Costly specialty drugs drive higher spending on provider-administered treatments, study finds 

Spending per member in commercial plans on medical pharmacy drugs increased by nearly 20% between 2016 and 2017, due in part to the growing number of emerging therapies with high price tags. 

Magellan Rx Management, the pharmacy benefit management arm of managed-care company Magellan Health, released its ninth annual trend report diving into spending on drugs administered by providers, and it found that per-member, per-month spending on these therapies increased by 18% from 2016 to 2017, reaching an average of $29.97 monthly, for people enrolled in commercial plans.

Spending on provider-administered drugs in Medicare also went up, the study found. Per-beneficiary, per-month spending increased by 12% in that same window, to an average of $52.19. 

The findings put a spotlight on focus areas for PBMs and payers to more effectively monitor use and control costs for these drugs, Kristen Reimers, senior vice president for specialty clinical solutions, told FierceHealthcare. 

“In previous years, drug pricing and inflation have really been the drivers of trend. This year, our analysis showed that drug spend was driven overwhelmingly by an increase in unit volume—in other words, more specialty medical benefit drugs are being utilized,” Reimers said.

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Drugs administered in hospitals continue to be the most expensive, the report found, typically costing between two and three times more than those administered at a doctor’s office or through home health.

But payers are taking notice—68% now use a site-of-service program to mitigate these expenses, Magellan found. 

Spending on emerging oncology treatments—particularly immunotherapy—are also a major driver, according to the study. Treatments in the antihemophilic factor category, for example, increased spending by 62% year over year in commercial plans and 185% in Medicare for patients given these therapies. 

Chimeric antigen receptor T-cell therapy, which Medicare may begin to cover in the near future, alone is projected to drive per-member monthly spending up by 581% for patients who are prescribed these treatments. The highest per-member, per-month spending across all service lines was also reported in oncology, Magellan found. 

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In addition to diving into claims data from 45 commercial insurers—33 of which also administer Medicare Advantage plans—Magellan also surveyed leaders at these payers. Just over half (51%) have instituted step therapy to manage these drug costs, and 64% said the cost of biosimilars, in oncology especially, is playing a significant role in their reimbursement plans. 

And more of these drugs are on the horizon—Magellan projects that there will be 43 billion dollar therapies on the market by 2021. 

"The big story again this year was the increase in oncology immunotherapy products," Magellan's researchers said. “Medical pharmacy continues to be driven by low-volume, high-cost specialty medications."