Getting Creative in Combating Rising Specialty Drug Costs

High cost drugs are the most significant cost driver in healthcare today. Because of their therapeutic value (they cure illness), it is very difficult to manage the cost of these specialty medications. Prior approval, quantity limits and high cost-sharing have proven to be among the most effective utilization mechanisms.

A study published in The Journal of the American Medical Association in September 2017 illustrates this. Of the more than 45,000 patients who were prescribed PCSK9, the newly available lipid-lowering super drug during the study period, only 47.2% were able to receive carrier authorization. And, despite the fact that 52.5% of the patients obtained coverage through government programs, more than one third never filled their script – most notably due to their cost-sharing. This means that less than one third of the patients who were recommended the drug by their physician ultimately got it. This drug, which costs around $15,000 per year, is a potential budget buster and has been tightly managed.

The City of Rockford, IL is taking a different tack. In April they sued drug manufacturer, Mallinckrodt Pharmaceuticals over the cost of its drug, H.P. Acthar. The city also named a subsidiary of their PBM, Express Scripts, as colluding in the fraud. The drug is recently reported to cost $35,000 per vial, but cost only $40 in 2001. Rockford, which spent almost $500,000 on the drug in 2015, is alleging that Mallinckrodt, which obtained Acthar through an acquisition, engaged in monopolistic sales practices by purchasing a competing manufacturer and then jacking costs up. And the suit may have some legs since this cost increase is simply unconscionable.  

I expect that the federal government will step in to provide needed oversight. But in the meantime, plan sponsors aren’t just sitting on the sidelines.

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