Controlling costs may assist in improving access to biologic drugs

July 1, 2007

Payers and employers can pay up to $350,000 per patient for just one year of treatment for high-cost conditions such as rheumatoid arthritis. Patients, too, share the burden, in some cases shouldering 50% of the bill in deductibles and co-pays.

The rising price tag for treating chronic conditions, such as rheumatoid arthritis and psoriasis, is a significant component of increasing healthcare costs. Such conditions require clinical oversight and treatments up to twice a week, over a lifetime. Payers and employers can pay up to $350,000 per patient for just one year of treatment. Patients, too, share the burden, in some cases shouldering 50% of the bill in deductibles and co-pays.

This issue won't disappear anytime soon. Chronic biologics are penetrating mainstream working populations: By 2010, an estimated 1 in 25 people will be taking biologics, accounting for 60% of drug spending. To date, nearly 200 specialty drugs have been approved by the FDA and an additional 800 are in development, according to AON.

What's driving the high costs? Much of the public spotlight has been on the lack of biogenerics to provide price competition for established biologics. That's certainly an issue, although insurers have assisted in leveraging their specialty pharmacy providers to negotiate steep discounts on the drugs with the pharmaceutical industry.

The current shortage of infusing physicians means a shift to hospitals for ongoing treatment of chronic conditions. Hospitals are the highest cost infusion service site, as they mark up drugs and charge facility and nursing fees on top of high infusion rates. The practice of marking up these therapies is ripe for abuse as these line items are often buried in medical claims that are vague and difficult for health plans to scrutinize.

High cost is not the only barrier to patient access to quality chronic services. Oversight and accountability is a huge problem. Once patients enter into treatment - whether in the hospital, physician office, or homecare - no information is provided to the health plan or physician on how that patient was treated, including valuable clinical and usage data that could ensure better management of the overall care of the patient.

Lastly, patients with chronic conditions are still productive members of society who can go to work if properly treated. But that routine is impaired when they're forced to take time off work because of a hospital's, physician's, or homecare nurse's limited availability, as they rarely have opportunities for weekend and evening services. Even simply scheduling an appointment can turn into a time-consuming process that takes weeks.

A three-fold issue

The issues with chronic healthcare are three-fold: prohibitively high costs, poor oversight and limited access. Thus, insurers often try step therapy as a way to avoid infusions and injections. Ultimately, patients are paying in the form of non-compliance. This dropout rate catches up with the patient and plan providers with higher costs and increased pain when the chronic condition intensifies to the point that it requires hospitalization or lost work days.

However, the industry has produced a paradigm-shifting solution that broadens access and contains costs.

The solution is a centrally managed national network that leverages clinics and eliminates high hospital infusion costs. The network keeps drug prices low by leveraging a plan's existing specialty pharmacy discounts while also eliminating service mark-ups through complete transparency. Instead of thousands of dollars in deductibles and co-insurance, only a small co-pay for the drug and service is required from the patients.