Site of Care
Site of Care: Helping Employers Control Soaring Specialty Drug Costs
3 minute read•Navigation Insider
Specialty drugs are transforming medical treatment and quality-of-life possibilities for millions of people who face health conditions and diseases ranging from the common to the chronic and complex. At the same time, these drugs are dramatically increasing healthcare costs for self-insured employers and their health plan members.
A 2020 Mercer survey found that while only about 2% of consumers receive specialty drugs, these treatments now account for 51% of employers’ total annual pharmacy costs. The survey noted that while overall health benefits costs per employee have been rising in the 3% to 4% range in recent years, employers who track specialty drug costs were seeing an average increase of more than 11%.
By one estimate the average cost of a specialty drug — defined as “specialty,” in part, because it must be infused or injected — recently topped $5,000 per year. The most expensive treatments can cost hundreds of thousands of dollars annually, some more than $1 million.
With an estimated 75% of the drugs in development considered specialty in nature, both the expanding treatment possibilities, and the upward financial pressures, show no signs of slowing.
As employers and benefits consultants seek solutions to this issue, Quantum Health has developed an in-house clinical team that conducts SOC reviews on specialty drug authorization requests and treatment cases. The goal is to help employers and members identify opportunities to reduce treatment costs while still enabling access to clinically appropriate therapies.
Why does the SOC matter? A major factor driving pricing is where a specialty drug is administered. Sites can vary — hospital, outpatient infusion center, doctor’s office, even the patient’s home — with sometimes astounding cost swings. A recent study showed a nearly 90% cost difference between home and hospital (the most expensive) for administering one medication.
In most cases, patients must get their first few doses in a hospital to ensure adequate medical support should there be a life-threatening reaction to the drug. But once a drug proves well tolerated, an SOC program often can shift future treatments to a clinically appropriate, but less costly, location.
How significant can those cost savings be? Our team recently managed a case where a member received infusions every six weeks in a hospital. Annual cost: $621,000. Collaborating with the treating physician, and identifying an alternative infusion facility, we were able to shift treatment to an outpatient setting. Annual cost: $38,385.
Quantum Health’s SOC service is integrated into our healthcare navigation and care coordination solution. That means our team gets a uniquely holistic view of each member’s treatment journey. In most instances, we’ve already dedicated a nurse to provide one-on-one clinical support while also engaging with the treating physician.
Not all self-insured employers receive SOC review through one of their benefits administration partners. If it sounds like a strategy that’s needed in your benefits program, here are steps our team considers key to effective SOC review:
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