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More on Specialty Drug Spending

By May 23, 2012Commentary

Specialty drugs currently represent only about 15% of commercial drug plan spending, but their high prices and rapid growth have payers very concerned.  A report from the Center for Studying Health System Change examines opportunities to limit spending.   (CSHSC Brief)   The report points out that the characteristics of the specialty drug market make conventional cost control techniques of little value.  Most notably, most specialty drugs are biologics, which currently usually have no generic or biosimilar alternatives, and which also often don’t even have other brand-name category competition.  This allows manufacturers to charge very high prices, which they do, often tens of thousands dollars a year for a course of treatment.

Because of the limited ability to encourage price competition, or even to use utilization management techniques like step therapy, payers have resorted to more cost-shifting to patients, which likely discourages prescription filling and adherence, which may itself cause more costs in the longer run and probably lessens overall quality of care.  Prior authorization is widely used, but may not actually limit spending much since most prescribing for specialty drugs is approved.  Quantity limits may have some modest effect, since they result in less drug ordering before it is known if the patient will tolerate the drug or see benefits from it.  But as the authors note, nothing is likely to work well until biosimilars or generics are on the market.

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