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.”

© 2024 MMIT
Peter Johnson

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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