Friction Between Health Plans, Pharma Grows Over Specialty Drugs

The war of words between managed care and pharmaceutical manufacturers, which began when Gilead set the price for its drug to treat the hepatitis C virus (HCV), has taken off in October with the reclassification of a trio of cancer drugs from Genentech.

Growth in the “specialty pharma” sector, where prices are rising much faster than drug prices generally, has drawn concern from payers and the umbrella group that represents them, while the trade group that represents drugmakers is pushing back against critics, saying that it faces challenges in bringing life-saving therapies to market.

All this is playing out against the backdrop of the Affordable Care Act (ACA), which professes to rein in the nation’s escalating healthcare costs, including drug prices. As the second year of open enrollment on the exchanges gets underway, a series of events in the healthcare sector have spilled into the public arena, just in time for the November 4 midterm elections:

• America’s Health Insurance Plans (AHIP) took aim at the $1000-per-pill cost of Gilead’s Sovaldi, the breakthrough treatment for HCV as a symbol of the rising challenge of the specialty pharma sector, which AHIP says accounts for an “unsustainable” share of health plans. An AHIP issue brief from February 2014 stated that in 2012, specialty drugs accounted for 1% of all prescriptions but 25% of the drug costs.
• On September 18, 2014, Genentech announced that 3 mainstay cancer therapies — Avastin, Herceptin, and Rituxan – would no longer be available to hospitals from wholesale distributors and would instead be sold through a select group of specialty distributors, increasing their costs. The change took effect October 1, 2014, giving the hospitals little time to absorb the change.
• On October 5, 2014, leading oncologists took aim at pharmaceutical prices in a 60 Minutes segment in which one clinician said that, “High cancer drug prices are harming patients, because either you come up with the money, or you die.”

In recent days, the Pharmaceutical Research and Manufacturers of America, or PhRMA, has countered with its Access Better Coverage initiative, which is designed to guide consumers shopping for coverage on the exchanges as they select health plans based on what out-of-pocket expenses they would face for prescription drugs. But the broader message of the campaign is to point out instances in which plans have assigned all patients with conditions such as HIV into higher-price drug tiers, which was the topic of a well-read editorial in The American Journal of Managed Care by Gerry Oster, PhD, and A. Mark Fendrick, MD.

Around the Web

Hospitals Furious at Cancer Drug Price Hikes

Issue Brief: Specialty Drugs Challenges

Access Better Coverage

Is All ‘Skin in the Game’ Fair Game? The Problem with Non-Preferred Generics