ACHP Briefing on Capitol Hill: Specialty Drug Costs

Specialty drugs represent an extraordinary lifeline for patients in need, but their high costs are driving up health care spending at an alarming rate. For many of these drugs, prices are simply too high for patients, government purchasers, employers and insurers to be able to pay for them without making difficult trade-offs. At a time when health plans, enrollees, and others are trying to hold down premium increases, it is time to look at how the pricing of specialty drugs and other drugs are contributing to those increases.

On October 7, ACHP held a briefing on Capitol Hill to provide insights into how the costs of specialty pharmaceuticals are affecting care and costs across the country. More than 70 individuals from the Hill and health care organizations joined us in a standing-room only presentation.

The expert panel offered perspectives from key stakeholders:

  • Bobby Clark, senior manager of PwC Health Research Institute
  • Steve Marciniak, R.Ph., associate vice president of pharmacy programs at Priority Health
  • Sharon Levine, M.D., associate executive medical director at The Permanente Medical Group, Inc.
  • Shari Davidson, vice president of National Business Group on Health

In conjunction with the briefing, ACHP published a briefing paper, Dollars and Sense: Putting Specialty Drug Costs in Perspective, an educational resource for stakeholders.

At ACHP, we want people to have access to the most appropriate drugs for their needs, and to make sure this access continues. Ultimately, our goal is to ensure the best care for all patients — those who require specialty drugs and those who don’t — while working to control the overall growth of health care costs.

Panelist Bobby Clark explained that from 2012 to 2020, U.S. specialty drug spending is expected to increase by 361 percent and that employees will be expected to help supplement these costs and pay a greater share of their treatment. “Half of all drug sales in the country in coming years will be for specialty drugs,” Clark noted.

The ability for health plans to offer clinically sound, cost-effective pharmacy benefits is changing. As the pharmacy director of a health plan, Steve Marciniak, R.Ph., emphasized that “With specialty drug costs trending at 15 to 18 percent per year since they came on the market, the cost pressure is greater than health plans alone can handle. Further, the challenge extends beyond specialty drugs to non-specialty brand names, generics and even vaccines – all of which are showing rising price trends, some very significant.” He added that the cost growth has outstripped the tools they have to manage the care of their patients.

To put the cost of these drugs in perspective, Sharon Levine, M.D., pointed out that specialty drugs account for just one percent of prescriptions, but 25 percent of total drug spending at Kaiser Permanente. Dr. Levine told the audience, “We need some level of transparency that goes beyond sound bites to substantive pricing…Until now, [health plans, consumers and employer-purchasers] have managed around pricing. Now we have to talk about pricing.” She pointed out that high drug prices and costs don’t affect only health care: “How much of the total resources for public good will health care consume?” Levine asked.

Employers are among those shouldering the burden of rising costs for specialty drugs. Shari Davidson, quoting the National Business Group on Health’s Large Employers’ 2015 Health Plan Design Survey, said specialty drugs are one of the top drivers of health care costs for employers. She added that while the per-member-per-year (PMPY) cost of traditional drugs is projected to decrease by 1.9 percent in 2015, the PMPY costs for specialty drugs are projected to increase by 18 percent. Further, specialty drugs are a larger and larger share of prescriptions. In 2013, specialty drugs accounted for 39 percent of all drug sales; this will increase to 47 percent by 2020. Among the approaches large employers are using to manage high prices and utilization are incentives for those employees who shop for less expensive sites of care, coupons and financial assistance.

All stakeholders across the health care system will shoulder some of the costs associated with high-priced specialty drugs, and there is no easy solution. In the words of Bobby Clark, we need to determine how we, as a society, will pay for breakthrough innovations. Any solution will require thoughtful consideration of many stakeholders and factors. But solutions can’t be postponed for long – because the current trends of prices and costs are simply unsustainable.

Patricia Smith, President and CEO, Alliance of Community Health Plans