Manage specialty drug formularies

May 1, 2011

By 2012, 11 of the top 16 drugs in the United States will be injectable or infusible, and by 2014, specialty pharmaceuticals will comprise the bulk of drug spending in the United States.

BY 2012, ELEVEN OF THE top 16 drugs in the United States will be injectable or infusible, and by 2014, specialty pharmaceuticals will comprise the bulk of drug spending in the United States, according to a new report from ICORE Healthcare, a subsidiary of Magellan Health Services.

"The world of pharmacy management and drug management is at an inflection point that is being driven by the change in drug mix," says ICORE President Alan Lotvin, MD.

While payers have long been concerned about rising specialty drug costs, tracking specialty drug spending has been notoriously difficult because of a lack of detail and uniformity in the data collected.

INJECTABLES ADD TO CANCER CARE

The report found specialty drugs related to cancer care represented more than half of medical injectable costs. Injectable chemotherapy accounted for more than one-third of all medical injectable costs, but chemotherapy support medicines (granulocyte colony-stimulating factors and erythropoiesis-stimulating agents) added significantly to the total cost of cancer care.

What's more, spending on injectable chemotherapy dwarfed the amount spent on oral chemotherapy. In 2009 a typical commercial payer covering 1 million lives spent nearly $32 million on injectable chemotherapies: eight times more than it would have spent on oral chemotherapies, according to the report.

Biologic response modifiers used to treat autoimmune disorders, such as rheumatology, represented the second largest therapeutic spending category.

"That's been a rapidly growing class that often surprises people," says Dr. Lotvin, noting that the drugs are now used for a broad array of indications including gastrointestinal conditions like Crohn's disease and skin conditions like psoriasis.

While intravenous immunoglobulin (IVIG) constituted only about $2.2 million of the typical payer's specialty medical drug spending, for example, the report projects that total IVIG spending-including home infusion and treatments administered through the specialty pharmacy channel-was probably three times as much.

Overall, key cost drivers include: the expansion of indications for certain chemotherapies; the U.S. Food and Drug Administration approval of several new therapies; and price inflation, which the firm estimates to be 4%.

Given the magnitude and upward trajectory of these costs, it's no surprise that payers are looking for ways to manage their spending. Dr. Lotvin says that many plans have put fee schedules in place, started to focus on utilization management, and have begun developing and managing formularies.

More than half the plans surveyed receive rebates for at least one injectable drug paid under the medical benefit, most often for rheumatoid arthritis drugs. Larger health plans are about 50% more likely to have a rebate program in place.

"Pricing in the industry has gotten so aggressive that you really can't talk about discounts anymore," he says. "You need to talk about clinically based management approaches, and you have to make sure what you are doing is absolutely within the scope of maintaining and improving clinical practice."

Because a growing number of conditions, such as multiple sclerosis and Crohn's, are treated with a broad mix of drugs, payers need to find an integrated approach to managing pharmacy and medical benefits data.

"That won't be easy," he says. "It's going to take diligence, focus, sweat and a recognition by the market that this is important."
-Shelly Reese