Spending on specialty pharmaceuticals climbed 18 percent in 2015, compared to an increase of less than 1 percent for standard prescription medications. The burgeoning outlay comes as no surprise considering the hefty price tag of these new drugs, with some reaching upwards of $60,000 for a course of treatment.
Few clinicians question the effectiveness of specialty medications when they are prescribed and administered appropriately. A 2014 study found generally positive clinical results for the three conditions associated with the highest spending, although some findings were inconclusive. Drugs used in the study included several that had original approval or tentative approval dates of 2013 or later, including golimumab, infliximab, dimethyl fumarate, Glatopa (glatiramer acetate), Plegridy (peginterferon beta-1a), capecitabine, Kadcyla (ado-trastuzumab emtansine), and vinorelbine tartrate.
For individuals diagnosed with multiple sclerosis, rheumatoid arthritis and breast cancer, the study authors noted, specialty drugs hold promise for improving quality of life.
Despite their effectiveness, specialty medications are under constant scrutiny—reflecting the growing concern of balancing clinical innovation with responsible spending.
Increasing Costs for Specialty Medications
Despite treating only 1 to 2 percent of the population, specialty medications constituted 37 percent of drug spending in the United States in 2015; that amount is expected to increase to 50 percent by 2018. For the first time, a class of specialty disease—inflammatory conditions, including rheumatoid arthritis—stands as the most expensive drug category. In 2015, spending on the specialty therapy class of inflammatory conditions reached more than $89,000 per member per year.
For managed care organizations and other payers, the question is how to control costs for expensive specialty pharmaceuticals while providing them to the patients who truly need them.
The Role of Biosimilars and Interchangeables
In the coming years, the overall expenses for specialty drugs may come down due to two new categories of biological products: biosimilars and interchangeables. Biosimilars are the less-costly versions of biologics. Interchangeable biological products meet the biosimilarity standard and should have the same clinical results as reference products.
It’s clear that biosimilars will continue to gain prominence in the U.S. market; the drugs are expected to constitute between 4 and 10 percent of the total biologics market by 2020. Many payers and patient advocates hope that the increase in available biologics will help bring prices down through increased competition. So far, though, the drugs have only achieved cost decreases of approximately 15 to 20 percent over their innovator counterparts.
Thus far, few biosimilars and interchangeables have reached the U.S. market; in April, the FDA approved Inflectra, the second biosimilar to come to market in the United States. The drug is biosimilar to Remicade, which was originally approved in 1998. Inflectra can be prescribed for treatment of conditions including Crohn’s disease, ulcerative colitis, rheumatoid arthritis, active ankylosing spondylitis, active psoriatic arthritis and chronic severe plaque psoriasis.
In March 2015, the FDA approved the nation’s first biosimilar, Zarxio, which is biosimilar to Neupogen. That drug was approved in 1991 and treats conditions including cancer, acute myeloid leukemia and severe chronic neutropenia.
Making biosimilars available requires a lengthy approval process along with extended litigation, so the drugs may not flood the market anytime soon. In the meantime, payers continue to explore additional means for controlling costs for specialty pharmaceuticals.
When Are Specialty Medications Appropriate?
Although specialty drugs have been shown to effectively treat certain conditions, their high cost has some payer organizations looking for methods of ensuring proper prescription and administration. Some organizations are taking the following steps to help control costs:
- Requiring a high level of cost sharing from subscribers.
- Requiring diagnostic tests before approving coverage to identify patients who are likely to respond positively to a specific specialty drug. For example, Tafinlar is used in the treatment of metastatic or unresectable melanoma; however, it has a specific indication for use in patients with a BRAF V600E mutation (single agent therapy) or BRAF V600E or BRAF V600K mutations (in combination with trametinib). Therapy protocols indicate confirmation of BRAF V600E or BRAF V600K mutation status with an approved test prior to treatment.
- Managing the locations in which the drugs are administered. Patients can self-administer some specialty pharmaceuticals at home rather than relying on more-costly doctor’s offices or outpatient facilities.
Assessing Patient Outcomes
Another method payers are using to control costs from specialty pharmaceuticals is comparative effectiveness review. Information gathered during such reviews can provide sound justification for denying coverage of treatments that cost significantly more but that do not provide higher clinical value. The cost of drugs is not directly related to their efficacy.
So far in the United States, comparative effectiveness review has not considerably changed the use of specialty medications. Internationally, however, government payer organizations have used the method aggressively. For example, the United Kingdom is slow to provide access to high-cost therapies in the absence of evidence of better patient outcomes.
Some payer organizations are working to establish collaborative pharmacy contracts that are based on outcomes. Such partnerships may:
- Implement certain standards for patient management, education and training of pharmacists, prescription fulfillment, and documentation through electronic medical records, among other parameters.
- Require collection and reporting of metrics for compliance and other outcomes, which are compared to established benchmarks on an annual basis.
- Establish long-term expectations for patient care and core services.
New Avenues for Treatment
As specialty pharmaceuticals continue to come to market in the United States, they undoubtedly will provide effective clinical options for many patients. But the treatments come at a high cost, and managed care organizations and other payers must take steps to control rapidly rising expenditures. By relying on clinically proven algorithms and standards of care, medical providers can help ensure that specialty drugs are used appropriately.