Specialty pharmaceuticals require payers' attention

March 1, 2006

Advanced specialty pharmaceuticals are increasingly used to treat a wide range of conditions. They require close clinical monitoring. With a relatively short shelf life and limited stability, they call for special handling and timely distribution.

Advanced specialty pharmaceuticals are increasingly used to treat a wide range of conditions. They require close clinical monitoring. With a relatively short shelf life and limited stability, they call for special handling and timely distribution.

The explosive growth of specialty pharmaceuticals is projected to exceed $60 billion annually by the end of this decade. The pipeline reveals more than 100 biopharmaceuticals from more than 70 manufacturers in phase II or higher development, representing more than 40 disease categories and 165 indications.

The ethical conundrum arises when no alternative to these agents offers respite from specific conditions. Offering an unaffordable cure is another ethical complication.

BENEFIT REDESIGN

Changes in benefit designs are just one solution. Transitioning management of specialty pharmaceuticals from the medical benefit to pharmacy benefit is a dramatic change exacerbated by high copay and coinsurance requirements. Some plans have created injectable management programs to try and more effectively manage the costs of these products through rigid preauthorization, benefit changes, increased patient cost-sharing and injectable formularies.

Despite the array of specialty programs, the results of these diverse initiatives have been much less than expected. To date, plans have achieved less than 10% decreases in specialty pharmaceutical spending, generated primarily by patient cost-sharing and specialty pharmacy discounts.

While 20% coinsurance on a drug costing $30,000 per year might work actuarially, patient non-adherence leads to increased medical, laboratory and facility costs with the potential for poor clinical outcomes. Copay was intended to reduce frivolous use, not to serve as a barrier to care.

Specialty pharmacy is a natural forum for collaboration to create medical policies and clinical protocols ensuring appropriate utilization, pricing and distribution. The impact of Medicare Part D and the potential opportunities through Medicare's Competitive Acquisition Program (CAP) will further challenge this entire realm.

CAP offers an alternative to "buy and bill," reducing physicians' capital commitments and collection of patient copays. These agents are limited to drugs administered "incident to physician services" under Part B. While the revised CAP program is scheduled to be effective in July, there still are unanswered questions, such as whether physicians must maintain separate inventories for each CAP drug.

Whether the physician will choose to "brown bag" agents covered under both Part B and Part D bears further investigation. Given the catastrophic coverage provisions of Part D and the government's financial backing of prescription drug plans and Medicare Advantage prescription drug plans, patients might find that their cost share of certain agents is less if the drug is obtained under Part D rather than Part B, especially if the patient is taking multiple pharmaceutical agents.

MHE Editorial Advisor Joel V. Brill, MD, is chief medical officer of Predictive Health LLC.

Dennis Robbins, PhD, MPH, MHE editorial advisor, serves as an advisor on ethics and related issues for national organizations, law firms, hospital systems and government.