Specialty Drugs Continue to Bring Hope and Concerns

By Denise Cabrera

The Centers for Medicare and Medicaid Services (CMS) expects prescription drugs spend to be the fastest growing health care expense over the next decade. Plan sponsors will invest a significant portion of total health care spend into their pharmacy benefit coverage. McGriff’s Pharmacy Practice monitors emerging drug development, market trends and strategies that can help plan sponsors effectively manage pharmacy benefit design, control drug spend and improve the health and well-being of plan participants. 

The National Business Group on Health predicts that specialty drug costs will increase 21- 24% annually over the next three years and will likely account for 50% of total drug spend in 2021.¹ High cost specialty medications are driving an average trend increase of 2.3% and the market is estimated to grow to $505 billion by 2023. Over the last seven years 140 new specialty drugs have been approved by the FDA with 39 specialty biologics receiving FDA approval in 2020.

Innovation in medical care is expanding in predictive modeling and precision treatment for chronic conditions like diabetes and rheumatoid arthritis. This type of quality of care reduces progression of these chronic conditions, prevents other comorbid diseases and reduces total healthcare spend. Greater accessibility to healthcare has prompted a greater focus on outcomes-based medicine with the use of data to aid healthcare providers in determining the very best treatment plans.

When surveyed, nearly 70% of employers said specialty drug cost is their primary concern from a budgetary perspective. Many noted concerns over new drugs coming to market with limited ability to plan in advance for the financial impact they could bring. This is a valid concern and warrants review of the specialty drug pipeline.

Pharmaceutical manufacturers continue to investment in development of high investment biologic therapies including orphan drugs for rare diseases. Novartis, maker of Zolgensma, the world’s most expensive medicine, spent over $9.4 billion dollars on research and development in 2019 and reported $4.5 billion through second quarter 2020. There are currently more than 8,000 drugs in development for diseases including cancer, autoimmune conditions, metabolic disorders and hereditary diseases like hemophilia and cystic fibrosis.

2021 Top Specialty Drugs

Alzheimer’s Disease	Hereditary Angioedema	Multiple Sclerosis	Duchenne’s Muscular Dystrophy
Aduhelm (aducanumab)	Orladeyo	Zeposia Bafiertam Dimethyl fumarate (generic Tecfidera Kesimpta Ponesimod	Viltepso Casimersen Ataluren  Edasalonexent Givinostat  Idebenone Vamorolone

On June 7, 2021 the Food and Drug Administration (FDA) approved Biogen and Eisai’s submission for Aduhelm (aducanumab), a monthly infusion designed to break down amyloid plaques that are thought to contribute to the severity of Alzheimer’s disease. Biogen set the list price at $4,312 per infusion for a patient of average weight, or $56,000 annually, which is significantly higher than expected and well above the recommendation from the value-based review of the Institute for Clinical and Economic Review (ICER). Their evaluation stated that due to “insufficient evidence of benefit” an annual cost of $8,300 was reasonable.  Brain swelling and potential bleeding was documented in approximately 30% of patients treated with aducanumab which prompted further comment that “The FDA has failed in its responsibility to protect patients and families from unproven treatments with known harms.”

The FDA’s independent advisory board expressed concerns about broad coverage and suggested a value-based evaluation which estimated a cost-effective price range of $2,500 to $3,800 annually. The committee recommended against approval stating that data failed to demonstrate that aducanumab slowed cognitive decline. In response to these concerns the FDA stated that if the drug doesn’t show significant results in phase 4 trials it could be pulled from the market.

Approval of this novel therapy presents both an opportunity and a challenge for our current health care system. Safety and efficacy must be evaluated with respect to the drug and the actual administration process called CAR-T Therapy. This is a very complicated process and can cause severe reactions in patients.

Since the Medicare benefit will be the most highly impacted population, with an estimated 96% market share, it is imperative that an evidence-based policy be established to protect beneficiaries and taxpayers and avoid variance in policies across the U.S.

It is estimated that 18 million Americans suffer from Alzheimer’s disease which means that this new therapy could increase healthcare costs dramatically. If every Alzheimer’s patient gains approval the U.S. will be looking a $1 trillion in additional spend. A conservative estimate of 6 million eligible individuals would add over $300 billion in direct costs. This does not include any costs incurred due to complications with the CAR-T process. Since the FDA broadly approved the drug for all Alzheimer’s patients it is important for plan sponsors to discuss prior authorization criteria with their medical carrier or Pharmacy Benefit Manger (PBM). 

Sources

1. Large Employers Double Down on Efforts to Stem Rising Costs, National Business Group on Health
2. http://www.prnewswire.com/news-releases/employers-lack-awareness-and-understanding-of-specialty-drugs-and-costs-130770188.html
3. Major Healthcare Merger & Acquisition Deals Announced in 2020, Revcycle Intelligence
4. Insulin Prices 8x Higher in the U.S. Compared to Similar Nations, PharmaNews Intelligence
5. Trends in Retail Prices of Specialty Prescription Drugs Widely Used by Older Americans: 2017 AARP Public Policy Institute
6. Employers Project Health Plan Costs Will Rise 5.3% for 2021, SHRM
7. Pharmacy Benefit Management Institute’s (PBMI’s) 2018 Trends in Specialty Drug Benefit report
8. Trends in FDA Approval of Specialty Drugs 1990 Through 2017, RJHealth
9. In the Pipeline: What’s Next for Drug Development, PhRMA
10. The Global Use of Medicine in 2019 and Outlook to 2023, IQVIA Institute
11. RxBenefits Drug Trend Analysis, 2020