Pharmacy Benefits

Specialty Drugs Exploding on the Marketplace

Experts warn that by 2018 specialty drug costs could rise to 50 percent of total drug costs for workers' comp payers.
By: | April 21, 2014

Last year, costs for specialty drugs were all but nonexistent for workers’ comp payers. Now, they comprise about 2 percent of the drug spend for clients of myMatrixx with no signs of slowing down.

The pharmacy benefit management and ancillary services company is putting workers’ comp practitioners on notice to watch for the explosion of these costs. The company says stakeholders need to put the issue on their radar screens.

“The question is, why should you be concerned?” said Phil Walls, chief clinical and compliance officer for myMatrixx. “The number one reason is that by 2018 specialty drug costs will rise to 50 percent of total drug cost.”


Walls and Dr. Jennifer Dragoun, vice president and chief medical officer at CompServices Inc./AmeriHealth Casualty, recently conducted a webinar on specialty drugs and their impact on workers’ comp. They say few in the workers’ comp system have a grasp on the issue.

“I don’t think many people understand, even in the physician community, what specialty drugs are,” Walls said. “The awareness is just now starting, but it has the potential to explode in terms of costs.”

Specialty drugs are not the same as compound drugs. While there is no formal definition, the American Journal of Managed Care says a specialty drug is one that costs at least $600 per month and treats a rare condition, requires special handling, uses a limited or restricted distribution network, or requires ongoing clinical assessment.

“These drugs are often used for rare conditions, so frequently there are no other options,” Dragoun said. “That allows for higher pricing.”

“PBMs, payers, and providers need to start thinking about drug therapy in a different way.” —Phil Walls, chief clinical and compliance officer, myMatrixx

The drugs are used for a variety of conditions such as multiple sclerosis, HIV, and rheumatoid arthritis. While they may seem to be conditions that are not compensable for injured workers, many of them can be.

“HIV and hepatitis C can both be contracted from occupational exposure through a needlestick injury,” Walls said. “Rheumatoid arthritis is brought about by genetic predisposition, but it can be impacted by an occupational injury, or an occupational injury can make it worse. So that drug may be compensable.”

Osteoarthritis can be brought on, in part, by heavy labor. Drugs for traumatic brain or spinal cord injuries could be compensable, as might cancer chemotherapy in states with cancer presumption laws for firefighters.

“If I were a payer trying to assess my risk, who would it be?” Walls said. “The population will be very large.”

That could include anyone who has just undergone orthopedic surgery who would need anticoagulants to prevent deep vein thrombosis. Or a health care worker who was exposed to a needlestick injury.

Other workers most at risk of requiring specialty drugs include:

  • First emergency responders.
  • Public safety personnel.
  • Law enforcement officers.
  • Correctional officers.
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  • Certain defined workers in states with cancer presumption laws.

“PBMs, payers, and providers need to start thinking about drug therapy in a different way,” Walls said. “Traditionally, pharmaceuticals has been viewed as a silo mentality. ‘We are spending this much on drugs, this much on providers, this much on hospitals.’ But with specialty drugs, to evaluate the cost and the associated savings these drugs can bring requires us to look at and manage them in a different way.”

For example, noncompliance could become an expensive proposition for an injured worker prescribed specialty drugs. While a three-month treatment of hepatitis C specialty drugs may cost upwards of $90,000, a liver transplant costs about $280,000.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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