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Specialty, compounded drugs driving up costs

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Specialty and compounded drugs, which a study says have driven a major increase in overall U.S. prescription drug spending, also are increasing workers compensation costs.

Driven by specialty medications, the overall national prescription drug spending increased 13.1% last year to $979.86 per member, the highest increase in 11 years, according to the Express Scripts 2014 Drug Trend Report released Tuesday.

Though the study by the St. Louis-based pharmacy benefit manager addressed only group health, Medicare and Medicaid prescriptions, sources say they're seeing similar trends in workers comp.

“Specialty drugs are impacting comp primarily in the hepatitis C area due to occupational exposure,” but they could decrease costs in the long-term, Phil Walls, chief clinical and compliance officer at Tampa, Florida-based PBM myMatrixx, the marketing name of Matrix Healthcare Services Inc., said in an email.

For example, he said spending $90,000 for the hepatitis C drug Sovaldi to achieve a potential cure is preferable to spending $500,000 later for a liver transplant.

Specialty drugs are used occasionally in workers comp, such as health care workers who contract hepatitis C from a needle stick, Kimberly George, Chicago-based senior vice president and senior health care adviser at Sedgwick Claims Management Services Inc., said in an email.

Overall, the hepatitis C drug class was the fourth-most expensive specialty therapy class in 2014. Compounded drugs ranked No. 3 in spending among traditional therapy classes, according to the Express Scripts report.

Ms. George and Mr. Walls said compounded drugs account for a greater percentage of workers comp drug spending than specialty medications.

“Almost all compounding in comp is unnecessary and has no proven value,” Mr. Walls said, but there are cases in which a patient might have a “special need, such as the inability to swallow,” which would make compounding “a true life-saving alternative.”

Since compounds aren't always processed through a PBM, an injured worker could take a drug for weeks or months before a payer gets the bill, said Mark Pew, senior vice president of product development at Prium, a Duluth, Georgia-based medical management company.

Mr. Pew said closed drug formularies that require preauthorization to prove compounds are medically necessary could reduce prescriptions as could a utilization review, which some states, such as California, allow.

However, “specialty drugs are the fastest growing segment in the new-drug pipeline,” Mr. Walls said, adding that he's seen estimates that such drugs will represent 50% of the workers comp market by 2018.

Express Scripts is expected to release its 2014 Workers Compensation Drug Trend Report in April.