As Specialty Drugs Gain Share, Trump Looks To Curb Prices

The share specialty drugs have of total U.S. pharmaceutical sales is hurtling toward 50% just as the Donald Trump White House prepares next week to unveil proposals to curtail the nation’s tab for prescription drugs.

Specialty drugs as a percent of U.S. pharmaceutical sales are already at 40% , but new data Avalere Health released Tuesday at the annual Asembia Specialty Pharmacy Summit shows that is only expected to grow. Data from Avalere, a health research and consulting firm, shows 50% of all newly approved drugs in 2015 alone “were considered specialty” and another 900 specialty drugs are currently in development.

Specialty drugs and the companies that support them have taken off as an industry as these new expensive specialized treatments have flooded the market, creating more need to service, handle and dispense such life-saving medicines. That, however, has come with higher costs given the reimbursement needed for everything from dispensing and distribution to case management of patients.

“President Trump and his administration continue to keep drug prices on its list of domestic priorities,” Avalere Health executive vice president Matt Brow said in an interview. Trump was expected to give a speech last week but it was delayed and is now expected next Tuesday.

A key focus of Trump’s agenda is expected to be a focus on “increasing the competition and management under the Part B drug benefit,” Brow said. Medicare part B covers drugs that are generally administered by health professionals and tend to be expensive drugs that are infused like cancer drugs, biologics for autoimmune diseases and many new treatments.

Given the expense of drugs covered under part B, industry analysts expect it to be a focus of Trump’s drug pricing policy.

“The focus has largely been on two types of policy mechanisms: revising the Part B drug payment methodology or allowing an intermediary or other entity to negotiate and manage Part B costs,” Brow said. “The first set of proposals would directly impact unit prices of Part B drugs, while the second set of policies would seek to increase competitiveness within certain drug classes.”

But Medicare part D, the broader drug benefit for seniors, is also expected to be a target of reform given more than 10,000 baby boomers are turning 65 and aging into the Medicare population every day.

Depending on how any of Trump proposals are implemented, the White House’s drug pricing agenda could impact specialty pharmacy, which has been consistently one of the major growth areas for large retailer drugstore chains CVS Health and Walgreens Boots Alliance as well as pharmacy benefit managers (PBMs). Even Rite Aid, which is amid a financial turnaround and pending sale to grocer Albertsons, reported that its Envision PBM’s specialty pharmacy segment had double-digit percentage growth in its most recent financial quarter.

Employers in the private sector are already escalating their efforts to reign in the cost of specialized medicines by working with the health insurance industry and pharmacy benefit management (PBM) companies and insurers.

Some of the Trump administration’s potential proposals mirror those already underway by commercial pharmacy benefit managers (PBMs) and health insurance companies. The Trump administration may propose passing along pharmacy discounts the government gets from drug manufacturer rebates for Medicare beneficiaries at the point of prescription sale.

UnitedHealth Group, for example, last month said it will pass along pharmacy discounts it gets from drug manufacturer rebates via a new program for its fully-insured customers at the point of a prescription sale.

Effective Jan. 1, 2019, the nation’s largest health insurer said people enrolled in UnitedHealthcare “fully insured commercial group benefit plans” will have discounts applied when they fill their prescriptions at the retail pharmacy or through home delivery.  There are 7 million people enrolled in such UnitedHealthcare fully insured group benefit plans and it would be an optional program for self-insured employers.

UnitedHealth Group and OptumRx aren’t the first managers of drug benefits to process point-of-sale rebates to their clients. The PBM Express Scripts last year launched the SmartShare Rx program, which the company says works for clients that offer high deductible health plans. CVS Health, which operates the Caremark PBM, says it also offers point-of-sale rebates.

“Reflecting the growing focus on the role of rebates in Part D, the administration’s reports all include a proposal requiring plans to share manufacturer discounts with Medicare beneficiaries at the point of sale,” Brow said. “The President’s budget specifically proposes to require (Medicare) Part D plans to pass on at least one-third of total rebates and price concessions to beneficiaries at the point of sale.”

Some observers also expect the Trump administration to begin working on a value-based approach to paying for prescription drugs in Medicare. Value-based models base medical treatment and healthcare delivery on health outcomes and performance, moving away from fee-for-service payments that emphasize volume of medical care delivered which studies show can lead to unnecessary treatment and overprescribing.

Increasing numbers of health insurers and policy-makers view value-based models as a check to make sure patients are prescribed what they need, particularly given fallout from the nation’s opioid epidemic. Some policy makers are pushing for more education of those in the pharmaceutical industry and their influencers as Trump’s drug pricing policies are rolled out.

“Given the increasing complexities in drug development and the healthcare landscape, proper credentialing of pharmaceutical industry professionals is key,” said Dr. William Soliman who heads the Accreditation Council for Medical Affairs (ACMA), which offers accredited certification for pharmaceutical industry professionals.