Sovaldi has brought high prices of specialty drugs to the fore. Less examined so far are proactive approaches insurers and drug benefits managers can use to curb the growth trend without sacrificing quality or access.
Through 2018, there will be a 17 percent compound annual growth rate in U.S. specialty drug spending and it could account for more than half of all drug costs, according to Alan Lotvin, MD, EVP of speciality pharmacy at CVS Caremark.
For instance, Copaxone, Teva Pharmaceuticals' injection-based multiple sclerosis drug, debuted in 1996 at a price of about $1,000 per month, Lotvin said. By 2008, it was priced at $2,000 per month and nowadays is hovering around $5,000.
From cancer to MS to hepatitis C, that type of pricing growth is forcing a range of public and private payers to start making hard decisions, possibly tradeoffs, especially when it comes to the breakthrough hepatitis C drug Sovaldi, sold by Gilead Sciences at about $80,000 per course.
Medicaid programs, most of them mandated with covering drugs, are warning about troubles ahead -- many billions that would need to be spent to treat patients, at the risk of crowding out other state services at the $80,000 price.
In Oregon, though, where a federal waiver offers the Medicaid program more flexibility, state health leaders are planning to limit Sovaldi access only to the sickest of the estimated 20,000 Oregon Medicaid beneficiaries carrying the virus.
Sovaldi is quite unique among drugs, including speciality drugs, in that it "cures disease," said Lotvin, a former interventional cardiologist who entered the pharmacy benefits industry in the late 1990s. "We don't cure a lot of things."
But it also offers an opportunity to develop new ways to manage drug benefits, Lotvin argued in a presentation Thursday at AHIP Institute 2014 in Seattle.
For hepatitis C, which can stay nascent without creating harm for years, a patient's liver can be monitored regularly via ultrasound and when signs of damage start to appear, treatment can begin -- to buy time until Sovaldi's price comes down or similarly-successful competitors become available.
Other conditions that need specialty drugs can be approached with strategies that don't limit access when the evidence of benefit is clear but do emphasize the most affordable options, Lotvin argued.
"On management, we need to monitor the literature much more closely," he said. "We can be much more aggressive without sacrificing quality."
For patients with HIV, he said, "you can get almost exactly the same antiretroviral activity" with multiple pills daily of generics as with the once-daily branded drug.
Insurers and PBMs should also try to put themselves in the shoes of patients as they devise these strategies and consider how patients using specialty drugs make their choices, Lotvin said.
For employer-based plans where employees have the choice of low-deductible or high-deductible plans, many individuals reliant on specialty drugs actually choose the high-deductible plans with low premiums.
"They blow through half their co-pay in January," get reimbursed by the drug company. They pay the rest of the annual co-pay in February, "they get another check and their done for the rest of the year."
"All the things we want to do with HDHP with getting patient's skin in the game goes away with speciality drugs," he said.
That makes engagement with members all the more important -- to tackle the rest of their costs that are both avoidable and not beneficial for them, like complications and repeat hospitalizations.
In Crohn's disease, Lotvin said, home care has shown promise for reducing emergency room visits. For Crohn's patients who start taking the artificial antibody infliximab (sold as Remicade by Johnson & Johnson's Janssen) and intravenous total parenteral nutrition treatment, infection is a real risk. Rather than patients having the ER as the default for treating infection, regulator home visits can help either prevent infection by IV checkups or by catching infection early on and starting antibiotic treatment.
These types of strategies to tackle the problems and spending associated with specialty drugs are going to be important for insurers to adopt at the same that they seek more affordable pricing and look to competitors coming out of the pipeline for breakthrough drugs like Sovaldi.
Personally, Lotvin believes drug pricing reforms and structural changes are going to be the provence of the private sector. "I don't see a scenario where we get to really aggressive government price controls in this country."