Industry Overview

Total drug spend in the US grew to more than $300 billion in 20101, with the most rapid increase occurring among those drugs that are reimbursed under the medical benefit.  Many of these drugs require healthcare professionals for administration and are dispensed in settings such as hospitals, nursing homes, clinics, outpatient facilities and the home1.  Often these are drugs that are administered by injection or infusion, a category that is growing faster than oral forms of medication, and now represents almost 30% of overall drug spending.  Of the $81.5 billion spent for drugs under the medical benefit, almost half is in clinics and through home health care.

While the overall rate of growth in spending for drugs has moderated in recent years, growth in specialty drugs continues at a rapid pace.  Spending for specialty drugs increased 19.6% in 2010 and this segment now represents about 25% of all drug spend2.  Since specialty drugs are often infused or injected, it should not be surprising that an estimated 55% of total spending for specialty drugs occurs on the medical benefit2.  This is especially true for oncology drug costs, of which 80% are billed on the medical benefit2.

Since healthcare professionals are typically involved in the administration of drugs billed on the medical benefit, administration and delivery fees, which can vary significantly among settings, can have an important impact on the overall cost of care.  Data indicate that from 2005 to 2008, medical spend for key specialty therapeutic classes increased by over 60%; during the same time period there was also a shift in site of care from the physician’s office into more costly outpatient care facilities2.

Despite the rapid growth in spending for medical and specialty drugs, health plans often lack the information and tools necessary to appropriately manage utilization and spend for these drugs in a comprehensive and consistent manner.  Many incorrectly assume that their current PBM manages these drugs. However, most PBMs do not have the ability to accurately code and process payments for drugs and related services paid under the medical benefit.  In addition, many insurers continue to use traditional paper-based claim processes.

As the need to manage spending and pricing in this area becomes more apparent, NovoLogix is uniquely positioned to help plans manage the administration of drugs in the physician’s office and at home. Our next-generation, proprietary web-based system provides authorization and claims capabilities, enabling clients to cover these high-cost pharmaceuticals on the medical benefit while easily and effectively managing every stage of the process. These services include:

  • Drug Spend Containment
  • Drug Utilization Management
  • Strategy Execution
  • Easy Integration
  • Streamlined Processing

The NovoLogix information system and services platform creates customizable, PBM-like capabilities, that effectively and efficiently manage drugs covered under the medical benefit.  NovoLogix software provides unmatched pricing flexibility and ensures that claims are processed according to client-specified contracted rates. As a result, our clients have saved millions of dollars on their overall drug costs.



1. 2010 U.S. Spending and Prescription Information. (2010, April 7). IMS
from http://www.imshealth.com/portal/site/imshealth/menuitem.a46c6d4df3db4b3d88f611019418c22a/?vgnextoid=ed2e5a6b5895f210VgnVCM100000ed152ca2RCRD&cpsextcurrchannel=1

2. Drug Trend Report. (2011, April). Express Scripts Research
from http://www.express-scripts.com/research/studies/drugtrendreport/

Pharmacy Benefit Manager (PBM) - Pharmacy Benefit Manager typically contracts directly with an insurer (e.g., a health plan or large employer) to manage its pharmacy benefit, sending medications either through retail or mail outlets, and applying a series of other drug management tools or technologies.