A breakthrough is defined as a sudden, dramatic and important discovery or development. It’s hard to dispute that medical breakthroughs have changed the course of life as we know it. But what good are these breakthroughs if the people who need them can’t afford them? Such is the case with prescription drugs and, in particular, specialty pharmacy.
In the coming years, drug manufacturers will unleash an unprecedented raft of new drugs into the marketplace; some will improve the treatment of common medical problems like high cholesterol and diabetes, while others (those referred to as “specialty” drugs) will be used to treat complex conditions like multiple sclerosis, hepatitis C and cancer. The good news: These “precision therapies” provide new and, in some cases, better treatment options. The bad news: The price tag for such prescription drugs in the U.S. is breathtaking — even scandalous.
Drug companies argue that new products are harder to develop and manufacture, which justifies the additional cost. But U.S. pricing is often three to 10 times that in other developed nations. Is that really acceptable?
Human-resource and benefits leaders from 17 companies who are members of the Minnesota Health Action Group are mobilizing around the specialty-drug-pricing issue by joining a Specialty Pharmacy Care Delivery Learning Network sponsored and led by the Action Group. The goal is to effect market-based change in an informed, united way so Minnesotans can receive the right therapies, in the right place, at the right price and at the right time.
Why should employers care about specialty pharmacy and, furthermore, why should they give their precious time to help drive change? Quite simply, because if they don’t, they will eventually end up paying the price. Don’t believe us? Consider the following:
• The hepatitis C drug Sovaldi made headlines last year when a course of treatment was pegged at $84,000 in the United States, crushing previous cost and use records. The same drug is priced at $900 in Egypt and $51,000 in France.
• U.S. costs for a powerful new cholesterol management drug, PCSK9, are expected to be $7,000 to $12,000 per patient per year, compared with about $1,000 on average for conventional drug therapies. Given the number of patients who might benefit, the market for this one drug could easily reach $100 billion per year, or about 1/33 of what we currently spend on all U.S. health care. All this for a maintenance drug that comes with annual lifelong, recurring costs.
• By 2018, the cost for hundreds of specialty drugs that are flooding the pipeline is expected to account for more than half of the total U.S. drug spend, up from 25 percent in 2006. Spending on this category is growing almost 20 times as fast as non-specialty-drug spending.
Unless something changes, in a few years, we’ll spend more on specialty than non-specialty drugs or, for that matter, on doctors. The likelihood that this trend could financially overwhelm health care purchasers is real.
It’s hard to know how employers and unions will cope with the new pricing. Purchasers should consider a couple of key questions. First, what new measurable value will each new drug bring? This is hardly cynical; one recent study found that cancer drugs approved by the U.S. Food and Drug Administration over the past decade lengthened life by only 2.1 months, on average. Courses of many of these drugs cost more than $100,000. As consumers, we want to know what tangible value we can expect from a purchase. But in health care, that value has proved elusive.
Second, what is the pricing tied to? What makes it more expensive to buy these drugs in the U.S.? Why, exactly, is Gilenya, a multiple-sclerosis drug, almost six times as costly here as it is in Spain?
The battle over specialty-drug pricing could come down to a standoff between drug manufacturers and purchasers. In the past, drug companies have had reason to believe employers and unions were too preoccupied with other matters to take action against specialty-drug costs.
Minnesota Health Action Group members are here to say “enough is enough.” All Minnesota employers should get informed on this issue and join us as we strive to hold drug manufacturers and sellers accountable for rational pricing practices. It’s time, yet again, for business to lead the way in health care innovation.
Benefits managers and financial officers from employers, unions and governmental agencies have been watching their specialty-drug spend and calculating. It’s possible that excessive specialty-drug costs could capsize their benefit plans, making it untenable to maintain good health coverage without severely compromising other important benefits. Just as worrisome, these costs will exacerbate their health care cost burden and cannibalize profits.
Is it possible that, in manufacturers’ zeal for ever-greater profits, specialty-drug pricing could be the straw that breaks the tolerance of the nation’s health care purchasers for excessive health care pricing? If so, maybe health care will finally change.
Carolyn Pare is the president and CEO of the Minnesota Health Action Group. Brian Klepper is CEO of the National Business Coalition on Health.