Report Quantifies Cost of Utilization Management Wars

Prescription drug utilization management and moves to counteract it introduce billions in costs to payers, providers, manufacturers and consumers alike, a new report suggests. The report, published in the journal Health Affairs by researchers from the University of California, Berkeley and Novartis Pharmaceuticals Corp., argues that such practices inflate already-too-high drug prices — though one outside expert says she is skeptical about some aspects of the study.

The research article concludes that utilization management practices could introduce as much as $93.3 billion to the U.S. health care system annually. Some of the cost drivers identified in the article include, for payers, “cost of administering prior authorizations”; for manufacturers, the cost of “administrative support programs,” “direct financial payments to assist commercially insured patients” and providing insured patients with free medications; for physicians, the “cost of physician practices’ time interacting with payers over prior authorization”; and for patients, “spending on branded drug cost sharing.”

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