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Specialty Drugs: The Tipping Point is Coming
Payer clients are faced with alarmingly high-cost specialty drug trends with no clear direction on how to balance the dilemma of therapy versus cost.
Add the explosive development of new specialty drugs over the next few years and payers will face even more difficult decisions as this pipeline grows.
Industry experts have predicted that specialty drugs will represent 45% of pharmaceutical manufacturer sales by 2017. Over the past 5 years, specialty drug spending has grown by $54 billion, which represents 73% of overall medication spending growth during that period, according to a report released earlier this year by the IMS Institute for Healthcare Informatics.
“[The year] 2018 seems to be the tipping point where about half of the overall spending by any given payer on average is going to be in the specialty realm,” said Kevin D. Host, PharmD, president, Pharmaceutical Strategies Group (PSG). His company presented “The Brewing Storm in Specialty Drugs Costs” webinar hosted by America’s Health Insurance Plans.
One challenge is lack of consensus in defining specialty pharmaceuticals. “It makes it a little more difficult in terms of managing this class of medications because there is no clear definition of how to group them,” said Melissa Kuznik, PharmD, vice president and national practice leader, health plans, PSG. A majority of the plans (85%) defined “specialty” as high cost and nearly 70% of respondents considered $600 to $1200 monthly cost per prescription as high cost, she said referring to EMD Serono Specialty Digest, 10th Edition data.
“The [specialty] pipeline is ever growing and indications are expanding,” she said, noting that specialty drugs have shifted from medicines to treat rare diseases to more common, chronic diseases.
The 4 distinct levers to manage this drug class include clinical management, reimbursement management, site of care management, and plan design, according to Dr Kuznik.
“The channel landscape has become very complex. We are not just talking about delivering drugs through pharmacies any longer,” added Dr Host. “We are talking about managing this across multiple benefits and multiple different channels. [Therefore,] strategies have to evolve to meet the needs of these particular drugs.”
He noted that it is difficult to make decisions in this new landscape because now manufacturers are also involved with determining how these drugs are accessed. As a result, limited distribution networks have emerged, putting more pressure on access. Some manufacturers and payers have opted to try and continue to expand and balance the access patients have to these drugs, he explained.
Two key considerations for stakeholders in distribution options are overall cost management and clinical care management. “Bottom line is that we need to get to a point where we have integrated medical and pharmacy systems,” said Dr Host. “In the absence of true real-time integration and real-time adjudication, we have to depend on our strategies around drug policies, provider protocols, and networks. This is something that can be a heavy lift for organizations.”
Adherence is a critical component of care management. “When these drugs cost more than gold, there is a lot at stake. Payers cannot afford to waste any dollars,” he emphasized.
How can payers manage high-cost specialty drugs when all options are very expensive? “The key word is ‘manage.’ In the specialty space, it is really about the management of the cost because trend is going to continue to increase,” said Dr Kuznik.—Eileen Koutnik-Fotopoulos
