The Employer's Guide Blog for Overseeing PBMs

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Uncovering Hidden Specialty Drug Spend Outside of the Pharmacy Benefit

When reviewing overall drug trend, specialty drugs represent a small volume of prescription utilization although specialty drug spend represents a large share of drug costs.  As an example, when comparing branded specialty vs. branded non-specialty drugs, branded specialty accounted for only 3% of total prescriptions in comparison to 34% of the share of spending based on the November 2018 BlueCross BlueShield Prescription Drug Costs Trend Update Report.Therefore, the appropriate management of specialty drugs continues to be an area of focus for those involved in administering the pharmacy benefit.
Furthermore, payers should have oversight of both pharmacy and medical spend, particularly when managing specialty drugs.  A large portion of specialty drug spend occurs under the medical benefit.  According to a 2017 CVS Health  report, 45% of specialty spend occurs under the medical benefit with the remaining 55% under the pharmacy benefit:2
Moreover, there are many unique differences within each benefit. One notable difference is that medical claims are billed utilizing HCPS codes (commonly referred to as J-codes) vs. NDC codes for pharmacy claims.  J-codes present various challenges which include issues with certain drugs billed under a miscellaneous code if a specific code doesn’t exist, utilizing one j-code for several different drugs and inaccurate billing.  
Payers will need to analyze specialty drug data from the medical and pharmacy benefit.  In addition to the standard reporting available for drugs paid under the pharmacy benefit,  obtaining medical side specialty drug reporting is essential.  The 2018 PBMI Specialty Drug Trends Report stated that the majority (89%) of respondents reported that their PBM or other healthcare vendor tracks specialty and non-specialty drug spend separately for drugs covered under the pharmacy benefit. 

However, less than half (48%) reported that their PBM or healthcare vendor tracks specialty drug spend under the medical benefit……For the subset of respondents reporting that specialty spend under the medical benefit is tracked, the source of these reports is most often their health plan.”3

Key next steps towards appropriate management of specialty drugs would start with the understanding that a large portion ofthe spend exists under the medical benefit and then to obtain pharmacy reporting from the medical side in order to have a complete view of the total specialty drug spend under both benefits.
3)    Pharmacy Benefit Management Institute. 2018. Trends in Specialty Drug Benefits. Plano, TX: PBMI. Available from

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