Payers are slowly moving specialty drugs from the medical benefit to the pharmacy benefit to reduce cost. The Pharmacy Benefit Management Institute’s recently released 2014 Specialty Drug Benefit Report calls it an example of a new management strategy to deal with the rapid growth of specialty expenditures.
This strategy attempts to redefine the coverage landscape described in the EMD Serono Specialty Digest, 9th Edition. According to the digest, almost all plans cover self-administered drugs exclusively under the pharmacy benefit, while nearly all cover office-administered drugs exclusively under the medical benefit.
How would a shift be possible? Providers commonly buy and stock drugs at their offices and administer them to patients as needed. Then they mark them up and bill the insurer. However, this model is unsustainable for most practices and payers alike in light of the cost of the product.
Instead, shifting coverage of the drug from the medical benefit to the pharmacy benefit allows providers to resort to white bagging and brown bagging.
White bagging is where a specialty pharmacy ships the drug to the provider just before administration of the drug to a specific patient. Brown bagging is where a specialty pharmacy provides the drug to the patient, who then takes it to the appointment.
In both cases, the specialty pharmacy bills the payer for the drug, which effectively reduces cost for both the physician and payer.
Coverage under the pharmacy benefit can also provide payers with a greater ability to track and manage product utilization.
Sources: EMD Serono Specialty Digest, 9th Edition; Pharmacy Benefit Management Institute 2014 Specialty Drug Benefit Report