated medical claims for 2009 made available to us by a cross section of clients, including several employers and a health plan. Pharmaceutical spend under the medical benefit for this group of clients totaled $150M. Just over $30M, about 20 percent, of that spend was for non-specialty pharmaceuticals. The accompanying table breaks down the remaining spend on specialty pharmaceuticals by major therapeutic categories.

Cancer and associated supportive care specialty drugs, such as hematopoietics for anemia and neutropenia, accounted for 53 percent of total drug costs. Specialty drugs used to treat arthritic conditions and diseases, immune disorders, autoimmune diseases and hemophilia accounted for 17 percent of total drug costs.

Specialty drug spend in the medical benefit is expected to grow 60 percent, reaching $105B by 2015.1 Management of this spend is a high priority for payors. Current and future management approaches include prior authorization, mandatory mail, increased member cost share, revised physician fee schedules, preferred drugs, step therapy and the use of clinical pathways.

1 CVS Caremark analysis of data from IMS Health, Buck Consultants, NHE, Credit Suisse, 2011.

Spend on Specialty Pharmaceuticals in the Medical Benefit
Disease/Condition % Total Spend Key Specialty Drugs
Cancer 46% Avastin, Erbitux, Herceptin, Rituxan
Anemia and Neutropenia 7% Aranesp, Neupogen, Neulasta, Procrit
Osteo and Rheumatoid Arthritis 7% Euflexxa, Hyalgan, Orencia, Remicade
Immune disorders 6% Baygam, Carmimune
Autoimmune (Crohn’s and MS) 2% Remicade, Tysabri
Hemophilla 2% Alphanate, Humate, Recombinate
Pulmonary Arterial Hypertension 1% Remodulin, Ventavis
Macular degeneration 1% Lucentis, Macugen
Respiratory Syncytial Virus 1% Synagis
Lysosomal storage disorders 1% Aldurazyme, Cerezyme, Myozyme
Growth deficiencies 1% Humatrope, Omnitrope
All others 6%  
Specialty % of total spend 80%
Percentages have been rounded.

Topics: Pharmacy Benefits Management (PBM)