By Zafeira Sarrimanolis, PharmD, MedCost Clinical Consultant
In 2016 we saw 22 brand-new novel drugs hit the market. This year the FDA has approved 46 novel drugs.
A novel drug is an innovative product with a chemical structure that has never been FDA approved before and usually meets a previously unmet medical need.
In 2017, these novel drug approvals were accompanied by an influx of specialty and brand-name drugs to the market – many treating common chronic conditions like diabetes, asthma and RA.
It is a very exciting time in the healthcare world as these new drugs significantly advance patient care. However, these treatments come at a cost… literally.
This is not a comprehensive list of new-to-market drugs, and does not include all 46 novel drugs, but is a snapshot of key 2017 FDA approvals.
It is hard to predict what the FDA and drug manufacturers will do in 2018. However, we should expect even more high-cost drugs to be approved and available for members.
Hopefully these will be accompanied by the influx of generics and biosimilars to the market – which may help off-set rising drug costs.
One thing we know for sure is that managing drug costs will continue to be key. We employ cost-management strategies such as:
- Formulary management
- Prior authorizations
- Step-therapy programs
- Regulation of copay cards
Estimated Annual Cost
|11/16/17||Hemophilia A with FVIII inhibitors||$450,000|
|11/15/17||Mucopolysaccharidosis VII (MPS VII, Sly syndrome)||$375,000|
|11/14/17||Severe asthma (add-on treatment)||$30,000|
|9/14/17||Relapsed follicular lymphoma||$160,000|
|8/30/17||Acute lymphocytic leukemia||$475,000 per treatment||First gene therapy ever approved in the US|
|8/17/17||Relapsed or refractory acute lymphoblastic leukemia||$170,000
|8/1/17||Relapsed or refractory acute myeloid leukemia||$280,000
(sofosbuvir, velpatasvir, voxilaprevir)
|7/18/17||Hepatitis C||$75,000 for 3-month treatment|
|7/17/17||Reduce risk of breast cancer returning||$125,000|
|7/13/17||Moderate-to-severe plaque psoriasis
|7/7/17||Sickle cell disease||$11,000 – $18,000||Second drug approved for Sickle Cell in the US|
(C1 esterase inhibitor)
|6/7/17||Congenital fibrinogen deficiency||n/a||Pending launch date|
(coagulation factor IX)
|5/31/17||Hemophilia B||n/a||Expected launch early 2018|
|5/22/17||Rheumatoid arthritis||$39,000||Second-line agent|
|5/5/17||ALS||$145,000||Second drug ever approved for ALS|
|4/28/17||Acute myeloid leukemia||$180,000|
|$700,000||Very rare, inherited condition|
|4/11/17||Tardive dyskinesia||$64,000 – $128,000 depending on dose|
|3/28/17||Multiple sclerosis||$65,000 (~20% less than current treatments)|
|3/27/17||Epithelial ovarian, fallopian tube or primary peritoneal cancers||$160,000|
|3/23/17||Merkel cell carcinoma||$150,000|
- OptumRx® RxNews
- FDA: “Novel Drug Approvals for 2017”. Accessed: https://www.fda.gov/drugs/developmentapprovalprocess/druginnovation/ucm537040.htm
- FDA: “Drugs@FDA: FDA Approved Drug Products”. Accessed: https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=reportsSearch.process
- Pharmacy Times (http://www.pharmacytimes.com/)
- Specialty Pharmacy Times (https://www.specialtypharmacytimes.com/)
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To Manage Employer Prescription Costs, Get the Right Drug for the Right Condition
Zafeira Sarrimanolis, MedCost Pharmacist and Clinical Consultant,knows the value of reviewing pharmacy usage patterns for clients, to identify opportunities to contain costs.
“From a more clinical perspective, the key to managing drug costs is making sure that the right people are using the right drug for the right medical condition,” she said.
Obstacle #1: Not Adhering to the Formulary
“What is a formulary?” asked Michael Cornwell, Director of Sales and Underwriting. “A formulary is a guide that the Pharmacy Benefit Manager puts out that says these brand drugs are the preferred versus the non-preferred versus generics.
“For example, the average cost of a generic today is about $28-$29. The average cost of a brand drug is probably in the $167 range.
“Members do not always know what drugs are on the formulary,” said Ms. Sarrimanolis. “Certainly their providers don’t always know what drugs are on the formulary, so that’s where some of the confusion and disruption comes from.
“We try to fill a lot of these gaps through member education. Pharmacy Benefit Managers do a great job of outreaching to members through the mail, emails and on their websites. Unfortunately, members might not always understand that information.
“What we need to do is to encourage members to become smarter consumers and to make the best, most cost-effective choice for their own medication.”
The Pharmacy Benefit Manager’s Role
“A Pharmacy Benefit Manager, or PBM, serves multiple purposes,” Mr. Cornwell said. “One purpose is to process all the pharmacy claims. By doing that, benefits administrators like MedCost are able to collect the data and analyze it.
“Zafeira, as our pharmacist on staff, and our Care Management teams know what usage patterns are. We know what kinds of drugs people are taking.
“The PBMs certainly are negotiating discounts at the drugstore and contract rates for us to get the best prices that we can for the drugs that we take. PBMs can also provide data on clinical reasons to manage those drugs and make sure that they’re the most appropriate and cost-effective.
Obstacle #2: Not Educating Members
“One of the largest reasons that people are readmitted to the hospital is because they don’t adhere to directions to take their medication.
“Programs like step therapies ask: ‘Have you tried this drug before you try that one?’
“Prior authorizations ask: ‘Why do you need this drug?’ For example, you must have the proper genotype to be able to take certain treatments for Hepatitis C.
“Prior authorizations cause a lot of disruption to the member. You go to the doctor for a prescription. You go to the drugstore and they say why do you need to take this drug? And you go back to your physician but they’re busy. It takes time, so it’s all disruptive at a time when you want your medication. It’s hard to understand.
“Member education is extremely important. It would be nice if we could fill that gap to where physicians knew exactly what your formulary was at the point that physicians are prescribing that medication. Right now that doesn’t exist.
“Every 1% increase in generic utilization results in about 1.5% savings,” said Michael Cornwell.
“In drug costs, it becomes pretty significant. As Zafeira said, as the drug manufacturers continue to make more drugs (which is a good thing), it puts more challenges on us to make sure that the drugs are appropriate and cost-effective.
Using PBM Websites to Shop Employer Prescription Costs
“We’re going to go through more disruption as a result of that. We’re going to have to get used to it. But there are a lot of new tools coming on the marketplace to try to help people shop for drugs,” Mr. Cornwell observed.
“The PBMs have websites where you can log in under your personal account with your PBM that is administering your drugs. You can put in the name of the drug and the details; and it will show you the best places the most price-competitive places, to buy that drug. It will also match up what your formulary is and if there are alternatives that are cheaper than the drug you have.
(This post is a transcript from the video, “2 Obstacles to Managing Drug Costs.”)
An estimated 150 million Americans have employer-sponsored health insurance.[i] What is the complex system under which employer health plans cover the rocketing costs of prescription drugs?
Individuals covered by employer’s health plan. May pay premiums or copays for drug coverage.
Employer or Insurer
Employer or insurer pays PBM to develop preferred drug pricing & process prescription claims. PBM returns some or all rebates to employer or insurer.
Pharmacy Benefit Manager (PBM)
Negotiates discounts and rebates from manufacturer. Contracts with pharmacy.
Negotiates rebates with PBM.
Sells discounted drugs to wholesaler from core price.
Negotiates price with pharmacy.
Pharmacy dispenses to members & collects copays.
[i Robert Galvin and Troyen Brennan, “Can Employers Take a Bigger Role in Controlling Drug Costs?” Health Affairs blog, February 17, 2017, http://healthaffairs.org/blog/2017/02/17/can-employers-take-a-bigger-role-in-controlling-drug-costs/ (accessed April 6, 2017).
Specialty Drug Costs Can Be Managed with These Strategies
“It’s interesting that a lot of these specialty drugs are designed for a very small percentage of the population that have a certain disease state,” said Michael Cornwell, MedCost Director of Sales and Underwriting.
“There may be less than 200,000-300,000 people in the country that need that particular drug. That’s one of the reasons specialty drugs are so expensive.”
MedCost Pharmacist Zafeira Sarrimanolis agrees. “It’s an exciting time in the drug manufacturing world, because all of these new medications have been coming out over the past ten years or so for medical conditions that really weren’t treatable before.
“For example, hepatitis C medications previously were not very effective and really hard for patients to tolerate. Now we have new medications on the market that are practically a 100% cure rate for patients.
“These drugs are also a lot easier for them to take and tolerate. Part of the problem with that is the price tag on some of those new medications.”
“One of the largest reasons people are readmitted to the hospital is because they don’t adhere to the medication,” said Michael Cornwell. “Programs like step therapy ask you to try a clinically appropriate drug before you try a similar but more expensive one.
“Prior authorizations probe a physician’s reasoning behind prescription choices. A lot of these specialty drugs are really for a pretty small percentage of the population. So when you look at a population as a whole, the people taking those drugs are usually between 1%-1½% of your population. That’s the good news.
“The bad news is they’re very expensive. Probably the biggest growth area in the specialty arenas are the cancer drugs. There’s a whole pipeline of new cancer treatments hitting the marketplace. But in that pipeline, member education and aid in helping and consulting is a good thing too. It allows us to have some personal outreach try to help these people manage their disease state.
(This post is a transcript from the video, “CONTROLLING SPECIALTY DRUG COSTS.”)
Prescription insurance has become an increasingly major cost for employers. New drug approvals by the US Food and Drug Administration (FDA) are expected to escalate this year with multiple innovative drugs already being approved for cancer, multiple sclerosis and other conditions.
As researchers discover more treatments, costs will continue to climb. For this reason, smart management of pharmacy plans will be even more vital for employer health plans.
2017 Drug Pipeline
2016 saw a below average number of drug approvals. 2017 is expected to bounce back with 30+ new specialty drugs.
Specialty medications are high-cost prescription drugs used to treat complex conditions. The blue bar (below) shows specialty medication drug approvals. The green bar represents traditional brand and generic drugs. Technology, innovation and new scientific discoveries have caused specialty medication drug approvals to rapidly increase over the last few years.
Growth of Novel Drugs in Prescription Insurance
In 2016, 22 novel drugs were approved, which was the lowest number since 2010. A novel drug is an innovative product with a unique chemical structure that has never been approved by the FDA before. Typically novel drugs meet an unmet medical need.
But it comes at a cost – literally.
When 1% of prescriptions drive 40-45% of an employer’s pharmacy spend, avoiding wise management is no longer optional. Part of my role as a MedCost Pharmacist is to emphasize the importance of cost-management strategies to our employers and consultants.
I also work closely with our clients to help employers understand the importance of educating their employees about these changes and why they are needed.
- PwC Health Research Institute, “Medical Cost Trend: Behind the Numbers”, 2016.
- Specialty Pharmacy Times: “Specialty Pharmacy Drugs: 2016 Approvals and 2017 Forecasts”, 1/26/17. Accessed: https://www.specialtypharmacytimes.com/news/specialty-pharmacy-drugs-2016-approvals-and-2017-forecasts
- Specialty Pharmacy Times: “Specialty Pipeline Highlights”, 2/8/16. Accessed: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2016/february-2016/specialty-pipeline-highlights-jan-16
- Diplomat Pharmacy, Inc.: “Diplomat 2016 Pipeline Recap.” Accessed: https://issuu.com/diplomatrx/docs/2016pipelinerecapfinal_ web?e=15248128/42785885
- DRUG TABLE
- OptumRx© RxNews Weekly email blogs
- FDA Approvals 2017: https://www.fda.gov/drugs/developmentapprovalprocess/druginnovation/ ucm537040.htm
- BioPharma, accessed: http://www.biopharmadive.com/news/fda-gives-thumbs-up-to-takedas-lung-cancer-drug/441653/
- Forbes; accessed: https://www.forbes.com/sites/matthewherper/2017/05/05/fda-approves-first-new-drug-to-treat-als-in-22-years/#1399b94d7fb3
- Bloomberg, accessed: https://www.bloomberg.com/news/articles/2017-03-23/pfizer-and-merck-kgaa-s-new-cancer-drug-to-cost-13-000-a-month
- National MS Society, accessed: http://www.nationalmssociety.org/About-the-Society/News/FDA-Approves-Ocrevus
- MarketWatch, accessed: http://www.marketwatch.com/story/tesaro-wont-reveal-price-of-ovarian-cancer-drug-but-itll-likely-be-near-14000-a-month-2017-03-28
- “The cost of Drugs for Rare Diseases is Threatening the US Health Care System” https://hbr.org/2017/04/the-cost-of-drugs-for-rare-diseases-is-threatening-the-u-s-health-care-system
- Pharmacy Times “7 New FDA Approvals to Know from March 2017” 4/13/17. Accessed: http://www.pharmacytimes.com/news/7-new-fda-approvals-to-know-from-march-2017
- Pharmacy Times “7 New FDA Approvals to Know from February 2017” 3/3/17. Accessed: http://www.pharmacytimes.com/news/7-new-fda-approvals-to-know-from-february-2017
- Pharmacy Times “5 New FDA Approvals to Know from January 2017” 2/17/17. Accessed: http://www.pharmacytimes.com/news/5-new-fda-approvals-to-know-from-january-2017
Pharmacy terms in health plans can be confusing. Employers must understand their pharmacy plans, especially in this era of rising drug costs.
As a pharmacist, I help MedCost clients navigate their Pharmacy Benefit Manager and identify opportunities for cost-saving in their company health plans. Here are some terms employers need to know when determining prescription drug benefits for their health plan.
1. Pharmacy Benefit Manager (PBM)
An organization that develops and maintains preferred drug lists, contracts with pharmacies, and negotiates discounts and rebates with drug manufacturers. PBMs also process and pay prescription drug claims in addition to implementing strategies that save pharmacy plan dollars, while improving member health.
A prescription drug list that is preferred by a health insurance plan. Identifies medications available to treat certain medical conditions and organizes into tiers.
Different cost levels a member pays for a medication. A tier 1 medication is generally generic and lower-cost, while higher-cost brand name medications fall in Tier 2 or 3.
Developed, patented and sold exclusively by a pharmaceutical manufacturer.
5. Generic drug
Manufactured and sold after the brand-name patent has expired. For example, Tylenol® is a brand-name medication and acetaminophen is its generic equivalent. Generics promote competition and drive down drug costs. Almost 80% of prescription drugs sold in the US are generics.
6. Specialty drug
A high-cost, prescription drug that treats complex conditions such as rheumatoid arthritis, cancer or multiple sclerosis. These drugs typically have special storage requirements, administration techniques and require specific monitoring. Specialty drugs may account for up to 45% of a plan’s total drug costs.
A drug or service not paid for by a health plan.
Money paid by manufacturers after drug purchases, as part of negotiations with payers (insurance companies, PBMs, benefits administrators, Medicare). Rebates cut about $40 billion from drug sales annually (see examples).
Requires a doctor to provide additional clinical information to determine coverage of the prescription drug under the plan.
10. Step therapy
Trying a lower-cost, clinically-similar drug before a higher-cost drug for the same medical condition is allowed under the plan.
Step therapies and prior authorizations feel disruptive to employees. For that reason, employers are faced with the challenge of balancing employee satisfaction with cost containment.
Our clients are seeing significant results using preferred formularies and these cost-saving strategies. One group avoided expenses of over $250,000 in the first months after adopting a managed approach with one of our PBM vendors.
The goal is to ensure the right people get the right drug for the right medical condition at the right time. With our PBM partners, we work to ensure that our members are utilizing safe, clinically-appropriate, cost-effective treatments. Employers can partner with their employees to become better healthcare consumers so everyone benefits in the use of prescription drugs.