By: Dea Belazi – President and CEO – AscellaHealth
Specialty pharmaceuticals represent the fastest-growing segment of the pharmaceutical industry, dominating new drug development while capturing the attention of payers, providers and consumers seeking effective treatment options to address the complex health challenges associated with chronic or rare diseases.(1)
A specialty-focused pharmaceutical management company can help to reduce prescription drug costs and improve quality for patients, employers, plan sponsors and government programs. It can engage patients to make better health decisions and maximize the use of their benefits while supporting healthcare providers through evidence-based care.
Specialty-focused care improves patient adherence to their treatment plans, supports patient safety and helps patients afford lower-cost pharmacy plans that offer convenient access and extra discounts at certain pharmacies.
A recent study found that the estimated total economic burden of 379 rare diseases with a prevalence of 15.5 million people in 2019 was $966 billion,(2) including a direct medical cost of $418 billion and an additional $548 billion in indirect and non-medical cost.
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The Challenge of Gene Therapy
Gene therapy is a type of highly targeted treatment that uses genetic material with the goal of changing the course of a disease. Approximately 1,006 gene, gene-modified cell and cell therapies were in clinical development as of the end of September 2020, with the number of regenerative medicine clinical trials and approved products expected to grow exponentially over the next few year.(3)
While insurance companies pay much of the cost of orphan drugs that treat rare childhood diseases, families’ share of the cost has risen rapidly. In fact, the mean out-of-pocket spending on orphan drugs for children rose to $866 in 2018, up from $486 in 2013. The out-of-pocket costs for these families were higher than those faced by adults who take orphan drugs.(4) Small-molecule drugs drive much of the increase in orphan drug spending, with a 16% rise in five years, compared with a 16% rise for biologic drugs.(5)
Furthermore, new gene therapies for rare diseases that aim to cure by correcting the underlying genetic abnormalities are highly expensive for employers, payers and plan sponsors. In 2013 a cure for hepatitis C cost $85,000 for a 24-week course.(6)
Payers now brace themselves for the introduction of other ultra-high-cost therapies in the drug manufacturer pipelines. Recently launched therapies include a new spinal muscular atrophy gene therapy with a one-time price of $2.12 million,(7) and a one-time DNA-altering gene therapy for curing an inherited retinal disease costs $850,000. Both of these novel therapies add substantial additional costs to the standard medical benefit. In response, payers are scrambling to find the best approach for managing high-priced cures for orphan and rare diseases.
Curative gene therapies for hemophilia – with therapies starting at $2 million or higher - and sickle cell disease are in late-stage development. Manufacturers that offer the strongest efficacy claim, make the best case for value, and have the most attractive financing arrangement with an assurance for durability will prevail, with many focused on determining how to make any associated “pay-over-time” liability portable.
Payers want manufacturers that offer clear efficacy and can convert the payment model of their therapy to look more like chronic therapy treatments: steady, manageable payments that conform to current operating budgets. Once they pay for a therapy upfront, payers completely own the liability, along with the risk that another plan will benefit if the beneficiary switches insurance companies or employers. Sharing liability across payers will give a manufacturer a critical competitive edge.
The good news is that alternative payment models and Specialty Pharmacy Benefit Management (SPBM) are poised to usher in a new era of affordability.
Next-Generation Payment Model and SPBM
An SPBM partner can help reduce costs for ultra-expensive gene therapies and other specialty Rx therapies, improve outcomes and impact costs for gene therapies by managing the specialty pharmacy spend. They focus on ensuring that the patient is getting the right therapy at the right time, and the right treatment plan with the least amount of waste. They also examine patient compliance with their treatment regimen to make sure they are considered an appropriate candidate when gene therapy becomes available.
New alternative payment models are designed to make costly human gene therapies financially feasible for employers and plan sponsors. Gene therapy manufacturers have high market expectations for increased utilization of these promising new interventions that provide patients and providers with expanded therapeutic choices.
By going beyond the traditional pharma-payer/PBM frameworks, SPBMs enable affordability by helping payers to manage the extraordinary costs for novel products. The goal is to assist in the management of value-based relationships between manufacturers and payers, including price monitoring and tracking trends for high-cost therapies.
SPBM programs have been effective in dramatically reducing costs for specialty and high-cost therapies, including emerging gene therapies. A suite of financial and insurance products is poised to become the industry standard for how high-cost medical care is delivered and paid for.
Finding the Right SPBM Partner
SBPM partners help payers to identify ways to ensure that patients receive the quality care they need in the most cost-effective manner. Proper inventory and assay management ensure that therapies that are dispensed compare reasonably with what's being prescribed, and that the patient is receiving the appropriate number of doses. SPBM also verify how much product the individual has available to determine how many more doses are needed each month to ensure the patient is covered.
SPBM companies serve as a hybrid of traditional and innovative approaches that focus on specific populations that have an acute or chronic condition. They also educate individuals and caregivers about programs so that they feel more empowered after diagnosis and referral. Such a personalized approach enables a preferred formulary, evidence-based clinical policy bulletins and pathways, step therapy, lab and other clinical assessments. Key therapy areas for SPBM include oncology, infectious disease, neurology, hematology, endocrinology, nephrology, ophthalmology, respiratory, cardiovascular, immunologic and orphan or rare conditions.
SPBM partners also foster ongoing positive patient outcomes through persistence, adherence, compliance and timely collaborative patient management. Professional teams measure and track program effectiveness and validate savings and opportunities for continuous improvement and best practices outcomes.
In contrast to standard PBMs, SPBMs offer the additional benefits of technology, analytics and clinical services geared for specialty and gene therapy cost containment. This enables them to better manage these drugs covered under the pharmacy benefit, including some that may be going through a retail pharmacy, as well as those prescribed and covered under the medical benefit. Innovative SBPM programs help to reduce prescription drug costs and improve care quality for the benefit of patients and payers alike.
Important SPBM Features
The most effective SPBMs serve as partners for cost containment, making them an obvious choice for innovative financing programs. They deliver significant value for patients, payers and manufacturers, offering specialty pharmacy and infusion networks that specialize in data, analytics and cost modeling, as well as real-time front-end prescription triage to ensure that patients get the right care at the right time.
These programs also use technology to streamline the specialty Rx prescription process among the physician, patient, specialty pharmacy and health insurance plan, leading to more coordinated care and cost savings.
One such SPBM hemophilia program is based on an all-encompassing data analytics interface technology solution. This allows the program to capture, integrate and provide unlimited amounts of prescription data and healthcare outcome analytics in a real-time platform, providing accurate insights into patient care, provider Rx value, Rx trends, specialty pharmacy performance, dose optimization, treatment paths, and other clinical intervention reports.
For example, therapy optimization for a 55-year-old man with hemophilia led to savings of $284,000 per year. For a 25-year-old patient changing drugs in the middle of the month, the program uncovered $27,000 in drug waste and inappropriate therapy.
What’s more, this SBPM’s infusion management program created substantial cost savings and optimized patient care by using proprietary financial models combined with superior technology and analytics, delivering a flexible, tailored drug management solution based on real client needs.
These SPBM programs increase patient safety, improve patient health outcomes, identify appropriate sites of care for treatment, reduce waste and cost with effective medication management and offer negotiated dispensing rates, as well as increased transparency. Some programs translate into annual savings: hereditary angioedema $708,000, spinal muscular dystrophy $466,232, hemophilia, $99,480, cystic fibrosis $18,012 and hypophosphatasia $392,124. The average cost savings case-by-case with this SPBM program is 10-42%.
Stakeholders should partner with a SPBM that has a track record for specialized expertise, delivers value throughout the care continuum, uses a patient-first approach and offers specialty pharmacy carve-outs. A patient-centered approach provides clinicians, patient/members and payers with high-quality information that enhances patient care, clinical outcomes and cost management.
For value-based pharmacy management, these strategies deliver innovation and customization to overcome the challenges of reimbursement based on outcomes, as well as the need for payers to track real-world outcomes related to specialty products to ensure efficiency.
Specialty pharmacy carve-outs focus on specific diseases, such as diabetes, cancer and other specialty treatments to give payers better control over pharmacy benefit costs. (8) They also provide transparency into a payer’s pharmacy benefits so that they can better manage risk, improve plan performance and create savings for the plan and its participants. (9)
References
- Arnwine, CC, Nielsen SL, Kalyn Davis M et al. US Pharmacist, Community and Specialty Pharmacy at a Crossroads. US Pharmacist. April 13, 2018. Available at: Community and Specialty Pharmacy at a Crossroads (uspharmacist.com); accessed April 6, 2021.
- Every Life Foundation. The National Economic Burden of Disease. Feb. 25, 2021. Available at: Lewin 508 Report Guide (everylifefoundation.org); accessed April 6, 2021.
- Pieri, S. NEXT 2021: A Time for Resilience and Ingenuity. Global Genes. Feb 17, 2021. Available at: NEXT 2021: A Time for Resilience and Ingenuity - Global Genes - powered by HappyFox; accessed April 6, 2021.
- US Food and Drug Administration. What Is Gene Therapy? How Does It Work? Available at: What Is Gene Therapy? How Does It Work? | FDA; accessed April 6, 2021.
- Pieri, 2021.
- US Food and Drug Administration.
- PM Live. Novartis secures US approval - and payers’ blessing – for $2m gene therapy Zolgensma. May 28, 2019. Available at: Novartis secures US approval - and payers’ blessing for $2m gene therapy Zolgensma - PMLiVE; accessed April 6, 2021.
- Truveris. The Benefits of Pharmacy Carve-Out Plans. Feb. 10, 2021. Available at: The Benefits of Pharmacy Carve-Out Plans - Truveris; accessed April 6, 2021.
- Berkrot, B. U.S. prescription drug spending as high as $610 billion by 2021: report. Reuters. Available at: U.S. prescription drug spending as high as $610 billion by 2021: report | Reuters; accessed April 6, 2021.
About the Author
Dea Belazi has more than 20 years of experience in the healthcare industry, mostly developing and managing pharmacy benefit management companies. He is currently the President and CEO of AscellaHealth, a national PBM with almost 2 million lives under management. He was part of the development of PerformRx, a PBM owned by Keystone First Health Plan as well as another, Future Scripts, an Independence Blue Cross company that was sold to Catamaran a few years ago. Belazi holds a PharmD from the University of RI and completed his dissertational work at Brown University and later completed an MPH from Johns Hopkins University and a post-doc health outcomes research fellowship at Thomas Jefferson University. He is a reviewer for multiple medical journals and sits on multiple boards.
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