UnitedHealth study: Administering specialty drugs outside hospitals could save $4B

Administering pricey specialty drugs in doctors' offices and patients' homes instead of hospitals could reduce drug costs by $4 billion a year for insurance plans, according to a study from insurance giant UnitedHealth Group.

The study released Monday comes as specialty drugs for chronic conditions such as cancer have eaten up a large portion of drug spending costs. UnitedHealth said that changing the location of administering specialty drugs to outside the hospital could save $16,000 to $37,000 in savings per patient.

“Compared to independent physician offices, hospitals charge more for specialty drugs and their administration, whether treatment takes place in a hospital facility or in a hospital-owned physician practice,” the study said.

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Changing the location of administering drugs had the most impact on the cost of multiple sclerosis drugs. The monthly cost per patient for administering such drugs in a hospital was $20,965 compared to $11,619 in a physician's office to $10,849 in the patient’s home.

The cost of taking specialty rheumatoid arthritis drugs was $11,451 for hospitals and roughly $5,000 for administration in both doctors' offices and patients' homes, the report said.

The study was based on the utilization and costs of hospital-administered specialty drugs in 2018 for UnitedHealthcare members with employer coverage. The release comes as insurers have tried to curb the costs for specialty drugs.

A report from pharmacy benefit manager Magellan Rx Management found spending per member on commercial plans for pharmacy drugs increased by nearly 20% from 2016 to 2017 due in part to rising specialty drug costs.

The Trump administration has also proposed several moves to rein in costs for Medicare, such as tying prices for physician-administered drugs in Part B to cheaper prices countries overseas pay.