Specialty drugs are providing relief for sufferers of many chronic illnesses -- as long as they can pay for the treatment. Spending on such drugs accounted for one-fifth of all drug expenditures in the country in 2009, and it's expected to continue to grow.
Thanks to cutting-edge research, new and effective treatments for chronic illnesses such as hemophilia, rheumatoid arthritis, multiple sclerosis and Crohn's disease are making the lives of sufferers much easier.
These "specialty pharmaceuticals" do come with a hefty price tag, however; in some cases, the costs can exceed $100,000 for a year's supply.
Spending for specialty drugs has grown between 15 percent and 20 percent for the last several years, accounting for 21 percent of U.S. drug expenditures in 2009 -- despite the fact that such drugs are used by only 1 percent to 5 percent of the U.S. population, according to a recent report from the Pharmacy Benefit Management Institute in Plano, Texas.
The report -- the 2011-2012 PBMI Prescription Drug Benefit Cost and Plan Design Report -- projects the growth in spending on specialty drugs will continue to outpace non-specialty drug spending.
Factors behind the growth include, among other things, expensive manufacturing processes continuing to push prices higher and limited competition within drug-therapy classes corresponding with less price competition, according to the report.
"Specialty drugs are a primary topic of discussion for benefit-plan sponsors these days," says Allan Zimmerman, national pharmacy practice leader at New York-based PricewaterhouseCoopers.
Indeed, even though the latest drug-trend report from St. Louis-based Express Scripts revealed that spending on prescription drugs in the United States rose only 2.7 percent last year -- the smallest increase in the two decades it has tracked such data -- it found that spending on specialty drugs jumped by more than 17 percent in the same period.
Express Scripts attributed at least part of the price jump to new treatments for hepatitis C.
Perhaps not surprisingly, the PBMI report found that reducing the acquisition cost of specialty drugs is a top goal for nearly 60 percent of employers.
With specialty drugs, however, the costs and utilization can be difficult for employers to track because the drugs are often received by patients directly from their doctors, rather than through a pharmacy-benefit manager, says Zimmerman.
"The split, depending on the plan sponsor, tends to be around 50/50 in terms of what's channeled through the PBM and what's channeled through the medical plan," he says.
Few plan sponsors have figured out a comprehensive way to manage costs for specialty drugs on both the medical and pharmacy side, says Zimmerman. Some PBMs are trying to control costs by establishing a separate cost-sharing tier for specialty drugs in which co-payments are often much higher than those for non-specialty drugs, he says.
These higher co-payments have sparked concern among patients and have led a number of states -- including New York, Vermont and Maine -- to pass laws limiting the annual out-of-pocket expenses borne by patients who use specialty drugs.
High co-payments have also raised concerns about "non-adherence," or patients neglecting to take their medication.
The Express Scripts report reveals that, for many therapy classes, fewer than half of patients take their medication as prescribed. According to an Express Scripts pilot program, 16 percent of the participants cited cost as the reason for their non-adherence -- far below, however, the 69 percent who cited forgetfulness and procrastination.
Other efforts by PBMs to rein in the cost of specialty drugs have included working more closely with medical providers in this area, but such efforts have not always gone smoothly, says Kevin Host, senior vice president of specialty pharmacy operations at OptumRx, a PBM that is part of Minnetonka, Minn.-based UnitedHealth Group.
"In the early days, as we tried to help manage specialty drugs, there was a lot of push-back from medical providers because they used to derive a great deal of income from selling these products -- they called it 'buy and bill,' " he says.
"Now, we're seeing that for the small and mid-sized practitioner groups, they no longer have the cash flow to support the buying and selling of these drugs. They are more receptive to the fact that PBMs like us are going to use the most efficient channels for distributing these drugs," he says
Those channels include the use of URAC-accredited specialty pharmacy vendors, Host says, which can make it easier to obtain discounts, track utilization and create programs designed to help the relatively small number of employees and dependents who rely on specialty drugs to better manage their health.
"I think everyone is trying to look at the levers available to them to manage the cost of these drugs without negatively affecting care," he says. "It's a tricky balance."