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WHAT IT MEANS AND WHY IT'S IMPORTANT If Medicare Part D is to remain solvent in the future, then lawmakers may want to take a closer look at the more than 10% of spending on drugs under the program that has gone toward specialty drugs — some of the most expensive drugs on the market — and find ways to come up with cheaper alternatives.
(THE NEWS: GAO: Specialty drugs accounted for 10% of Medicare Part D spending in 2007. For the full story, click here)
The Government Accountability Office reported that of the $54.4 billion spent on prescription drugs under Medicare Part D in 2007, $5.6 billion went toward specialty drugs. Many specialty drugs — particularly those for cancer and autoimmune disorders, are biologics — which can cost thousands of dollars for a month’s supply and for which no generic alternatives are available. In addition, while Alzheimer’s disease often falls outside the traditional “specialty” realm, many treatments for it in the pipeline are biologics as well.
One way to save money to patients and the Centers for Medicaid and Medicare Services alike would be to create an abbreviated regulatory approval pathway for follow-on biologics, also known as biosimilars and biogenerics, similar to the one that has existed for generic pharmaceutical drugs since 1984.
As long as it gave innovator companies ample opportunity to recoup their investments and didn’t leave patients and payers waiting too long before biosimilars became available, such a pathway could go a long way toward bringing down the costs associated with cutting-edge treatments.