Medical vs. Pharmacy Drug Channel

Specialty drugs continue to become more and more important in treating chronic conditions. These types of drugs can be covered under the medical benefit, pharmacy benefit, or both. This depends on whether the drug is self-administered or given in a clinical setting. Medical benefit drugs are ones that are injected or infused by a healthcare professional in an out-patient clinic or infusion centers. Whilst, pharmacy benefit drugs are self-administered and include orals, self-injectable, or a route of administration a patient can manage at home.

Outpatient drugs are most often (by volume) distributed/dispensed via retail pharmacy, with the remainder via specialty pharmacy, home infusion, infusion suite, hospital outpatient, and physicians’ offices. Many specialty drugs are processed through the medical benefit which also means that there is a lag between administration and billing. This differs when specialty drugs are processed via the pharmacy benefit, since they are billed in real-time.

In addition, it can be a challenge to accurately track drug spend and utilization when specialty drugs are processed through the medical benefit. A major restraint for transparent medical benefit drug utilization and analyzing spend data is the use of less descriptive Healthcare Common Procedure Coding System (HCPCS) through a traditional CMS-1500 claims billing format.

The costs of drugs via pharmacy benefit and medical benefit differ as well. Medical drug rebates are often pennies to the dollars compared to drugs dispensed under the pharmacy benefit which has more aggressive access to rebates through formulary management. Typically, infusion drugs (IV, intrathecal, etc.) are dispensed via medical benefit because of needed supplies for infusion which are not commonly dispensed, or well-coordinated, via the retail pharmacy route. Shifting from Medical to Pharmacy Benefit could assist in reducing cost by taking advantage of more aggressive utilization management, opportunities for rebates, and deeper network discounts. Unfortunately, as a result of the difficulties in managing the high cost of specialty drugs, each accountable group (pharmacy directors and medical directors) does not want the responsibility of the cost and develop strategies to shift the cost in the direction of the other.