The Rise of Specialty Medication Spending
November 18, 2015
The one thing you might already know about specialty drugs is that they are expensive. This is not hype, some can be very, very expensive. They can also be life changing. Like in other areas of the US healthcare market, the active struggle with specialty drugs is maintaining access while securing bottom lines. New specialties are coming every year and the results can be very impressive, but the prices can also be staggering, and sometimes completely out of reach.
Specialty drugs treat chronic conditions like cancer, heart disease, rheumatoid arthritis, and multiple sclerosis. Sometimes they require special handling conditions or require more involved administration. RxREVU defines specialty drugs as costing above $600 per month, often biologic or injectable. Often times, they represent great innovations, but many expensive treatments with questionable efficacy that manage chronic conditions over the course of many years frighten payers, and rightfully so.
Express Scripts is the second largest Pharmacy Benefits Manager in the United States. They have decided to take a very aggressive approach towards new specialty drugs. This approach was to take a cold price war and make it red hot. The very private world of payers, PBMs and drug companies, shrouded in mystery and secret contracts, saw very public blood being spilled. Their first battle this year was over a specific Hepatitis-C drug:
“Gilead Sciences’ Sovaldi, which costs about $1,000 per day, or $84,000 for a 12-week course of treatment.” Express Scripts negotiated an exclusive deal with a competitor that was a corporate knee-capping for Gilead. “That move ignited a price war that culminated in early February, when Gilead shocked investors by announcing expected discounts of 46 percent on its hepatitis C drugs, Sovaldi and Harvoni, for 2015.” – CNBC
This is corporate warfare and the stakes are very high. Each potential new drug could be an enormous windfall for a drug developer and it could also be a threat to the market itself. Express Scripts cast themselves as the “catcher in the rye” trying to save the market from itself, not letting other companies go off the cliff. Smaller payers and employers are trying to manage specialty drug costs without the enormous buying power of a company like Express Scripts, but companies like Express Scripts make the market and it is the market everyone else lives in.
The LA Chamber of Commerce released a short paper about specialty drugs. They placed a lot of emphasis on educating employees about specialty drugs in an effort to reduce costs. They outline strategies, mostly vague and toothless, which would make their employees somehow savvier in choosing specialty drug treatments. The LACC doesn’t explain exactly how to these educate employees. RxREVU, however, would educate and benefit both employers and employees. RxREVU has the direct comparison capabilities that show treatment options focused on affordability and sustainability.
Specialty drug costs are enormous and they have potential to cause serious harms on payers and the system as a whole. Technology offers an opportunity to bring market solutions to market problems. A technological approach would tie down costs to results and steer doctors and patients away from costly and less effective options using big data. Not every company can unilaterally impact the market like Express Scripts. On this large corporate battlefield, technology may be the only defense that can give a small actor big company leverage, and RxREVU is here to help defend the bottom line of patients and payers.