In the past decade, specialty drugs have
helped bring about advances in medicine
that have greatly improved the quality of
health care. However, at the same time, these
drugs have been a factor in the rising cost of
health care and, as a result, become a matter
of concern for many employers.
According to the America’s Health
Insurance Plans (AHIP), only 1 percent of
patients use specialty drugs, yet this usage
accounts for 20 percent of drug spending
($54 billion annually). The annual cost per
patient ranges from $10,000 to more than
$1 million. By 2010, the U.S. specialty prescription spending is expected to reach
$99 billion as the volume of new specialty
products continues to pour into the market.
“Taking control of specialty drug costs is
not easy,” says Chronis Manolis, vice president of pharmacy services for UPMC Health
Plan. “There is not one method that is right
for all employers. But, an approach that
incorporates evidence-based best clinical
practices with sound cost-containment methods ensures the most sensible way to
approach the problem.”
Smart Business spoke with Manolis about
specialty drugs and what employers can do
to control the costs connected to them.
What is a specialty drug?
A specialty drug requires a complex delivery system and has a cost that exceeds $5,000
per patient, per year. The average cost of a
specialty drug is more than $1,500 per month.
They are typically prescribed to treat rare,
complex or chronic diseases.
Specialty drugs are high-cost injectable or
oral drugs that typically involve intensive
clinical monitoring and patient training. They
often require specialized handling and/or frequent dosing adjustments to ensure proper
treatment. Specialty drugs are sometimes
limited or restricted to certain distribution
channels, specifically specialty pharmacies.
Are employers taking a more active interest
in managing specialty drugs?
According to a recent survey, 45 percent of
employers from large companies say they
recently reviewed their plan benefits or their
limits for specialty or biotech drugs. This is an increase from the 34 percent that did so in
2005. Certainly, given the cost of these drugs
and the number of new specialty drugs hitting the market in the next few years, there is
definitely a sense of urgency and heightened
interest with respect to the management of
this class of drugs.
What are some of the factors driving up costs
of specialty drugs?
First, a growing number of specialty drugs
are in development and each year more of
them enter the market. More than 600 specialty drugs are currently in the biotechnology ‘pipeline,’ including many oral formulations. In recent years, about one-third of all
new drugs introduced were specialty drugs
and specialty products are projected to be
half of all U.S. Food and Drug Administration
(FDA) approvals by 2010. Also, an increasing
number of common chronic conditions, such
as diabetes, osteoporosis and rheumatoid
arthritis, are now being treated with this class
of drugs. Specialty drugs already on the market continue to gain approvals for new uses.
An additional reason for the rise in costs is
the increase in diagnoses of people with
chronic conditions. An estimated 105 million Americans have chronic conditions, and in
the first decade of the 21st century, the number is expected to increase by 16 million. In
many cases, some diseases, such as many
forms of cancer, have become chronic conditions that patients can live with, thanks to
regular, sometimes lifelong, treatment with
specialty drugs.
Are there generic versions of specialty drugs
that can be utilized to help reduce the cost?
Specialty drugs are biologics so there is less
of a chance that generic alternatives
approved by the FDA can be developed.
Biologics are genetically engineered proteins
and are more difficult to manufacture. The
FDA does not currently have a regulatory
framework to quickly approve biologic
generics, although this is expected to change
in the next few years. Even when generics
are created, they too can be expensive; sometimes the difference in price is only 30 percent, compared to nonspecialty generics,
which are typically 60 to 90 percent less than
their brand-name counterparts. However,
there is still a huge savings opportunity for
generic biologics as many specialty drugs
currently on the market have already lost
patent protection.
What are some strategies to effectively manage specialty drugs?
Effective pharmacy management requires
a holistic approach to provide cost containment and management of this class of medications. Employers should take advantage
of utilization management strategies, such as
prior authorization and quantity limits to
ensure safe, appropriate use of these medications in accordance with FDA guidelines.
Limiting supplies to 30 days per co-pay can
reduce waste due to changes in dosing or
side effects. Using specialty pharmacies
helps to control the distribution of specialty
drugs to provide high-touch clinical management of the patient, including counseling and
training on the use of the medication, as well
as better pricing and enhanced reporting.
CHRONIS MANOLIS is the vice president of pharmacy services for UPMC Health Plan. Reach him at [email protected] or
(412) 454-7642.
Chronis Manolis
Vice president of pharmacy services
UPMC Health Plan
