A Healthesystems publication

Fall 2014

Specialty Pharmacy Medications: Drug Innovations Offer Great Promise at High Cost

The growing presence of specialty medications within workers’ compensation introduces a new set of complexities to medication management. Careful patient selection will contain costs while ensuring appropriate care; however, the limited clinical experience surrounding these novel agents will make it difficult to weigh potential benefits against cost. 

The workers’ compensation industry is already seeing some instances of specialty pharmacy treatments in limited patient populations. As this segment of the pharmaceutical industry continues to evolve, it is becoming even more important for payers to develop proactive strategies to monitor the appropriate use of these costly medications. A precautionary yet strategic effort to address specialty medications can better equip workers’ comp payers to manage future and ongoing research and development, as evidenced by the large number of specialty drugs in the medication pipeline.

Similar to the manner by which other medical trends in workers’ compensation began, such as compounds and opioid prescribing, specialty pharmacy represents a small yet growing portion of todays injured worker population. This area of innovative pharmaceuticals is focused on the treatment of complex conditions that previously had fewer, if any optimal therapeutic options. However, they also have the potential to significantly raise overall workers’ compensation prescription costs. Discussed in depth in the Spring 2014 issue of Healthesystems’ RxInformer journal, specialty medications are one of the biggest cost concerns for the healthcare system today, as costs can top several hundred thousand dollars annually for a single patient.1

Signs of this burgeoning segment of the pharma industry are evident in group health. Spending on specialty medications has grown to represent 15 to 20 percent of overall prescription expenses, with a small percentage of patients driving nearly 20 percent of overall costs. This is expected to increase 30 percent over the next five years as new and innovative products enter the market.2

Cumulative specialty drug spend in 2012 in the United States was approximately $87 billion. Some pharmacy experts suggest it could quadruple by 2020 reaching $400 billion.3

The U.S. Food and Drug Administration’s (FDA) approval of specialty pharmaceuticals has outnumbered those for traditional medications in the last two years. Currently, more than 5,000 new specialty medications are in the global pipeline.4 Another factor which may expedite specialty medications into the market is the FDA’s new Breakthrough Therapy Designation intended to fast track new medications for serious or life threatening conditions by speeding up approval from ten years to only two.5

Cost Complexities

Typically, new medications entering the market tend to be expensive. Often, traditionally developed medications eventually become less costly when a generic is available. The trajectory for specialty medications, however, is different. Their cost is significantly higher for several reasons, most notably because of the complex manner in which they are manufactured. In addition, compared to traditional drugs, there often are no alternatives to specialty medications, and currently no biosimilars exist for these agents. Specialty medication often requires different routes of administration which also add to the cost of the total treatment. And, because the conditions treated with these medications are complex, so is the corresponding medication regimen which may involve multiple medications and more diverse dosage forms, increasing cost.

An example of the cost complexities of specialty medication is found with the drugs Sovaldi and Olysio. These medications are 90 percent curative for hepatitis C, which gradually damages the liver and affects three to four million Americans. A treatment regimen using Sovaldi can cost $84,000 to $168,000 per patient.6 Sales of Sovaldi have reached nearly $6 billion for its first two quarters on the market — breaking pharma industry records for a new medicine.7

To illustrate the cost impact of this treatment, consider an employer treating six employees who contracted hepatitis C as of a result of work-related incidents; the treatment regimen costs could be as high as $1 million using Sovaldi or Olysio. However, the benefit of these medications are quite promising for saving lives and preventing liver transplants, which has led some experts to predict that hepatitis C will be rare by 2036.8

In the case of hepatitis C where early treatment can significantly improve outcomes, some cost relief may be on the way. In October of 2014 the FDA approved a new specialty combination drug called Harvoni to treat this condition. It is the first and only hepatitis C treatment to provide a complete regimen in a single tablet. The recommended treatment is one orally administered tablet taken daily for a duration of 12 or 24 weeks.9 The medication itself is more expensive than Sovaldi but some patients have only required a shorter duration of eight weeks, at a cost of approximately $63,000.10

Infusion & Injectable Therapies

In workers’ compensation, infusion therapy, or medication administered through a needle or catheter, may play a role in treating various complex conditions such as rheumatoid arthritis, osteoarthritis, hepatitis C, and other conditions. Infused medication is typically administered intravenously, but it can also refer to intramuscular injection and epidural injection. The types of infusible medications vary and can include corticosteroids, antibiotics, chemotherapy, pain management, and newer biologics such as immunoglobulin.

Infusion therapy can be performed at home, at an infusion center, in a physician’s office, or in a hospital setting. However, according to one study, infusions are increasingly occurring in the hospital setting, where costs are the highest.11

Injectable specialty medications can be self-administered or administered by a healthcare professional. Medications such as Synvisc®, Orthovisc® and Euflexxa® occasionally are seen within the workers’ compensation patient population. All of these aforementioned drugs are indicated for the treatment of pain in osteoarthritis (OA) of the knee. These injections can exceed $1,000 per single joint treatment.12

Self-injectable biological agents such as Humira® or Enbrel® are also occasionally seen in workers’ compensation and these drugs are indicated for treating moderate to severe rheumatoid arthritis (RA) symptoms. Costs associated with these treatments can be over $2,000 per patient per month.13

Other drugs to manage this condition, which are close to approval by the U.S. Food and Drug Administration (FDA) include the RA vaccine Ravax®, sarilumab and secukinumab, a IL-17 inhibitor.14 In total, there are currently 92 medicines in development for arthritis, including 55 for RA and 10 for OA. See RA/OA Medication in Development by Phase graphic below.

Proactive clinical intervention is most effective toward achieving optimal outcomes resulting in appropriate cost containment.

MEDICATION in development by disease and phase

Tools and Strategies 

Specialty medications offer new opportunities for treating injured workers with complex conditions. Payers need to consider a balanced approach, weighing the potential patient benefits with the high costs often associated with these products, and proactively develop strategies to manage this evolving trend.

Some group health drug benefit companies are excluding coverage of these drugs in order to manage costs, but wholesale refusals are not possible in the workers’ compensation system. Therefore, it is critical to ensure specialty medication therapies are medically appropriate and adhered to from the onset.

Healthesystems applies its Specialized Transaction & Alternative Therapy (STAT) approach to ensure that appropriate therapy is balanced with cost. Timely clinical analysis of pharmacy transaction and billing data are conducted to identify concerns such as the selection of the most effective, evidence-based drug, as well as the correct dose, medication adherence, and treatment outcomes. Specialty medications can be identified and addressed according to each payer’s unique needs. 

Adherence Plays a Role

Specialty medications, similar to all other medications, need to be prescribed appropriately, and close clinical evaluation can ensure evidence-based guidelines are followed. Adherence to therapy is especially critical for many specialty medications.

It is important to understand that not only are specialty medications different than their traditional counterparts, but patients taking specialty medications are different, too. Their complex conditions often involve medications with different routes of administration and their medical treatment may involve more specialist visits, more hospital admissions, as well as more lab tests; in addition, these patients are often faced with more severe side effects resulting from their treatment regimen with specialty medications. Ensuring that the injured worker adheres to treatment is important to fostering successful outcomes.

Nonadherence can certainly add to medical costs with researchers estimating the cost to the overall healthcare system and society at upwards of $100 billion per year.15

With some specialty medication regimens, patients who do not adhere and complete therapy can develop resistance, rendering treatment reintroduction to be potentially ineffective. For example, nonadherence to a particular HIV medication therapy is closely associated with incomplete viral suppression and disease progression and is thought to be a risk factor for the development of drug resistance.16 In other cases, where reinitiating treatment is possible, it becomes more costly to pay for subsequent treatments.

Nonadherence compounds an already costly medication regimen. While specialty pharmacy medications continue to show promise in treating and curing illnesses, they are quite complex and costly. Ensuring appropriate prescribing and carefully applying proven medical cost containment strategies will help ensure both patient safety and effective cost containment for payers. 

For patients already faced with a complex medical condition, nonadherence can lead to:

Additional physician visits
Additional hospital admissions
Additional prescriptions
Emergency department visits

 

 

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SOURCES

1 -Wall Street Journal. Rockoff JD. Drug Makers See Profit Potential in Rare Diseases. January 30, 2013. Available at: http://online.wsj.com/articles/SB10001424127887323926104578273900197322758 . Accessed 10/26/14.
2 -IMS Institute for Healthcare Informatics. The Global Use of Medicines: Outlook through 2017. Available at: http://www.imshealth.com/portal/site/imshealth/ menuitem.762a961826aad98f53c753c71ad8c22a/? vgnextoid=9f819e464e832410VgnVCM10000076192ca2RCRD& vgnextchannel=a64de5fda6370410VgnVCM10000076192ca2RC RD&vgnextfmt=default . Accessed 10/26/14.
3 -Specialty Trend Management: Where to Go Next. Insights 2013. CVS Caremark. CVS Caremark projection (2013) based on internal data and forecasts; McKinsey MPACT6 Model, Kaiser Family Foundation: Medicare at a glance, 2012; National Health Expenditure Projections 2011-2021 CMS; Avalere 2013 Medicaid Opt-Out Model, Milliman Specialty Medication Benchmark Study developed using the 2010 and 2011 Truven Health MarketScan Research Database for a commercial population (used for 2012 estimate).
4 -Pharma. The Biopharmaceutical Pipeline: Evolving Science, Hope for Patients. Published January 17, 2013. Available at: http://www.phrma.org/sites/default/files/pdf/phrmapipelinereportfinal11713.pdf . Accessed 10/26/14.
5 -U.S. Food and Drug Administration Regulatory Information. Frequently Asked Questions: Breakthrough Therapies. Available at: http://www.fda.gov/regulatoryinformation/legislation/federalfooddrugandcosmeticactfdcact/significantamendmentstothefdcact/fdasia/ucm341027.htm . Accessed 10/26/14
6 -Pollack, Andrew. The New York Times. FDA Approves Pill to Treat Hepatitis C. December 6, 2013. Available at: http://www.nytimes.com/2013/12/07/business/fda-approves-pill-to-treat-hepatitis-c.html . Accessed 10/26/14.
7 -Pollack, Andrew. NY Times. July 23, 2014. Gilead’s Hepatitis C Drug, Sovaldi, Is on Pace to Become a Blockbuster. Available at: http://www.nytimes.com/2014/07/24/business/sales-of-hepatitis-c-drug-sovaldi-soar.html . Accessed 10/26/14.
8 -Study predicts hepatitis C will become a rare disease in 22 years. 4 August 2014. http://scienceblog.com/73746/study-predicts-hepatitis-c-will-become-rare-disease-22-years/#ZFVWPplGSiFU3Ckq .97 Accessed 14 September 2014
9 -Gilead Sciences Policy Position. Gilead Sciences, Inc. Innovating and Expanding Access to Hepatitis C Treatments. October 2014. Available at: http://www.gilead.com/~/media/Files/pdfs/Policy-Perspectives/ExpandingAccesstoHCVTreatments10214.pdf . Accessed 10/26/14.
10 -Pollack, Andrew. Harvoni, A Hepatitis C Drug From Gilead, Wins, FDA Approval. New York Times. October 10, 2014. Available at: http://www.nytimes.com/2014/10/11/business/harvoni-a-hepatitis-c-drug-from-gilead-wins-fda-approval.html . Accessed 10/26/14.
11 -Specialty Trend Management: Where to Go Next. Insights 2013. CVS Caremark. CVS Caremark Internal Data, 2013. Available at: http://info.cvscaremark.com/sites/default/files/Insights%202013.pdf . Accessed 10/26/14
12 -Healthesystems. Medical Applications of Specialty Drugs in Workers’ Compensation. RxInformer. Spring 2014 issue. Available at: www.healthesystems.com/rxinformer . Accessed 10/26/14.
13 -Demaria, Acelajado MC, Luck J, et al. Variations and Practice in the Care of Patients with Rheumatoid Arthritis: Quality and Cost of Care. J Clin Rheumatol. 2014; 20(2): 79-86. Available at: http://www.medscape.com/viewarticle/821539 . Accessed 10/26/14.
14 -Medicines In Development: Arthritis A Report on Arthritis and Related Musculoskeletal Diseases. PhRMA. 2014 Report. Available at: http://www.phrma.org/sites/default/files/pdf/2014-meds-in-dev-arthritis.pdf . Accessed 10/31/14.
15 -Brown MT, Bussell JK. Medication adherence: WHO cares? Mayo Clin Proc. 2011;86(4):304-14.
16 -Bangsberg, Charlebois, Grant, Holodniy, Deeks, Perry, et al. AIDS. 2003; 17(13). Available at: http://www.medscape.com/viewarticle/460684 . Accessed 10/26/14.
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