The relative ease of getting a physician-administered drug in a doctor’s office or hospital is starting to fray as new economic realities change the dynamics between insurers and oncologists.


Traditionally, when a patient receives a drug in a doctor’s office or hospital, the physician handles the process without much interference from patient’s insurer. An oncologist, for instance, would use the vial of chemotherapy stocked by his or her office or hospital, administer it to the patient, bill the insurance company for the cost of the drug at a markup, and collect an administration fee. The patient pays one copay for the office visit, which covers the drug cost.


But now, faced with an expensive pipeline of promising oral and IV-administered agents treating cancer and other life-threatening or debilitating diseases, insurers are increasingly inserting themselves into process of claims payment. The patient’s medical benefit—which covers drugs administered in a clinical setting—is no longer off limits to prior authorization, separate patient drug charges and incentives to use insurers’ preferred drugs—cost controls that historically been the domain of the pharmacy benefit.


This trend toward more aggressive drug benefit management comes into clearer focus in the latest study by Decision Resources Group examining eight of the newest oral and IV-based therapies to treat advanced non-small cell lung cancer (NSCLC). The drugs include two of the latest immunotherapies on the market, Bristol Myers Squibb’s Opdivo and Merck’s Keytruda, IV-administered therapies that mobilize the body’s immune system to attack spreading cancer cells.


Results of the March 2016 surveys of 100 oncologists and medical and pharmacy directors from 39 managed care organizations illustrate the different perspectives of payers vs. physicians. MCOs indicate the rules on prescribing for NSCLC are not as onerous as for other drug indications; prior authorization is mainly aimed at ensuring proper use according to FDA labeling, leaving oncologists to practice largely at their discretion. On the other hand, a majority of oncologists said payers are restrictive on drugs both on the medical and pharmacy benefits.


While insurers may not be overly heavy-handed on oncology drug utilization, they are not writing the checks for drugs without applying the balances. They are starting to take more of a hands-on approach to medical benefit management while increasingly relying on specialty pharmacies as a lever of control.


The study found that many payers that designate drugs as under the medical benefit are distinguishing them as preferred or nonpreferred, promoting their use mostly through physician financial incentives, but also via promotional activities. Not surprisingly, total costs and treatment outcomes are driving the status decisions.


Many medical oncologists were unaware of MCOs designating preferred drugs on the medical benefit. But among those surveyed that were, a majority said they encounter more MCO restrictions – such as prior authorization – for a nonpreferred drug than a preferred drug and that patient cost sharing is higher for nonpreferred drugs.


Patients are also being asked to shoulder more of the costs. Contrary to standard practice years ago, most surveyed MCOs’ commercial plans charge members a copay for a drug administered in a clinical setting that is separate from the office visit copay, although that copay is nominal, averaging under $20.


Although industry news often focuses on strategies such as clinical pathways, bundled payments and site-of-care restrictions, our survey reveals more of a reliance on specialty pharmacies. Many payers mandate the use of specialty pharmacies for NSCLC, including IV-administered therapies—higher than for drugs for other indications studied by DRG.


Specialty pharmacy distribution allows health plans to direct the use of drugs acquired at a better discount than what they may end up paying physicians under the buy-and-bill arrangement. By processing drugs under the pharmacy benefit, insurers can better apply utilization controls, have specialty pharmacists provide high-touch services to patients, and steer patients to lower-cost preferred therapies.


Physicians can still leverage buy and bill, but MCO are placing controls on drugs obtained through this channel. This is leading to reduced prescribing of drugs through B&B for some surveyed oncologists but has had a muted affect around specific NSCLC drugs.


The pressures of oncology drug pricing are well publicized. Pharmacy benefit manager Express Scripts reported a cost trend of 23.7% for oncology in 2015, driven by increases in both utilization and price. It’s no wonder insurers are leaving no stones unturned, shining the spotlight on the medical benefit and pointing the way to specialty pharmacies.


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