CRS: Something's got to give on pricing of specialty drugs

Print 24 August 2015
Mari Serebrov / BioWorld

With specialty drugs taking an ever bigger bite of the U.S. prescription drug spend, pressure is mounting for more controls on pricing.

Overall, U.S. prescription drug spending last year rose by 13 percent from the previous year, the steepest increase since 2001, according to a Congressional Research Service (CRS) report. That growth was driven by a 26.5 percent increase in spending for specialty drugs, due in large part to new hepatitis C drugs. (Citing IMS Institute data, the CRS said 161,000 patients started treatment last year with specialty hepatitis C drugs, compared with 17,000 in 2013.)

While specialty drugs accounted for less than 1 percent of the medicines prescribed in the U.S. in 2014, they comprised about a third of the drug spend, the CRS said. And within three years, half of every dollar spent on prescription drugs in the U.S. is expected to be paying for a specialty drug.

"To date, the rapid increases in specialty spending have been driven mainly by price inflation, although utilization is starting to play a larger role as manufacturers bring a wider array of specialty drugs to market, including products with broad applications, such as the treatments for hepatitis C," according to the report.

Sixty-five percent of the 41 new molecular entities (NMEs) approved by the FDA last year were considered specialty drugs. About a third of the NMEs were for rare indications. (See BioWorld Insight, Aug. 17, 2015.)

The expanding definition of a "specialty drug" could be part of the problem. In the past, specialty drugs were those that treated rare or orphan diseases or required special handling or training, so they demanded higher prices. But the term today more often than not simply reflects the price of a drug, regardless of its indication. In fact, price is the most frequently cited factor for including a therapy on a payer's specialty drug list, the CRS said.

Even in the Medicare Part D program, price "is the main factor used to determine whether an insurer may classify a drug as a specialty product and impose higher cost sharing," the report noted.

Thus, high-priced biologics and small-molecule drugs intended to treat larger populations are being reimbursed as specialty drugs. As prices continue to climb, more new therapies will land in the reimbursement tiers of specialty drugs that require prior approval, higher co-pays or coinsurance ­­– all of which can affect patient access and compliance.

In response to the public outcry about insurance pricing structures that restrict access to new drugs, most legislative efforts have been aimed at payer practices. But with prices still going up, drugmakers shouldn't be surprised to find themselves in the scope of lawmakers and others wanting to make prescription drugs more affordable. The CRS report summarized some of what is, or could be, coming:

• increased pressure on Congress to pass legislation imposing Medicaid rebates on specialty drugs and other prescription drugs purchased by low-income beneficiaries in the Medicare Part D program (in the past, government-required rebates and other discounts may have contributed to higher launch prices, the report added, since drugmakers made up for the discounts by raising prices in other parts of the market);

• renewed calls to permit Part D price negotiations for biologics and other high-cost drugs included in the specialty tier;

• new payment models that would allow insurers to spread the cost of pricey drugs over time, perhaps creating a new credit system with a third party providing loans or insurance to payers;

• use of rigorous economic cost-benefit analyses by medical specialists and insurers to determine which drugs to cover and prescribe;

• use of data from electronic health records and other information systems to help rationalize a drug payment system.

The report also noted that the Institute for Clinical and Economic Review is planning to analyze the comparative effectiveness, cost-effectiveness and potential budget impact of newly approved "high-impact" drugs and make its findings public in several reports.

But it's not just specialty drugs coming under fire for their pricing. Last week, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.) informed Valeant Pharmaceuticals International Inc., of Laval, Quebec, that they were investigating price increases for two heart drugs the company purchased from Marathon Pharmaceuticals earlier this year.

The day Valeant acquired the rights to Isuprel (isoproterenol) and Nitropress (nitroprusside), it reportedly raised their prices by 525 percent and 212 percent. "We want to know why Valeant significantly raised the prices of these two vitally important drugs when the only thing that has changed about the drugs is the company that owns them," Cummings said in announcing the investigation.

The price hike is the second one in two years for the drugs, as Marathon raised their prices by nearly 400 percent after acquiring them from Hospira Inc. in 2013. Sanders and Cummings wrote to Marathon last October requesting justification of that price change.

NEW GONORRHEA DRUGS NEEDED

Recognizing the potential for gonorrhea to become resistant to all the current antibacterial drugs, the FDA released a guidance Monday highlighting the need for new drugs to treat the disease.

To meet the need, the agency is encouraging sponsors that are developing antibacterial drugs with in vitro activity against N. gonorrhoeae to consider testing their candidate in patients with uncomplicated urethral, cervical, rectal or pharyngeal infections caused by the bacteria.

If a drug is being developed for another infectious disease, a single adequate, well-controlled, noninferiority trial in uncomplicated gonorrhea may be sufficient to provide efficacy evidence for a gonorrhea indication. However, sponsors should meet with the FDA to discuss independent confirmatory evidence, such as trial results for the other indication.

If uncomplicated gonorrhea is the only indication being sought, two well-controlled trials generally would be recommended, the agency said. But in certain circumstances, a compelling outcome in a single trial may be enough to provide evidence of effectiveness.

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