Health Insurers, Pharmacy Benefit Managers, Employers Look To Rein In Spending For High-Cost Specialty Drugs

Main Category: Public Health
Also Included In: Health Insurance / Medical Insurance;  Pharmacy / Pharmacist
Article Date: 21 Mar 2008 - 11:00 PDT

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Employers, health insurers and pharmacy benefit managers are "redoubling efforts to rein in spending" for cancer treatments and other high-cost treatments amid "fresh evidence that so-called specialty pharmaceuticals are among the biggest drivers of escalating health costs," the Wall Street Journal reports. Specialty drugs include biotechnology and other drugs used to treat serious conditions such as cancer, multiple sclerosis and rheumatoid arthritis.

According to the Journal, the average prescription for specialty drugs costs more than $1,500, and some can cost as much as $100,000 annually, compared with about $90 to $120 per month for conventional brand-name drugs to treat conditions such as high cholesterol, hypertension and depression. The Journal reports that spending on specialty drugs is increasing even as spending for conventional drugs declines because of patent expiration and generic competition.

To reduce the use of costly specialty drugs, some payers are pushing for legislation that would allow drug makers to sell generic versions of biotech drugs. Steven Miller, chief medical officer at the PBM Express Scripts this month testified at a congressional hearing that a generic biotech bill could generate savings of "$71 billion over the course of the decade, starting with $3.5 billion in the first year." Some large U.S. employers -- including General Motors and Ford Motors -- have formed the Coalition for a Competitive Pharmaceutical Market, which is lobbying for passage of a generic biotech bill. However, biotech drug companies say their products are more complicated than conventional treatments and want generic biotech drugs to undergo clinical testing, which could drive up costs.

Meanwhile, Aetna is considering a pay-for-performance system for specialty drugs, under which a drug's price would be linked to efficacy. Medco officials say they are working to reduce off-label prescribing of specialty drugs by enforcing evidence-based treatment guidelines, precertification requirements and transparent accounting of the reason for the prescription, the Journal reports. The company says the efforts have reduced inappropriate use of biologics such as human growth hormone injections for cosmetic purposes. In addition, Express Scripts and Medco are "tightly managing their formularies with rules governing drug selection, usage and dose." Medco also is requiring patients to begin treatment on the lowest-priced drug, advancing them to more costly treatments only if less costly drugs do not work (Chase, Wall Street Journal, 3/20).

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