AMCP Talk Pricing of Specialty Pharma Spurred by Sovaldi

October 9, 2014
Casey McDonald

Casey McDonald is Senior Editor, Pharmaceutical Executive.

Pharmaceutical Executive

Starting off this week’s Academy of Managed Care Pharmacy (AMCP) meeting in Boston, experts including patient access advocates, pharma and payer representatives came together for this year’s symposium entitled “Specialty Pharmacy and Patient Care: Are We at a Tipping Point?”

Starting off this week’s Academy of Managed Care Pharmacy (AMCP) meeting in Boston, experts including patient access advocates, pharma and payer representatives came together for this year’s symposium entitled “Specialty Pharmacy and Patient Care: Are We at a Tipping Point?”

Sovaldi’s pricing has triggered a major and unexpected dialogue for the managed care experts. The pricing came with no warning and illustrates a serious disconnect on pricing philosophy and the weight placed on the number of patients a drug can benefit, said John Rother, President and CEO, National Coalition on Health Care. This pricing decision came from a Gilead, company with little presence in Washington, but that is painting the entire pharma industry black, Rother said.

Experts questioned how Gilead got to the $84,000 price tag, which took no account of the value, but simply added onto the cost of the previous standard of care – an inherently inflationary practice, noted Rother

Because of Sovaldi, dialogue is now taking place with employers and payers working to adopt medication management measures to constrain cost while trying to ensure patient access and adherence and avoid shifting the cost to employees, Rother said. Additionally, groups are joining coalitions to hold drug makers accountable to the public and congress.

17% of employers’ pharmacy costs go to specialty drugs, and that number is expected to hit 40% by 2020, Rother said. The high cost of specialty drugs leaves employers with a tremendous challenge, and their response is to provide high-deductible health plans and increased co-pays. Rother also projected an unsustainable cost burden on employees with resulting reduction to patient adherence and less treatment seeking by patients.

Federal action need!

Federal action is necessary in the short term to address the escalating costs of specialty drugs, said Matt Salo, Executive Director of the National Association of Medicaid Directors.

States do not have the tools to deal with the cost, nor access to treatment in hep C and specialty pharma at large.

Sovaldi poses unique challenge to limited budgets, but its $84,000 price tag for 12 weeks of coverage is just the tip of the iceberg considering the larger picture of specialty drugs, Salo said.

States may be able to solve the hep C issue and deal with the short term hit from Sovaldi, but would still not be out of the woods, added Salo. Pharma pipelines are full of innovative therapies that will be expensive, so a broader national debate about cost and value of drugs is needed, he said.

Value-based Insurance Design

There is systemic underutilization of all the best things we have in healthcare, said Dr A. Mark Fendrick, the Director of the Center ofValue-Based Insurance Design (V-BID) at the University of Michigan. There is evidence of cost-related non-adherence in all sectors of medicine, he added.

The more important question about healthcare spending is “not how much we spend, but how well we spend, said Fendrick. The V-BID center advocates for nuanced approach to the clinic

A repeated question that arose during the symposium however was that the value of a drug means different things to different people in the healthcare community.  Value is a bigger concept than healthcare and involves greater tradeoffs in peoples’ lives, stated Rother.

Rother also raised the question of who should pay for a patients current treatment when true benefit and savings might not accrue for many years. As an example, why should an employers pay for Sovaldi treatment for a 63 year old patient if the true beneficiary (besides the patient) could be Medicare?

Finally, Rother also suggested a list of potential fixes for approaching specialty pharmaceuticals and their escalating costs. For one, the congressional budget office could perform a budget analysis to determine the impact of specialty drugs.

Regarding how drug companies determine their prices, drug makers should be forced to justify their prices publicly, he said.

The federal government could also revisit the very long exclusivity period drug makers demanded before agreeing to support the ACA,Rother suggested.  Additional, a change is needed in the incentive structures that encourage doctors to prescribe high cost treatments.

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