Managing the Cost of Specialty Drugs: Not So Black and White

Specialty Pharmacy TimesJan/Feb 2014
Volume 5
Issue 1

The editor-in-chief of Specialty Pharmacy Times discusses the tactics used by pharmacy benefit managers and manufacturers to contain specialty therapy costs.

The editor-in-chief of Specialty Pharmacy Times discusses the tactics used by pharmacy benefit managers and manufacturers to contain specialty therapy costs.

In defining what makes a specialty product, price arguably rises to the top of the list. The Centers for Medicare & Medicaid Services, under Medicare Part D, pegs the definition of specialty products as those costing $600 or more per month. The majority of products dispensed by specialty pharmacies do fall under the prescription drug benefit of a plan sponsor, which is most often administered by prescription benefit managers (PBMs).

We have been blessed to have new therapies over the last several years for hepatitis C, rheumatoid arthritis, HIV, multiple sclerosis, and other diseases. Thousands of lives are being saved, we are gaining more time with loved ones, and quality of life is improving for patients. But these new therapies generally come at increased cost over existing therapies.

Health care organizations are being held accountable for both the quality of the services and the cost. New entrants give cost “gatekeepers” the opportunity for leverage. That is not all a bad thing; however, it raises the question, “What are the criteria by which these decisions are being made?” Traditionally, we’ve allowed the “art of medicine” to prevail as to what works best for the patient, based on their physician’s professional judgment and great science that improves by the minute. But more and more, the gatekeepers are creating processes to help manage the cost of therapy.

As PBMs seek new ways to contain rising specialty drug costs there is a particular emphasis on increased formulary management.


There are a number of traditional and nontraditional tactics that PBMs have deployed to discourage or eliminate the use of branded pharmaceuticals in the non-specialty world. PBMs have gotten a lot more sophisticated, and with advances in e-prescribing and realtime adjudication, they will get even better. Until recently, however, specialty products have been less vulnerable, as the disease states being treated were rarer and it would have been more socially unacceptable to withhold therapy. With the advent of more choices in some therapeutic classes, we are seeing those rules change dramatically. We are seeing many of the traditional tactics now being deployed in specialty, including:

  • Preferred versus non-preferred formularies
  • Restrictive prior authorization
  • Restricted networks
  • Tier 4 or higher copay differentials
  • Step edits
  • Share-of-cost programs

The PBMs do make a point that they must consider the risk of prescription abandonment and lack of adherence.

We must believe and cannot forget that the basic premise of these therapies is to improve patient outcomes. FDA guidelines in the last several years have, by and large, discouraged the approval of pure “me-too” drugs, looking at superiority as a key driver in their assessment process. Payers should look at the balance of managing care versus just cost, and most do. Certainly, no large publically traded payer wants to find itself on the front page of The Wall Street Journal as a result of withholding a truly needed therapy.


Patient assistance programs, copay subsidies, and contributions to disease-based foundations have been core areas in which manufacturers have recognized their role and have helped to make their high-cost lifesaving products more available to patients. These work well when managed responsibly.

I recently read that there are more than 600 discount drug coupon programs in the traditional drug world. Typically, these are countermeasures to the tactics deployed by payers in discouraging the use of new therapies as opposed to existing therapies that may be available generically or on payers’ preferred drug lists.

Specialty drug coupons are starting to emerge as a method to empower patients and prescribers in gaining access to products that may have been made less accessible by the payer tactics described above.

There has been a good amount of press lately regarding payers’ heightened approach to combating these manufacturer-based drug discount countermeasures. The general position taken by payers is that discount coupon use should not circumvent existing utilization management programs, care management programs, or formulary management strategies. It is the payer’s prerogative to do what many are doing; however, in specialty, it is not so black and white.

Specialty Pharmacy Times will continue to monitor trends in this space and assess whether or not these strategies deployed to curb the use of widely available discount programs hinder the access to specialty products. We’ve seen their impact on traditional drugs over the last 20 years. With the growth of specialty and approval of multiple products to treat similar diseases, are we on the same path? We invite our readers and stakeholders from all sides to present their views. Drop me a line on your thoughts at! SPT

Specialty Pharmacy Times

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About the Author

Mr. Steiber is a principal of D2 Pharma Consulting LLC ( and is responsible for commercial operations, trade-supply chain strategy development including 3PL selection, regulatory oversight, and “operationalizing” organizations. Dan has served in several senior positions in pharmacy, distribution, and industry over the course of his 35-year career and is a licensed pharmacist in Texas, Washington, California, and Pennsylvania. He is affiliated with several professional associations and publications and is a frequent speaker on behalf of many professional organizations. Dan graduated from Washington State University College of Pharmacy and has participated in a variety of postgraduate programs in law and business development/marketing at Harvard University and Northwestern University. Dan currently resides in Highland Village, Texas.

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