“We're blessed to be living in these times, but frankly, in this country, innovation is evolving at an incredibly rapid pace,” said Jon Mahrt, PBMD president and chief operating officer of Optum Rx in a session at Asembia 2024.

Mr Mahrt further explained that many conditions once considered lifestyle choices are now considered to be disease. And while these diseases, such as obesity, have lifesaving and quality-of-life enhancing medication innovations, they are useless if not affordable to patients. 

Pharmacists are looking to serve, and health care providers are looking to treat. Payers need aligned incentives such as outcomes, lower costs, and impact medical ratios. But currently, drug list prices in the US are over 2.5 times higher than in peer nations. Specifically, 2% of US gross domestic product (GDP) spending is mainly on prescriptions. There are approximately 160 medications that could cost more than $250,000 per year, and rising prescription drug spend in 2023 alone reached $711 billion. And the 5-year outlook of these costs is expected to rise another $299 billion by 2028, which is a whopping 37% increase in spending.

Mr Mahrt first contextualized these ideas in the market landscape and focuses on drug pipeline influence. According to Mr Mahrt, 40% of orphan drugs cost more than $100,000 annually and 18% of all drug sales are for treating rare and orphan diseases. The speaker cautioned that while these innovations can provide hope for patients, hope is fleeting when drug costs come into play.

“Through the eyes of a rare disease patient, there are 7,000 rare diseases. It’s estimated that 70% of them are rare or genetic…we’ve seen a good 7-year trend of more than 20 of these drugs coming into the market on an annual basis, which is an incredible relief for the temperature of the US population suffering from rare disease today,” said Mr Mahrt. 

According to a 2019 study by the EveryLife Foundation, the economic cost of rare disease life management and treatment approached $1 trillion and $400 million related to direct medical spending. Indirect costs equaled $400 million, influenced by retirements, disabilities, and absenteeism. Considering these expenses for the 1% rare disease populations concerning. According to Mr Mahrt, “consider[ing] that the 1% drives 45% of a plan’s cost, and behind that is the expected increase,” how can this be manageable for this patient population? Mr Mahrt noted that the plan costs estimate is around $300,000, a major increase since 2008. 

The speaker emphasized that while innovation is a net benefit, it requires new economic strategies. He evaluated the top drug classes on the market:

1. DGLPs (diabetes)
2. OGLPs (obesity)
3. Oncology
4. Inflammatory
5. ADHD
6. Others

Currently, 42% of overall drug market trends are driven by glucagon-like peptide-1 (GLP-1s).

Pharmaceutical companies’ strategies are playing an important role in pricing. For example, instead of changing prices, pharmaceutical companies are taking a new approach by using the same drug but launching them as a new brand under a different name. One of many examples shared was semaglutide, the drug for Ozempic (Novo Nordisk) and Wegovy (Novo Nordisk). While the same drug is used for both brands, Ozempic costs about $969 and Wegovy costs $1349. 

Another example shared was when Flovent (GSK) came to market in 2023 and was priced at $230 per prescription. In 2023, it reached $340 per prescription. Not long after, GSK released the same drug under a different name, Flovent HFA, but it costs $310. Mr Mahrt described this tactic as the “policy did not solve the problem; it perpetuated the problem.”

Building on this issue, direct-to-consumer pharma ad spend reached $8.1 billion in 2022. In 2023, Ozempic was the 7th largest ad spend, reaching a whopping $130.3 million, and Mounjaro was 9th at $114.8 million, causing high demand and demonstrating that direct-to-consumer marketing results in patient awareness to the point where patients are requesting these specific drugs.

To provide additional detail, Mr Mahrt reviewed statistics from ICER’s 2023 Unsupported Price Increase report. According to the report, 10 drugs were assessed due to net price increases, 8 drugs were judged to have price increases unsupported by new clinical evidence. The unsupported price increases of these 8 drugs produced a total of $1.27 billion in incremental added costs to US payers in 2022.

Ultimately, the impact is evident in today’s drug pricing. For consumers, Mr Mahrt explained that 83% of Americans say the cost of prescription drugs is unreasonable. Because of that, publicly available claims data shows that 1 in 4 Americans struggle to afford their medications, and 1 in 5 adults do not take their medication as prescribed due to cost compared to 1 in 10 patients in other developed countries. 

Mr Mahrt shared a real-life example from Dr Patrick Conaway, OptumRx CEO. A young child treated by Dr Conaway was sent home with a prescription for antibiotics. When the patient returned to him, they were septic. When Dr Conaway asked the child’s mother what happened, the mother said, “I couldn’t afford the medication.” The mother explained she tried to work with their family to come up with enough funds to pay for the medication, but she couldn’t pull together enough money.  

Mr Mahrt emphasized that “there’s people, very real people, beyond these [economic] numbers…83% of Americans say that the cost of treatment is very high.”

For plan sponsors, 89% of employers believe specialty drug spending is becoming a top threat to employer-provided benefits. The speaker even mentioned that some plan sponsors are starting to say that they cannot cover oncology drugs because they are so expensive. So how, the speaker asked, do we solve this problem?

Mr Mahrt believed the answer starts with transparency, specifically with transparent pharmacy and therapeutic committees and having clients examine which drugs should be covered and why based on that data. Costs should also be made clear by providing transparent pricing models to help clients make informed choices. 

“Consumers should be shown the lowest price of the drug available,” Mr Mahrt said. This would ensure patients are put on the correct path to receive the most affordable drugs.

Mr Mahrt also said the industry should provide clear reconciliation reporting to pharmacies, especially independent pharmacies, and place the burden of reconciliation on the pharmacy benefit manager (PBM). He also identified the strategy of making available critical drug affordability lists to ensure affordable copays. Most of all, stakeholders must collaborate to achieve access, affordability, and value for drug coverage.

“Unaffordable innovations are not progress,” said Mr Mahrt. “Do the right thing and lower the drug price instead of launching the drug under a different brand name. We are blessed to be living in these times…But it’s our job to figure out how we can work together to make drugs accessible and affordable.”

Reference
Mahrt J. Addressing cost & accessibility for innovative medicines – GLP-1s and beyond. Presented at the Asembia Annual Summit; April 30, 2024; Las Vegas, NV.