Meeting Patients’ Needs While Also Managing Costs

December 1, 2008

The use of specialty pharmaceuticals in the United States continues to surge as more drugs enter the market and new indications are found for existing medications. Use of specialty drugs has dramatically improved clinical outcomes. However, while the health benefits of specialty pharmaceuticals are substantive, health care expenditures associated with the drugs can be significant, with some costing as much as $250,000 annually. Specialty medications accounted for 11.4% of pharmacy benefit spending in 2007, up from 5.6% in 2003. With the increasing use and higher costs of specialty medications, employers and health plans need to effectively manage distribution and utilization to ensure the most cost-effective use of these agents as possible. (Drug Benefit Trends. 2008;20:478-484)

The use of specialty pharmaceuticals in the United States continues to surge as more drugs enter the market and new indications are found for existing medications. Use of specialty drugs has dramatically improved clinical outcomes. However, while the health benefits of specialty pharmaceuticals are substantive, health care expenditures associated with the drugs can be significant, with some costing as much as $250,000 annually. Specialty medications accounted for 11.4% of pharmacy benefit spending in 2007, up from 5.6% in 2003. With the increasing use and higher costs of specialty medications, employers and health plans need to effectively manage distribution and utilization to ensure the most cost-effective use of these agents as possible. (Drug Benefit Trends. 2008;20:478-484)

The use of specialty pharmaceuticals has prevented hospitalizations, surgeries, and disabilities, and some have saved the lives of persons with rare or complex health conditions. These drugs have revolutionized patient care by providing clinical therapies where none had existed just a generation ago. In addition, other specialty therapies have reduced or eliminated adverse effects associated with older drugs. Although the health benefits of specialty medications are substantive, so are their prices: the cost of some specialty drugs, such as treatments for rare enzyme disorders, can reach $250,000 a year.

The use of specialty drugs has soared in the United States in the past few years with the introduction of new therapies and new indications for existing medications. The expanded use of specialty drugs by an increasing patient population is apparent in the rise in health care expenditures. According to the 2008 Drug Trend Report by Medco Health Solutions, specialty drug costs doubled for its clients’ prescription plans over a 4-year period, from 5.6% in 2003 to 11.4% in 2007 (Figure).1 With the high cost and increased use of specialty pharmaceuticals, it is important for employers and health plan sponsors to manage utilization and ensure clinical quality to achieve effective and cost-efficient treatments with specialty drugs.

 

Figure. Specialty pharmacy spending rose by 12.3% in 2007, following a 16.1% jump in 2006. Specialty drug costs accounted for 11.4% of pharmacy benefit spending in 2007, up from 10.4% in 2006. Source: 2004-2008 Drug Trend Reports. Medco Health Solutions, Franklin Lakes, NJ.

 

Cost and Utilization Trends and Projections

The specialty drug utilization rate for Medco clients increased by 3.9% in the past year, which is more than double the 1.6% increase in utilization for prescription drugs overall. In addition to new medications and indications, the wider use of multiple-drug therapies for certain conditions is driving the demand for specialty drugs. Not unexpectedly, unit costs for specialty drugs continued to rise, by 8.4% in 2007, the result of price increases and new, more costly therapies replacing older treatments.

In terms of therapeutic classes, drugs used to treat persons with autoimmune conditions, including rheumatoid arthritis (RA), psoriasis, and Crohn disease, are the leading contributors to specialty drug trend. Between 2006 and 2007, specialty drug trend for autoimmune conditions increased by 16.4%, driven by a 10.1% surge in utilization and a 5.7% rise in unit cost. The CDC estimates that in 2005, nearly 1.3 million US adults had RA,2 and specialty drug therapies have been shown to slow the disease’s progression. Many of these same treatments alleviate symptoms of other autoimmune conditions, such as Crohn disease and plaque psoriasis (see below).

Cancer treatments, the second leading therapeutic class of specialty drugs, are the fastest growing category, with a trend increase of 24.2% in 2007. This increase was primarily driven by a shift toward newer, more targeted therapies and higher prices for existing brand-name drugs. Multiple sclerosis (MS) ranked third among specialty drug therapeutic classes in 2007, with an increase of 9.2%. A 12.6% rise in unit costs for MS drugs more than offset a 3% decrease in their utilization rate.

Specialty drug spend in the United States is projected to grow in the foreseeable future. Many specialty pharmaceuticals have emerged on lists of top-selling drugs. Specialty pharmaceuticals generally have not faced competition from generic drugs and will not do so until changes are made in how biologics are regulated to allow the marketing of biosimilars. The Table provides a list of the specialty drugs that are expected to enter the market in the next few years. New specialty drugs will likely target cancer and immunological diseases.

 

Treatment Outlook

In the past few years, indications of RA treatments for autoimmune diseases have broadened. For example, etanercept (Enbrel), a tumor necrosis factor (TNF) inhibitor, was approved in April 2004 for the treatment of plaque psoriasis and currently is in clinical trials for the treatment of idiopathic pulmonary fibrosis. Adalimumab (Humira), another TNF inhibitor, was approved by the FDA in February 2007 for treating adults with Crohn disease and in January 2008 for treating those with chronic plaque psoriasis.

As listed in the Table, several new competitors are likely to enter the market over the next 3 years. Tocilizumab (Actemra), which blocks inflammatory responses by acting on interleukin-6 receptors rather than on TNF inhibitors, was recommended for approval by an FDA advisory committee in July 2008. Persons with RA are being treated with drugs that were developed for other conditions. For example, rituximab (Rituxan), which is better known as a cancer treatment, received FDA approval in April 2006 for the treatment of adults with moderate to severe RA. Other cancer drugs have expanding indications as well: bevacizumab (Avastin), erlotinib (Tarceva), cetuximab (Erbitux), and imatinib mesylate (Gleevec) have received FDA approval to treat persons with more than one form of cancer.

Most important, these specialty drugs have changed the clinical and economic impact of certain cancers by allowing physicians to regard many cancers as chronic medical conditions. This trend is evident in spending forecasts. Medco projects that cancer drug spend will surge between 46% and 53% in the next 3 years. This increase is expected to be driven by cancer drug regimens that are more effective than conventional chemotherapy treatments but whose monthly costs can exceed $10,000. Demand for new treatments has fueled a development pipeline of 750 cancer drugs.3

Ancillary cancer treatments should not be overlooked as a source of drug spending growth. Some persons with cancer need medications to address the adverse effects associated with cancer treatments. Hematopoietics, drugs that are used to minimize chemotherapy-induced anemia, such as epoetin alfa (Procrit) and darbepoetin alfa (Aranesp), have been ranked among the top-selling pharmaceuticals for several years. Treatments for depressed white blood cell counts as well as for nausea and vomiting significantly contribute to the cost of cancer therapy. For example, the average annual cost of hematopoietics (Aranesp, Epogen, Neulasta, Neupogen, Procrit) as an adjunct to cancer therapy is between $5000 and $20,000.4 

Specialty Treatments Go Mainstream

The primary focus of specialty drugs used to be on rare disorders or cancer, conditions for which treatment options were limited. However, as researchers have gained a better understanding of the body’s biological processes at the cellular level and the role that complex protein molecules play in modifying biological processes, demand for specialty drugs has soared. These developments could lead to new drug therapies for lupus, osteoporosis, and several respiratory conditions in the next 3 years.

 

Lupus. Lupus is an autoimmune condition that affects up to 2 million US adults, and its symptoms periodically mimic those of RA.5 Persons with lupus have traditionally been treated with NSAIDs, corticosteroids, and immunosuppressants. Lupus treatments have been focused on alleviating symptoms and preventing the condition from worsening. Two experimental treatments target systemic lupus erythematosus, which affects the joints, skin, kidneys, and GI system. Abetimus sodium (Riquent) is designed to suppress the development of certain antibodies without compromising the overall immune function.6 The drug is currently in phase 3 trials that are expected to be completed in late 2009. Epratuzumab, currently undergoing clinical studies for recurring non-Hodgkin lymphoma, is in phase 2 trials for use in persons who have lupus.

Osteoporosis. Recommended therapy for osteoporosis, which affects 10 million Americans, is shifting to newer drugs requiring less frequent dosing.7 Zoledronic acid (Reclast), a once-yearly infusion, was approved by the FDA in August 2007. A recent study has shown that denosumab, an agent that inhibits cells responsible for breaking down bone, is effective in reducing incidence of spine fractures in women. It is in a phase 2 study and could reach the market by 2010.

Respiratory diseases. While the use of specialty drugs has improved the quality of life for persons with such respiratory conditions as cystic fibrosis and pulmonary arterial hypertension, new treatments in the pipeline may provide additional benefits.

Cystic fibrosis. Aztreonam lysinate for inhalation (Cayston) and an inhalable version of denufosol may go to market as early as 2008 and 2010, respectively. Cayston and denufosol are being studied for their ability to control infections and clear mucus from the lungs, respectively.

Pulmonary hypertension. New pulmonary hypertension medicines in development include a new formulation of treprostinil sodium (Remodulin) administered through a nebulizer rather than by infusion, and tadalafil (Cialis), which is best known as an erectile dysfunction treatment. If the new indication is approved, Cialis would compete against sildenafil citrate (Revatio), a renamed version of Viagra.

Idiopathic pulmonary fibrosis. While the use of prednisone in combination with azathiopine and cyclophosphamide may reduce inflammation and prevent future scarring of the lungs in persons with idiopathic pulmonary fibrosis, the only effective treatment option for such persons is a lung transplant. However, this could change if pirfenidone proves to inhibit scarring in a clinical trial that is under way.8

Managing Utilization

Given the outlook for continued rising costs of specialty pharmaceuticals, health plan sponsors need to develop plans to manage the increasing utilization and financial impact of these drugs. First, sponsors need to become more aware of what is in the specialty drug pipeline to better assess future expenses. Payers may choose to increase oversight of their health care networks to manage the use and cost of specialty drugs. When managing the process, plan sponsors must ensure that they track all medical costs associated with the use of specialty drugs, including laboratory and administration expenses. It is important to examine both the comprehensive cost of care for persons who require specialty medications and the drugs’ contribution toward controlling overall health care expenses-for example, by preventing hospitalizations and minimizing disability-related costs.

Persons requiring specialty drugs should be encouraged to obtain them from the most clinically appropriate and cost-effective distribution channel, which in many cases is a specialty pharmacy. Compared with other pharmacies, specialty pharmacies provide access to support services that enable patients to optimize their treatment. These pharmacies also typically provide greater cost-efficiency and transparency. Physicians and outpatient infusion centers purchase specialty drugs and then bill the drug’s cost (buy and bill), including a markup, for reimbursement under major medical coverage. In general, medical billing systems do not provide the level of detail found in pharmacy-based claims adjudication systems.

Health plan sponsors may also want to implement programs to prevent or minimize the overuse and possible waste of specialty drugs. This may be accomplished by dose optimization programs, such as supplying vials of medicine in more precise increments. Patient training and education can help to reduce potential waste as well. Many specialty drugs require temperature-controlled shipping and handling. With improper handling, treatments may be rendered ineffective.

Beyond managing product distribution more effectively, the benefit plan design can help drive efficient use of specialty medications. Cost-sharing programs that affect copays or coinsurance formulas can be implemented to encourage patients to choose the most economical options to obtain their specialty drugs, including the preferred specialty pharmacy network. Tactics such as prior authorization and step therapy have been used by PBMs to minimize waste, overuse, and off-label use of medications.

These same strategies can be applied to the management of many specialty drugs. Given their price, the impact on total health care expenses would be substantial. Prior authorization ensures that patients meet coverage criteria before a drug is dispensed and helps ensure that specialty drugs are being used as approved by the FDA or supported by evidence-based clinical information. Finally, step therapy is intended to ensure that clinically effective, lower-cost treatment options are tried before turning to more expensive measures and that second-line therapies are reserved for patients for whom first-line therapies are found to be ineffective.

Managing coverage and the use of specialty drugs are not the only approaches to efficient health care spending. Health plan sponsors need to consider therapy management in addressing overall costs. Patient monitoring and education may improve adherence to treatment, which, in turn, may maximize the therapeutic benefit of the drug and prevent costly hospitalizations and other avoidable expenses. Specialty pharmacies have clinical and patient support teams to assess a patient's ability to follow his or her treatment regimen and suggest ways for the patient to make lifestyle changes that may improve adherence. For example, a support team may recommend home infusion for a patient whose business schedule does not accommodate office-based infusions. Also, receiving training on self-injected medications can support a patient's desire for convenience and independence.

Managed care companies recognize the value of such a personalized specialty pharmacy approach. A specialty pharmacy’s support services can help improve a patient’s quality of life and health care, while managing overall costs for persons with complex or rare medical conditions. Integrated data networks at specialty pharmacies help coordinate care and keep members of the health care team aware of a patient’s physical and mental health. This oversight is aimed at optimizing treatment (eg, improved adherence, management of adverse effects, and fewer hospitalizations). Managed care organizations and plan sponsors recognize the value of providing therapy management programs to assist their members in the safe and effective use of specialty drugs. Specialty pharmacies are uniquely positioned and staffed to support the cost and cultivation management needs of plan sponsors and the clinical needs of patients.

Conclusion

Rare conditions were once the only province of specialty drugs, but the rapidly evolving biotech industry has broadened the clinical scope of these “medical marvels.” An expanding pipeline and increased use of specialty drugs for conditions with larger patient populations will continue to drive utilization of and spending on these higher-cost treatments, especially as some are approved for the treatment of additional conditions.

In the midst of the broader use of specialty medications, health plan sponsors can manage costs and, at the same time, help improve the quality of care for their members. Clinical services provided by specialty pharmacies work toward assisting patients and their physicians in maximizing the effectiveness of their specialty treatment regimens. Guidance and support from the specialty pharmacy can help reduce overall health care costs and and maintain a patient's quality of life.

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