There are few options to control increasing spending on high-cost specialty drugs, which raises questions for the insurers, employers and patients grappling with growing usage of specialty drugs, according to a study from the Center for Studying Health System Change.
Specialty drugs are typically biologics developed to treat complex medical conditions such as rheumatoid arthritis, multiple sclerosis or cancer.
The study's authors conducted 174 interviews with health plans, benefits consulting firms and other private-sector market experts on a variety of topics during HSC's site visits to 12 cities in 2010. In addition to those interviews, the researchers conducted another 20 interviews specifically on specialty-drug management.
The study found that specialty-drug manufacturers have “near-monopoly pricing power”
because many specialty drugs do not have generic or brand-name substitutes.
As a result, tools such as benefit design and utilization management are less effective, leading employers to increase patient cost-sharing.
“Some believe higher cost sharing is counterproductive, since it can expose patients to heavy financial burdens and may reduce patient adherence, which in turn may lead to higher costs from complications,” Ha Tu, senior researcher at the Center for Studying Health System Change and a co-author of the study, said in a news release.
The study also reported that specialty drugs are typically administered by clinicians, which means the drugs are covered under the medical benefit rather than the pharmacy benefit. Attempts to integrate medical and pharmacy benefits are still in early stages, the study noted.
“Spending under the medical benefit is estimated to account for 55 percent of total commercial spending on specialty drugs,” the authors said. “The division of benefit structures makes management of specialty drugs more complex and challenging for payers.”
Spending on specialty drugs is expected to increase from $60 billion in 2010 to $105 billion by 2015, according to a CVS Caremark analysis
. Specialty-drug spending currently makes up between 12% and 16% of commercial-drug spending with patients typically spending about $1,200 a month on a specialty drug.
Biosimilars, generic versions of biologic drugs, are expected to lower costs of specialty drugs, in part by allowing conventional drug-management practices such as preferred drug tiers and step therapy to be used in the specialty-drug market. However, the study said that it is difficult to develop biosimilars with therapeutic equivalence to biologics. In addition, biologics are granted 12 years of exclusivity.
“It may be useful for policymakers to revisit this issue, balancing the need to promote drug innovation against the priority of making relatively affordable substitutes available in a timely manner,” the authors said.