Specialty Therapies Lose Special Status - Pharmaceutical Executive

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Specialty Therapies Lose Special Status
Survey results say managed care is revamping the way it handles biologics


Pharmaceutical Executive


A physician's vulnerability to reduced reimbursements varies by specialty. Some, such as urologists, can offset lost drug-related revenue through revenue from billed in-office procedure codes. Others, particularly oncologists and rheumatologists, who rely primarily on revenues from drug administration, encounter major economic challenges. Faced with a choice of administering an infused agent at a potentially loss-making rate, many physicians have opted for alternate therapies or alternative care sites. Within the TNFa (tumor necrosis factor alpha) market, many rheumatologists have abandoned infused Remicade (infliximab) in favor of Enbrel (etanercept) and Humira (adalimumab), both of which can be self-administered.


Benefit Shift
A third group—physicians who have historically not provided drugs in their offices—pose a different challenge for pharma. The data suggest that, faced with low reimbursement rates and unfamiliar billing procedures, some dermatologists and pulmonologists may forgo the use of specialty products such as Amevive (alefacept) and Xolair (omalizumab). This phenomenon may hurt companies that are launching infused or intramuscular products into new markets.

Patient Injectables Favored The survey also revealed that payers favor patient administration of injectable therapies, with 78 percent now actively pushing for such products. Their reasons are patient convenience (96 percent), followed closely by the opportunity to reduce costs (88 percent), and elimination of office visits (88 percent). Increased self-administration enhances patient convenience by eliminating the need to take time to visit a physician, which, in turn, reduces a health plan's costs. Payers will continue to capture savings from physicians, this time through lost co-payments and lowered reimbursements.

Although the proportion of patient administration varies by category, health plans express few reservations about members' ability to self-administer safely, noting that insulins have long been used successfully by patients at all levels of the socioeconomic and educational spectra. (See "Patient Inject-ables," page 146.) Furthermore, payers believe patient adherence to be high with self-injectable therapies, because of the severity of the conditions they treat and the comparative absence of significant side effects associated with biologic therapies.


Patient Injectables
The growing use patient administration presents a particular challenge to manufacturers of infused therapies and other products that are perceived to be difficult to administer. Currently, 59 percent of TNF drugs are patient administered, a figure likely to rise with proposed changes to Medicare Part B. Within a category that has both subcutaneous and intramuscular drug choices, patient convenience may take on greater importance as a product differentiator. Among multiple sclerosis interferon products, for example, subcutaneous therapies such as Rebif and Betaseron may have an advantage over the intramuscular product Avonex because they can be injected more quickly and less painfully. Similarly, Copaxone (glatiramer), available in pre-filled syringes, may have an advantage over products that patients must reconstitute before use.

The payer preference for patient-administered therapies has important implications for manufacturers, particularly in light of the unusually powerful combination of enhanced patient convenience and lower payer costs. With Medicare likely to begin covering self-administered therapies, infused agents face major challenges. For categories like intravenous immunoglobulin G, in which most agents are infused, the first manufacturer to bring an FDA-approved self-administered product to market can expect to capture significant market share. Already, intramuscular IV immunoglobin is widely used subcutaneously, even without the label. FDA approval will allow manufacturers to market the new formulation to payers and to physicians.

Benefits Redesigned Classification of specialty drug benefits has also shifted. Most plans expect to reclassify this group within 12-18 months, citing greater cost control as the reason. (See "Benefit Shift,") Soon, most products that patients can self-administer will be treated as pharmacy benefits rather than medical benefits. Products that require infusion may remain on the medical side, though increasingly subject to SPP control. The percentage of plans classifying specialty products exclusively as medical benefits is expected to fall by 50 percent within the next 18 months, while those classifying them exclusively as pharmacy benefits will more than double. Additionally, 8-18 percent of plans expect to offer a carved-out specialty formulary, subject to much higher cost-sharing requirements.


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