At the Intersection of Health, Health Care and Policy Cite this article as: Alan R. Weil The Promise Of Specialty Pharmaceuticals Health Affairs, 33, no.10 (2014):1710 doi: 10.1377/hlthaff.2014.1091
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Health Affairs is published monthly by Project HOPE at 7500 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Copyright © 2014 by Project HOPE - The People-to-People Health Foundation. As provided by United States copyright law (Title 17, U.S. Code), no part of Health Affairs may be reproduced, displayed, or transmitted in any form or by any means, electronic or mechanical, including photocopying or by information storage or retrieval systems, without prior written permission from the Publisher. All rights reserved.
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from the editor-in-chief
DOI: 10.1377/hlthaff.2014.1091
The Promise Of Specialty Pharmaceuticals by alan r. weil
T
he role of prescription drugs in meeting health care needs has raised thorny policy issues for decades. Prescription drug spending grew 10 percent or more in real terms every year between 1997 and 2003. This led to questions about the role of direct-to-consumer advertising (which also grew during this period) and appropriate levels of profit and research spending in a sector where many products fail to reach market. The most heated element of the 2003 congressional debate over adding a prescription drug benefit to Medicare was over the relative roles of the federal government and the private sector in setting drug prices. The Food and Drug Administration faces constant scrutiny over its drug approval processes. We are now in the era of specialty pharmacy—drugs with three Ps: promise to treat serious medical conditions; peril in that they must be handled and administered with care to avoid serious adverse effects; and price, with an average monthly cost in excess of $3,000. With specialty drugs projected to account for half of all drug spending before the end of this decade, their growing use is sure to reignite debates that have been dormant in recent years, during which drug spending growth rates have slowed. spending Bradford Hirsch, Suresh Balu, and Kevin Schulman lead off this issue’s spending discussion by demonstrating that growing use of these high-cost treatments has the potential to increase health insurance premiums so much that it will be necessary to reexamine
1710
health affairs
long-standing practices such as costsharing tiers in pharmacy benefits. Recent declines in overall drug spending are largely attributable to a shift to generic drugs, but no comparable pathway exists for many specialty drugs, which means that costs are likely to continue to rise. Rena Conti, Adam Fein, and Sumita Bhatta describe the growing use of oral oncologics, with spending of somewhat less than $1 billion in the first quarter of 2006 growing to $1.4 billion in the third quarter of 2011. They found high and growing use among the highestcost drugs. On an optimistic note, they also found growing use and falling prices as generic alternatives became available. This suggests that where this pathway exists, prices should be expected to decline as patent protection ends. thorny policy challenges The high cost of treatment with specialty drugs has led payers to adopt new strategies designed to constrain spending. Rahul Nayak and Steven Pearson discuss the ethics of “fail first” policies,
october 2014
which require demonstration that a lower-cost treatment alternative has been unsuccessful before the payer will approve one at a higher cost. The growing use of this approach has generated a backlash, with a number of states adopting laws that define how these policies must be structured. Aware that the burden of high cost sharing is a barrier to access for many patients, some specialty drug manufacturers offer coupons that offset these costs. Catherine Starner and colleagues find that more than 60 percent of patient costs are covered by coupons, increasing adherence to the drug regimen but undermining insurers’ efforts to use patient cost sharing as a means for reducing utilization. variation and value Adding to the growing literature on regional variation in spending and utilization, Gabriel Brooks and colleagues find that acute care hospital spending is the primary source of regional variation in advanced cancer care spending. Chemotherapy drug spending is a smaller contributor to variation than its proportion of total spending. Ultimately, the societal and policy questions regarding specialty pharmaceuticals revolve around their value: their benefits as well as their costs. James Chambers and colleagues conclude that in the aggregate, specialty drugs offer benefits relative to costs comparable to those of traditional drugs, with a larger share of specialty drugs offering particularly high value. This suggests that we as a society benefit from their development and use. Unfortunately, it does not answer the question of who should pay, and how much, to receive that benefit. acknowledgments Health Affairs appreciates the generous support for this issue provided by CVS Health. We are grateful for the assistance of James Robinson, who served as adviser for the specialty pharmaceuticals articles in the issue. n
33:10
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The online version of this article, along with updated information and services, is available at: http://content.healthaffairs.org/content/33/10/1710.full.html
For Reprints, Links & Permissions: http://healthaffairs.org/1340_reprints.php E-mail Alerts : http://content.healthaffairs.org/subscriptions/etoc.dtl To Subscribe: http://content.healthaffairs.org/subscriptions/online.shtml
Health Affairs is published monthly by Project HOPE at 7500 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Copyright © 2014 by Project HOPE - The People-to-People Health Foundation. As provided by United States copyright law (Title 17, U.S. Code), no part of Health Affairs may be reproduced, displayed, or transmitted in any form or by any means, electronic or mechanical, including photocopying or by information storage or retrieval systems, without prior written permission from the Publisher. All rights reserved.
Not for commercial use or unauthorized distribution Downloaded from content.healthaffairs.org by Health Affairs on April 9, 2015 by guest
from the editor-in-chief
DOI: 10.1377/hlthaff.2014.1091
The Promise Of Specialty Pharmaceuticals by alan r. weil
T
he role of prescription drugs in meeting health care needs has raised thorny policy issues for decades. Prescription drug spending grew 10 percent or more in real terms every year between 1997 and 2003. This led to questions about the role of direct-to-consumer advertising (which also grew during this period) and appropriate levels of profit and research spending in a sector where many products fail to reach market. The most heated element of the 2003 congressional debate over adding a prescription drug benefit to Medicare was over the relative roles of the federal government and the private sector in setting drug prices. The Food and Drug Administration faces constant scrutiny over its drug approval processes. We are now in the era of specialty pharmacy—drugs with three Ps: promise to treat serious medical conditions; peril in that they must be handled and administered with care to avoid serious adverse effects; and price, with an average monthly cost in excess of $3,000. With specialty drugs projected to account for half of all drug spending before the end of this decade, their growing use is sure to reignite debates that have been dormant in recent years, during which drug spending growth rates have slowed. spending Bradford Hirsch, Suresh Balu, and Kevin Schulman lead off this issue’s spending discussion by demonstrating that growing use of these high-cost treatments has the potential to increase health insurance premiums so much that it will be necessary to reexamine
1710
health affairs
long-standing practices such as costsharing tiers in pharmacy benefits. Recent declines in overall drug spending are largely attributable to a shift to generic drugs, but no comparable pathway exists for many specialty drugs, which means that costs are likely to continue to rise. Rena Conti, Adam Fein, and Sumita Bhatta describe the growing use of oral oncologics, with spending of somewhat less than $1 billion in the first quarter of 2006 growing to $1.4 billion in the third quarter of 2011. They found high and growing use among the highestcost drugs. On an optimistic note, they also found growing use and falling prices as generic alternatives became available. This suggests that where this pathway exists, prices should be expected to decline as patent protection ends. thorny policy challenges The high cost of treatment with specialty drugs has led payers to adopt new strategies designed to constrain spending. Rahul Nayak and Steven Pearson discuss the ethics of “fail first” policies,
october 2014
which require demonstration that a lower-cost treatment alternative has been unsuccessful before the payer will approve one at a higher cost. The growing use of this approach has generated a backlash, with a number of states adopting laws that define how these policies must be structured. Aware that the burden of high cost sharing is a barrier to access for many patients, some specialty drug manufacturers offer coupons that offset these costs. Catherine Starner and colleagues find that more than 60 percent of patient costs are covered by coupons, increasing adherence to the drug regimen but undermining insurers’ efforts to use patient cost sharing as a means for reducing utilization. variation and value Adding to the growing literature on regional variation in spending and utilization, Gabriel Brooks and colleagues find that acute care hospital spending is the primary source of regional variation in advanced cancer care spending. Chemotherapy drug spending is a smaller contributor to variation than its proportion of total spending. Ultimately, the societal and policy questions regarding specialty pharmaceuticals revolve around their value: their benefits as well as their costs. James Chambers and colleagues conclude that in the aggregate, specialty drugs offer benefits relative to costs comparable to those of traditional drugs, with a larger share of specialty drugs offering particularly high value. This suggests that we as a society benefit from their development and use. Unfortunately, it does not answer the question of who should pay, and how much, to receive that benefit. acknowledgments Health Affairs appreciates the generous support for this issue provided by CVS Health. We are grateful for the assistance of James Robinson, who served as adviser for the specialty pharmaceuticals articles in the issue. n
33:10
Downloaded from content.healthaffairs.org by Health Affairs on April 9, 2015 by guest Oct_2014_eic.indd 1110
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