Price vs Patient Access: Specialty's Unsettling Conundrum

MAY 18, 2015
Ron Lanton III, Esq
As specialty medication costs rise, stakeholders seek to find a balance between cost containment and patient access.
Publicly traded health care companies have been on a tear recently compared with traditional indexes, such as the S&P 500. Innovative sectors, such as specialty pharmacy and biotechnology, once again have many viewing health care as a growth story. While these sectors are not new, the combination of improved science, more consumers accessing the health care system, and encouraging signs of an accommodative FDA have many on Wall Street optimistic about the future of health care.

Despite these encouraging signs, however, a threat is emerging. The accelerating trend of rising specialty medication costs is not only causing justifiable concern, but is also deepening the philosophical divide between the essential stakeholders, such as health care providers and payers, who play vital roles in ensuring appropriate patient care. While many are wondering whether higher pricing is a sustainable and justifiable trade-off if patient outcomes are improved, I believe that a major point is being ignored: without cooperation between the system’s essential stakeholders, our health care system’s potential will never be fully realized. While costs should be scrutinized, they should not be the sole factor in determining a patient’s access to therapy. This article will describe emerging viewpoints of key stakeholders to illustrate how specialty is segmented by price and offer insight into how this can be changed to help ensure a better scenario for all involved.

According to Express Scripts, Inc (ESI), the country’s largest pharmacy benefit manager, “US spending on specialty prescription drugs—those used to treat chronic, complex diseases, such as cancer, multiple sclerosis, and rheumatoid arthritis—is projected to increase 67% by the end of 2015.”While there are many reasons why this is occurring, manufacturers have no doubt shifted their focus when it comes to drug development. In a general sense, pharma has transitioned from creating “me-too treatments” and drugs that improved patient conditions to the point where they became more manageable to creating high-value transformative medications that are just shy of being called curative. Some manufacturers believe that their products should be priced at a premium to reflect their innovation and that a patient pool exists that is willing to pay top dollar for the best the market has to offer. While an argument can be made justifying premium pricing, pharma’s stance has created another marketplace response that may be squeezing patient access to medications even tighter.

Last year marked a significant change for the payer community. Payers, whose primary mission is to ensure lower drug costs for the system, felt that pharma was moving in an uncomfortable direction and resorted to aggressive cost containment protocols to regain price control. There were instances when payers like ESI voiced displeasure at products they believed were overpriced without being justified by peer-reviewed, evidence-based data. It seemed as though the payer community abruptly began to shift the system from one that was product-focused to one that is data-driven and values newly manufactured drugs based on clinical distinction and economic factors.

After halting coverage for many active ingredients found in ointments, creams, and powders used by compounding pharmacies due to cost concerns, ESI escalated its policy of forcing the lowering of product costs by negotiating a market-moving deal with AbbVie for its newly approved hepatitis C virus (HCV) treatment. Months after spearheading a national coalition to force Gilead’s high-priced HCV treatment Sovaldi out of the market, ESI announced it had negotiated a better price for competitor AbbVie’s Viekira Pak. Additionally, ESI announced that they would no longer cover Gilead’s HCV treatment. It didn’t matter that Viekira Pak’s original price was only slightly lower than Sovaldi’s; what mattered was that AbbVie significantly lowered Viekira Pak’s price in order to be included in the formulary.

Many were left wondering if this would prompt other payers to respond in a similar fashion and seek to achieve better patient outcomes via a pricing war. Surprisingly, the answer to date is no. Both CVS Caremark and Anthem decided to include Gilead’s Harvoni (Sovaldi’s more widely prescribed successor) on their formularies as a way to combat HCV, while Prime Therapeutics decided it could save its beneficiaries’ money by including both Gilead and AbbVie’s HCV treatments on its formulary.

After taking all of this into account, it seems as though payers have been putting too much of their resources toward cost containment without a balanced approach to achieving better patient care. However, the fault doesn’t lie entirely with the payers. In order to achieve the ultimate goal of patient access, it must be understood that neither pharma nor the payer community has fully realized the resources that the specialty provider community has to offer. I’ll illustrate the potential benefits of a comprehensive approach that is dedicated to preserving patient access:

First, clinical pharmacologists, such as specialty physicians and pharmacists, have better insight into what medication works for their patients than a pharmacy benefits manager. Better treatment decisions could be made in this setting without the cloud of an arbitrary contractual negotiation hanging over the patient’s treatment regimen.

Second, in order for providers to ensure lower costs during the time the patient accesses the system, insurance networks must not be restricted to the point it becomes a game of chance as to whether a patient’s payer formulary contains the product that the patient needs.

Third, I believe that payers should do more to ensure that their provider networks remain open enough that patient access is not being restricted. In December, the Centers for Medicare & Medicaid Services voiced its concern for patient accessibility in urban areas when it released its study on beneficiary access to discounted co-pays at preferred pharmacies in Medicare drug plans.

Lastly, pharma, payers, and specialty providers would all benefit from greater communication among themselves to ensure patient adherence. While AbbVie’s Viekira Pak may be cheaper, it requires a patient to take 4 to 6 pills per day, compared with Harvoni’s 1 pill per day. That amounts to between 336 and 504 pills for a 12-week period for Viekira Pak compared with 84 pills for Harvoni. Think of the added cost to the system if a patient on AbbVie’s product stops taking the medication because of the high pill burden and the patient’s symptoms worsen. In order to ensure patient adherence, pharma, payers, and specialty providers could work together to create an interoperable electronic system, customer relationship management system, or some form of adherence device that everyone could use to create smarter data that would help direct future treatment protocols and save the system time and money.

While challenges do exist, I see this as an opportunity. No system is able to achieve its fullest potential without going through a transition. I am optimistic that these challenges can be overcome with a more balanced approach by all stakeholders instead of a blind push focused solely on cost containment.


Ron Lanton III, Esq, is president of True North Political Solutions, LLC. He has over 20 combined years of government affairs and legal experience. This includes activities on the municipal, state, and federal levels of government. Most recently, he worked for a pharmaceutical wholesaler where he created and oversaw the company’s government affairs department, served as their exclusive lobbyist, and advocated for the company’s various health care customers. Prior to that, Ron worked at a government affairs consulting firm in Arlington, Virginia, where he focused on health care, energy, commerce, and transportation issues. He has also clerked for a federal magistrate, was appointed as a municipal commissioner on environmental issues, and has served as consultant to Wall Street firms on financial issues. He has been a featured industry speaker on issues such as pharmaceutical safety and health care cost containment.

Ron earned a juris doctor from The Ohio State University Moritz College of Law and a bachelor of arts from Miami University of Ohio. He is also a “40 Under 40” award recipient. He is admitted to practice law in New York, Illinois, and the District of Columbia.


Reference

  1. Specialty drug spending to jump 67% by 2015. Express Scripts website; May 22, 2013 http://lab.express-scripts.com/insights/specialty-medications/specialty-drug-spending-to-jump-67-percent-by-2015.


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