Specialty drugs impact increase in drug spending
Drug Store News sat down with Chris Jennings, president of Jennings Policy Strategies, to discuss options for managing the high cost of specialty drugs. Jennings is the former senior health care advisor for former presidents Barack Obama and Bill Clinton.
Drug Store News: Would you agree that specialty drugs are driving drug spend and need to be managed?
Chris Jennings: Yes, without question. While there are some traditional brands and generics facing little or no competition that have contributed to the problem, specialty drug products are the primary drivers of the increasing drug spend. We know this from both private and public purchasers who have documented specialty products as the most rapidly increasing component of their drug-cost spend and related cause of insurance premium increases. In response, the business community, health plans, consumer advocates, states and HHS are actively developing creative ways to intervene to moderate this cost problem, though most are quite frustrated with the pace of progress in this area.
DSN: What challenges do you see on the Medicare and private payer side?
CJ: The challenges are multifaceted for Medicare. In Part B, we see extraordinarily high expenditures for specialty drugs administered in physician offices, which translates into higher premiums and taxpayer underwritten costs for Medicare. In the Part D outpatient side of the program, Medicare and its private purchaser contractors have been largely successful at moderating cost growth, where there is competition of three or more competitors in a drug class and/or widespread use of generics. Drug management tools, such as formularies, generic substitution, drug utilization review and drug adherence programs are widely used to moderate costs. Thinking it would be helpful to broaden the use of these tools, Secretary Azar has proposed shifting drugs purchased under Part B to Part D. One can understand his instincts here, but many experts are skeptical the Part D program will be able to come close to matching the base prices now paid by Part B — even if it uses the additional management tools. With this in mind, he is well-advised to keep all or most of these drugs in Part B and find a way to import the private purchasing tools into Part B.
Private payers face similar problems as Medicare. Employers are reporting that their most rapidly increasing healthcare spend is on prescription drugs, particular specialty drugs that face little or no competition. Most of these purchasers are upset about the legal loopholes that the lawyers of manufacturers creatively use to extend market exclusivity to block competition. This so-called evergreening of market exclusivity adds billions of dollars to payers’ costs by delaying competition.
What unifies employers, plans and workers, though, is the strongly held view that the current drug cost trend is unsustainable.
DSN: What do you see pharmacies’ future role is in managing costs?
CJ: I think the role of the pharmacist is key. The reality is that there are no healthcare providers who see patients more than pharmacists, or have a better understanding of the breadth of the prescriptions for different conditions individuals are taking, or should be taking — or not taking. Pharmacists are finally getting the respect by payers and physicians that they deserve for their role in managing care. Their role is particularly important for the increasing numbers of chronically ill patients who are coming into our health systems. Their leadership role in stopping/managing negative synergistic drug interactions for those taking multiple medications has been well-documented. Their role in assurance of proper adherence with the medication protocol they have been prescribed is critical. Finally, we are starting to hear payers say that such care should be valued and compensated at greater levels. How and when this gets widely translated, I am not sure, but it is certainly well past time that we acknowledged and paid pharmacists for the key role they are and will be playing.
Drug Store News: Would you agree that specialty drugs are driving drug spend and need to be managed?
Chris Jennings: Yes, without question. While there are some traditional brands and generics facing little or no competition that have contributed to the problem, specialty drug products are the primary drivers of the increasing drug spend. We know this from both private and public purchasers who have documented specialty products as the most rapidly increasing component of their drug-cost spend and related cause of insurance premium increases. In response, the business community, health plans, consumer advocates, states and HHS are actively developing creative ways to intervene to moderate this cost problem, though most are quite frustrated with the pace of progress in this area.
DSN: What challenges do you see on the Medicare and private payer side?
CJ: The challenges are multifaceted for Medicare. In Part B, we see extraordinarily high expenditures for specialty drugs administered in physician offices, which translates into higher premiums and taxpayer underwritten costs for Medicare. In the Part D outpatient side of the program, Medicare and its private purchaser contractors have been largely successful at moderating cost growth, where there is competition of three or more competitors in a drug class and/or widespread use of generics. Drug management tools, such as formularies, generic substitution, drug utilization review and drug adherence programs are widely used to moderate costs. Thinking it would be helpful to broaden the use of these tools, Secretary Azar has proposed shifting drugs purchased under Part B to Part D. One can understand his instincts here, but many experts are skeptical the Part D program will be able to come close to matching the base prices now paid by Part B — even if it uses the additional management tools. With this in mind, he is well-advised to keep all or most of these drugs in Part B and find a way to import the private purchasing tools into Part B.
Private payers face similar problems as Medicare. Employers are reporting that their most rapidly increasing healthcare spend is on prescription drugs, particular specialty drugs that face little or no competition. Most of these purchasers are upset about the legal loopholes that the lawyers of manufacturers creatively use to extend market exclusivity to block competition. This so-called evergreening of market exclusivity adds billions of dollars to payers’ costs by delaying competition.What unifies employers, plans and workers, though, is the strongly held view that the current drug cost trend is unsustainable.
DSN: What do you see pharmacies’ future role is in managing costs?
CJ: I think the role of the pharmacist is key. The reality is that there are no healthcare providers who see patients more than pharmacists, or have a better understanding of the breadth of the prescriptions for different conditions individuals are taking, or should be taking — or not taking. Pharmacists are finally getting the respect by payers and physicians that they deserve for their role in managing care. Their role is particularly important for the increasing numbers of chronically ill patients who are coming into our health systems. Their leadership role in stopping/managing negative synergistic drug interactions for those taking multiple medications has been well-documented. Their role in assurance of proper adherence with the medication protocol they have been prescribed is critical. Finally, we are starting to hear payers say that such care should be valued and compensated at greater levels. How and when this gets widely translated, I am not sure, but it is certainly well past time that we acknowledged and paid pharmacists for the key role they are and will be playing.