Breakthrough Treatments Offer Hope, But Bring Sticker Shock

Doctor giving you medical pill

Specialty drugs can literally change lives, but their price tags can make them out of reach for many patients.

Specialty drugs help patients manage diseases like cancer, rheumatoid arthritis, multiple sclerosis, cystic fibrosis, diabetes and hepatitis C, diseases that can be life-threatening and previously were untreatable.

True, the specialty drug market is still small, accounting for 1% of prescriptions written in 2012, but it makes up 25% of the total amount spent in the U.S. on drugs, according to the most recent figures available from PBM Express Scripts.

What’s more, according to health care consultancy Visante, in 2015, the specialty drug market for prescriptions dispensed within prescription drug plans is projected to reach $68 billion, an amount that will pressure consumer wallets and employers’ bottom lines.

In fact, employers say specialty drugs are one of their three top costs in their overall health care spending, according to an annual report released by the National Business Group on Health.

Recently, the price of new Hepatitis C drug Sovaldi, which has a 95% cure rate, caused an uproar among consumers and advocacy groups with a costs of around $1,000 per pill or $84,000 for a typical course of treatment.

“People are going to want the best treatment when it’s available,” says Brendan Buck, spokesman for American’s Health Insurance Plans. “We told Gilead [Sciences], the company that makes Sovaldi, to lower the price. Treatments of $100,000 to $200,000 are not sustainable.”

But solutions may not be as simple as just asking or “walking into the drug store and taking a pill,” warns David Lansky, CEO of the Pacific Business Group on Health. Plus, Sovaldi differs from most breakthrough drugs in that it targets 3.2 million people; specialty drugs typically target smaller groups.

What’s more, Sovaldi’s treatment period is contracted at a few months in lieu of the more typical years. “Upfront this may save us all money instead of making payouts for chronic conditions over 20 years,” says Lansky. “But the entire bill is on one entity, not multiple payers. That entity may not have enough money in the bank to pay for it.”

Lansky says in order to bring the costs down, there needs to be a system that results in a fair pricing structure in which everyone benefits.  Drug companies will earn a reasonable return on their research and development (R&D), and consumers who are often denied access because of cost will be able to get the drugs they need.

Indeed, Sovaldi has catalyzed a conversation, says Dr. Alan Lotvin, executive vice president of special pharmacy at CVS.

“People may not have a lot of sympathy [for the health plans and employers] but it’s an urgent situation. Ultimately the cost ends up somewhere,” claims Lotvin.

Ripple Effect

Hypothetically, if every Hepatitis C sufferer working for a large automotive manufacturer were to be prescribed Sovaldi, Lotvin predicts the average premium increase per employee would be $300. “You can be sure that would end up in the cost of your car.”

While greater transparency in drug R&D, less restriction on the use of biosimilars and shortening the exclusivity period for generic biologics is the exclusive purview of policymakers, the role of specialty pharmacies is growing as a boots-on-the-ground salve for payers and consumers in the specialty drug equation, say experts.

“Not all drugstores are the same,” says Charles Cote, spokesman for the Pharmaceutical Care Management Association.  Specialty pharmacies differ from tradition pharmacies in that they negotiate to lower cost, and with a high touch approach coordinate all aspects of patient care.

Visante says specialty pharmacies can decrease drug costs 7% to 12%, relative to other distribution channels—an estimated $13.5 billion in savings for consumers, employers and other payers and $251.5 billion between 2015 and 2024.

Specialty pharmacies are also instrumental in decreasing drug costs by 10% to 40% through services that enhance adherence, claims Visante.

As counterintuitive as it seems for a patient population so emotionally and financially invested in its drug therapy, adherence rates are worse among patients who take specialty medications ,according to Brian Henry, spokesman for PBM Express Scripts which runs specialty pharmacy Accredo.

“It’s one thing for a patient to pay the cost of the drug, but another [cost] if the patient doesn’t take it,” says Henry. “The patient relapses and ends up in the ER.”

It’s important to understand why a patient is non-adherent. “Is the drug is too costly? The patient too lazy, even forgetful?  Adherence is not a one-size-fits-all solution. Accredo works with the patients to coordinate care on a person-by-person basis,” Henry says.

Still, one issue remains constant, says Henry. “Noncompliance is not an isolated expense, “Everyone shoulders the burden.”