More on Specialty Drugs

Although always expensive, for many years specialty pharmaceuticals were largely ignored because they represented a very small portion of overall drug and medical spending.  In recent years, much more attention has been focused on this category.  Recent estimates are that 20% or more of drug spending now is in this category, which is hard to define, but basically includes drugs that require some special handling and are usually administered by routes other than oral.  A new report on specialty drugs from the Pharmacy Benefit Management Institute, sponsored by Walgreens, describes results of surveys and other data on the specialty area.   (PBMI Report)   Employers and health plans have slightly different goals in regard to managing specialty pharmaceuticals.  Employers’ top concern is controlling unit cost and reducing inappropriate utilization, then improving adherence.  For health plans, reducing utilization was the top concern, followed by increasing adherence.  More so than employers, health plans were also focused on harmonizing medical and pharmacy benefits, which is a big issue because many physician administered specialty drugs are covered as a medical benefit.  PBMs are increasingly saying that they can offer an integrated management program.

The integration of medical and pharmacy benefits is critical because the survey found that many payers do not have good data on utilization and cost or on patient adherence.  A variety of management strategies is being adopted, including supply limits. drug utilization management, special copay classes, prior authorization, step therapy and limited specialty drug providers.  Cost-sharing for specialty drugs varies widely, depending on whether the drug is covered under the medical benefit or the drug benefit and payers are eager to rationalize and harmonize the cost-sharing.  Typically, cost-sharing can be quite high, which may hinder access for patients.  But these drugs are often astoundingly expensive, with relatively limited benefits.  The pipeline for new drugs is heavily dominated by specialty compounds, largely biotech and genetic products, which are often tens of thousands of dollars per course of treatment.  Putting limits on who gets these drugs is almost unavoidable if health spending is to be controlled.  We can expect to a continued rise in payer and policymaker attention to this category of spending over the next few years.