Specialty Drug Costs Spike

Oct 01, 2008
By Pharmaceutical Executive Editors

Not all drugs are created equal, and in the case of specialty drugs, some cost a lot more than others.

A study released last week by AARP finds that specialty drug prices have jumped well beyond the 2.9 percent annual average inflation rate. In 2007, these treatments—indicated for diseases such as cancer, arthritis, and multiple sclerosis—saw an 8.7 percent increase in cost compared with branded non-specialty drugs, which saw a 7.4 percent spike and generics, which dropped 9.6 percent.

The report, titled “Rx Watchdog Report Trends in Manufacturer Prices of Specialty Prescription Drugs Used by Medicare Beneficiaries 2004 to 2007,” goes on to explain that the annual change in cost for specialty drugs has been on an upwards trend since the launch of the Medicare Part D program in 2006. In 2004, specialty drugs increased five percent, in 2005 prices went up 6.8 percent, and in 2006 they jumped 7.9 percent.

“We do not attribute the price spike to Medicare or Part D,” said Jim Dau, spokesperson for AARP. “Frankly, if anything, the report asks about the prices of drugs that have been researched and developed—why are they spiking this much, and this much later?”

AARP tracked 144 specialty prescription products, noting costs for wholesalers and direct purchasers to acquire the dosages.

Of the top 25 specialty drug products in 2007, Celgene’s leprosy agent Thalomid saw a 46 percent increase in cost, Genzyme’s phosphate regulator Ranagel went up 20.9 percent, and Actelion’s hypertension med Tracleer jumped 17.7 percent.

Multiple sclerosis drugs, in particular, saw double-digit price increases last year, while arthritis drugs such as Amgen’s Enbrel and Abbotts Humira increased just 5.8 percent. The only drug on the top 25 list to increase less than the rate of inflation was Janssen’s tranquilizer Risperdal, at two percent.

Pharm Exec reached out to the companies with the biggest price hikes, but none got back for comment before press time. The report states, “For a consumer who takes a specialty prescription on a chronic basis, the average increase in the cost of therapy for the drug products used to treat chronic conditions rose by more than $6,690 during this four-year period.”

“Specialty drugs can be miracle drugs,” Dau said. “They can provide tremendous comfort and they can help people with really terrible conditions. The problem is that even the most miraculous drug is useless if the patient can’t afford to take it.”

The Biotechnology Industry Association, however, disagrees with the report. In a release to press, the organization states, “The AARP survey is based on the wholesale acquisition cost (WAC) of these drugs, which does not reflect negotiated discounts and rebates between manufacturers and Part D plan sponsors. The majority of manufacturers—particularly those with specialty products—provide funding for programs that assist patients with accessing needed therapies.”

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