Effective Utilization Management of Specialty Drugs

Las Vegas—Although only between 1% and 5% of people use specialty drugs, those products account for 20% of total drug spending, a percentage that is expected to increase to 40% in the coming years, according to HungChing Chan, vice president of clinical analysis and research and development at OptumInsight.

Specialty medications are effective at helping people with rare or chronic diseases. However, because of their high costs, insurers should implement effective utilization management strategies, Mr. Chan said at the PBMI meeting.

Characteristics of specialty drugs include high cost and treatment of chronic or complex conditions or rare diseases, according to Mr. Chan. Specialty drugs require special handling, storage, and patient care and are the fasting growing sector in pharmaceuticals. They include oral and injectable products.

Renee M. Rayburg, RPh, manager of clinical pharmacy at OptumInsight, added that focusing on the utilization of specialty drugs is important because it can ensure appropriate use, limit off-label use or misuse, ensure the appropriate use of first-line therapies, limit disease progression and treatment duration, and ensure compliance with treatment guidelines.

Mr. Chan cited data from IMS Health that found the retail pharmaceutical market increased >10% each year from 1997 to 2003. However, from 2004 to 2007, the annual growth has been <5%. In addition, the pharmacy spend in the United States grew <5% each year from 2008 to 2011.

The IMS Health report also revealed that there were <10 blockbuster drugs in 1996 that accounted for 12% of drug costs. By 2006, there were approximately 50 blockbuster drugs representing 50% of drug costs. The company defined blockbuster drugs as those with $1 billion in annual sales.

With many blockbusters such as Lipitor^® (atorvastatin calcium) losing their patent protections in the last few years, generics now account for approximately 80% of drug sales. After 14 years on the market, atorvastatin calcium generated a record >$130 billion in sales, including $11 billion in sales in 2010.

Mr. Chan said the average daily costs of drugs decreased 33% from 2005 to 2010 and are estimated to drop another 33% by 2015. He added that drug companies lost $21 billion in revenue in 2012 due to patent expirations to drugs such as Lexapro^® (escitalopram oxalate), Plavix^® (clopidogrel bisulfate), and Seroquel^® (quetiapine fumarate).

Mr. Chan said the traditional methods to manage drugs such as manufacturer rebating and formulary tier placement are disappearing, as the pipeline and newly approved drugs are changing. For instance, of the 39 FDA-approved drugs in 2012, two thirds were for specialty drugs.

During the third quarter of 2007 in a large commercial health plan covering >2 million lives, specialty pharmacy accounted for 14% of drug spend. Five years later, it had increased to 28% of drug spend, according to Mr. Chan.

Specialty drug spending increased 19.3% in 2010 and 17.1% in 2011, he added. The percentage will likely rise soon because there are >600 specialty drugs in the pipeline. In recent months, Mr. Chan said there have been promising developments in the treatment of rare diseases, including the approvals of Kalydeco^™ (ivacaftor) for a rare form of cystic fibrosis and Signifor^® (pasireotide) for Cushing’s disease.

Among medical claims for specialty drugs in the commercial plan covering >2 million lives, the largest therapeutic class is injectable oncology drugs (42.3% of claims), followed by inflammatory conditions (12.8%), neutropenia (9.3%), immune globulin (8.3%), and antiemetic (3.2%). The top specialty pharmacy claims were for inflammatory conditions (25.0% of claims), multiple sclerosis (17.9%), HIV/AIDs (14.4%), oral oncology drugs (12.2%), and hepatitis C (6.0%).

Ms. Rayburg cited the 2010 drug trend report from Express Scripts that found the portion of specialty drugs covered under the pharmacy benefit was expected to increase by 27% per year beginning in 2011. Meanwhile, the per member per year costs were predicted to double, while the top 3 specialty classes (inflammatory conditions, multiple sclerosis, and oncology) would account for approximately two thirds of the specialty trend. Ms. Rayburg said the cost and utilization of specialty drugs are each expected to increase around 15% per year.

Although specialty drugs have led to significant advances in treating chronic, complex, and rare diseases, Ms. Rayburg noted they cost an average of $2000 per prescription, so it is important to ensure appropriate use, compliance, and adherence in order to keep costs down and help patients benefit from the therapy.

When implementing utilization management strategies, Ms. Rayburg suggested companies focus on appropriate utilization, dose optimization, maximum drug therapy benefit for patients, and cost containment. The strategies should also be based on evidence culled from nationally recognized treatment guidelines, manufacturer product package inserts, peer reviewed journals, or consensus statements.

Still, there are challenges to managing specialty drugs, according to Ms. Rayburg. The medications are associated with poor medication adherence, price inflation, suboptimal rebating, contracting, and discounting, and difficulty in coordination across vendors.

In the traditional top down approach to managing specialty drugs, companies identify the top specialty drugs and disease states by cost and utilization and then develop strategies to manage the top classes. However, Ms. Rayburg said focusing on the leading drugs may lead companies to miss smaller offenders that can add up and contribute to high costs.

Ms. Rayburg suggested the bottom up approach could be more effective because it considers both the cost and utilization of the specialty drugs. In this strategy, companies have certain processes in place that they follow when specialty products come to market. Ms. Rayburg said the approach could be especially effective in the next few years because there are >600 drugs in the specialty pipeline and specialty pharmacy will exceed $1 trillion per year and account for 44% of payers’ total drug expenditures by 2030.

Before choosing what approach would work best, Ms. Rayburg suggested companies understand the data to identify what factors are leading to the higher costs and utilization and what changes are taking place. They should then determine why they need to implement utilization management for specialty drugs, whether it is to ensure appropriate use or limit the misuse of the products. After finishing that step, they can select the appropriate method.

Even when companies choose a strategy, Ms. Rayburg said they should be flexible and continue to monitor specialty drug data and utilization and “be prepared for what [is] coming” because the specialty pharmaceutical market is changing and growing.