The hidden drug markups driving unnecessary employer medical spend

How provider fees inflate specialty drug costs, and what self-funded employers can do to control spend.

Infusion therapies have transformed care for people living with multiple sclerosis, rheumatoid arthritis, Crohn’s disease, cancer, and other chronic and complex conditions.

They can also represent a significant and rapidly growing expense for self-funded employers.

But the cost of the therapy itself is only part of the story.

Employers are not always paying more simply because specialty drugs are expensive. They may also be paying provider markups that are bundled into medical claims and difficult to see. In some cases, those markups can make the same treatment cost dramatically more than it should.

Infusion costs are growing rapidly

For employers, infusion care has emerged as one of the fastest-growing and least understood drivers of healthcare spending. Pharmacy spend is growing at twice the rate of overall benefits costs, and infusions represent more than half of all specialty drug spending.

While only a small share of employees receive infusion treatments, these therapies account for a disproportionately large portion of total medical costs. According to Leap’s analysis, 1% to 2% of members receiving infusions may drive 10% to 15% of medical spend. Employers with 10,000 covered lives may also face as much as $3 million in avoidable specialty infusion spend.

Infusion drug markups are hidden inside claims

The issue isn’t just that the therapy is expensive. The issue is how medical providers are able to inflate the cost of the therapy when they bill for it. Currently, most commercial medical plans have minimal controls to ensure they pay a fair price for infusions.

Most infusion drugs are reimbursed under a “buy-and-bill” model. Under this model, a provider purchases and stocks the medication, administers the treatment, and then submits a medical claim. That claim may include the cost of the drug, administration fees, supplies, and a provider markup.

The employer typically sees only the total allowed amount. The underlying drug cost and provider margin may not be visible as separate components.

The issue, then, is not only that infusion therapy is costly. It is that the traditional claims process can allow substantial provider markups to remain hidden inside a single bundled total.  In buy-and-bill models, facility fees and provider markups can inflate a single infusion claim to more than 400% above the drug's true acquisition cost*.

What transparent infusion pricing looks like

Consider Ocrevus®, a commonly prescribed infusion therapy for multiple sclerosis.

An infusion delivered through a traditional hospital outpatient buy-and-bill model could result in an allowed claim of approximately $89,000.

Under a transparent pass-through model, the same infusion could total approximately $41,000:

●      $35,000 for the wholesale drug cost

●      $5,000 for a transparent coordination fee

●      $1,000 for clinical delivery

That represents a potential savings of $48,000, or 54%, on a single infusion claim.

With two expected Ocrevus encounters per year, the potential savings opportunity could reach $96,000 for one member. Actual pricing will vary, but the example illustrates how much of the cost difference may come from the reimbursement model rather than the therapy itself.

The same dynamic can affect other members receiving long-term specialty infusion therapy. Explore how transparent pricing and coordinated infusion care can reduce the total cost of multiple sclerosis care.

Why employers may hesitate to intervene

Even when benefits leaders identify unusually high infusion costs, they may hesitate to make changes.

That hesitation is understandable. Members receiving infusion therapy often have serious or complex conditions. Employers do not want to disrupt treatment, interfere with trusted provider relationships, or move care into a setting that may not be clinically appropriate.

The right infusion strategy should not force a trade-off between lower costs and appropriate care.

Instead, it should help employers remove unnecessary markup while preserving continuity, safety, and member support.

Depending on the medication and the member’s clinical needs, infusion care may take place at home, in an ambulatory infusion suite, or in another appropriate setting. Not every therapy or member is suited for home infusion, which is why each case should be evaluated individually by the clinical team in collaboration with the prescribing physician.

Learn more about the clinically-proven safety and efficacy of home infusion therapy.

The goal is not simply to redirect care. It is to coordinate the right medication, provider, and setting while making the economics more transparent.

What a better infusion benefit should provide

A stronger model gives employers greater control without placing the administrative burden on the member.

Transparent drug pricing

The employer should understand what the medication costs and how other fees are calculated. Drug sourcing at acquisition cost can help eliminate the hidden buy-and-bill margin.

End-to-end member coordination

Members should receive support throughout the process, including prior authorization assistance, scheduling, medication coordination, and ongoing clinical support.

Leap assigns each member a dedicated Care Guide who coordinates with the prescribing physician, pharmacy, and infusion nurse. The prescribing physician remains in charge of the care plan, while the Care Guide manages the logistics surrounding treatment.

Multiple site-of-care options

The model should support home infusion and other appropriate settings based on the member’s treatment, clinical needs, and preferences.

Compatibility with the current medical plan

Employers should not need to replace their carrier or redesign their entire benefits structure. The solution should work alongside existing medical carriers and TPAs.

Measurable savings

The financial impact should be visible in paid claims data. Employers should be able to measure actual savings, not rely solely on projections or theoretical discounts.

The potential impact goes beyond a modeled comparison. In one Leap case study, coordinated in-home infusion care eliminated a member’s four-hour round-trip commute for treatment and helped the employer realize $711,000 in claims-validated annual savings.

Employers can take back control of infusion spend

High-cost infusion drugs will remain an important part of care for people with complex conditions. But high drug costs do not justify unlimited or invisible provider margins.

By looking beyond the total allowed amount and examining how infusion claims are built, employers can identify avoidable costs that may otherwise remain hidden. They can then move toward a model that protects the member experience while creating more transparency and accountability.

How Leap can help

Leap removes provider drug markups, manages the logistics surrounding treatment, and supports members throughout their infusion experience. Leap can also analyze an employer’s historical claims to identify where hidden costs may be driving unnecessary spend.

And with Leap, employers get a trusted, market-validated partner who has substantially reduced infusion costs for some of the largest brands.

Ready to Stop Overpaying for Infusions?

See where hidden provider markups may be affecting your plan and learn how much your organization could save with Leap by requesting a savings analysis.

*Hospital Prices for Physician-Administered Drugs for Patients with Private Insurance.