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Specialty drugs -- Cost, impact & value: Health Affairs' October issue

Health Affairs

This issue of Health Affairs was supported by CVS Health.

Do specialty drugs offer value that offsets their high costs?

James D. Chambers of Tufts Medical Center and coauthors conducted a cost-value review of specialty versus traditional drugs by analyzing incremental health gains associated with each. This first-of-its-kind analysis is timely because the majority of drugs now approved by the Food and Drug Administration are specialty drugs produced using advanced biotechnology and requiring special administration, monitoring, and handling--all of which result in higher costs. In 2013 specialty drugs accounted for less than 1 percent of US prescriptions but for more than 25 percent of prescription spending. The authors found that while specialty drugs were associated with greater costs--$12,238 median over a treatment period versus $784 for traditional drugs--they offered greater gains for patients. These findings suggest that despite the high price tag, in many cases, specialty drugs may offer reasonable value for the money.

Specialty drug coupons help control member costs and may improve adherence but may decrease insurers' capability to manage drugs.

Catherine Starner of Prime Therapeutics and coauthors examined the prevalence of drug coupons and the degree to which they reduced patients' out-of-pocket (OOP) costs in nearly 265,000 specialty prescriptions. The authors found that more than 44 percent of specialty prescriptions had a coupon applied covering more than 60 percent of OOP costs. They next examined the association between high OOP costs and nonadherence (abandoning new or restarted therapy) among 16,000 patients. For patients with monthly OOP costs less than $50, the abandonment rate for biologic anti-inflammatories was 5.2 percent but jumped to 52.3 percent when monthly OOP costs totaled $2,000 or more. While coupons offer benefits, they may undermine pharmacy benefit managers' attempts to keep premiums affordable because they eliminate patient incentive to select preferred drugs that are most appropriate and cost-effective. These analyses shed light on the impact of coupons in the specialty drug market.

Are hospitals exploiting the 340B Drug Discount Program?

The federal 340B program gives certain hospitals deep discounts on outpatient drugs to care for poor and uninsured patients. Rena M. Conti of the University of Chicago and Peter B. Bach of Memorial Sloan Kettering Cancer Center examined claims that 340B hospitals are expanding in a manner that allows them to profit from the program by providing the low-cost drugs to well-insured patients. The authors matched data for 960 hospitals and 3,964 clinics registered with the 340B program in 2012 with socioeconomic data on their communities from the US Census Bureau. They found that hospital-affiliated clinics registering for the program in 2004 or later served wealthier, better-insured communities than those registered prior to 2004. The authors say further assessment is needed, but argue their findings are consistent with recent complaints that the 340B program is being converted from one that serves vulnerable patient populations to one that enriches enrolled hospitals.

Reduced residency hours do not adversely affect preparation of physicians for independent practice.

In 2003 amidst rising concerns about medical errors, medical residents' hours were capped at eighty hours per week, with shift lengths no longer than thirty consecutive hours. To assess whether shortened residency training diminished patient care provided by physicians newly entering independent practice, Anupam B. Jena of Harvard Medical School and colleagues studied data for patients in Florida between 2000 and 2009 whose care was provided by a physician who completed an internal medicine residency. They compared patients' average length of stay and hospital mortality against three categories of physicians: those who completed their residency before 2003; those with partial exposure to duty-hour reforms (those completing residency in 2004 or 2005); and those whose entire residency was after the duty-hour reforms of 2003. The findings suggest that the residency reforms of 2003 did not adversely affect the quality of physicians who trained during that period, as measured by their patients' hospital length of stay or mortality.

Other papers in the October issue focusing on specialty drugs include:

The Impact of Specialty Pharmaceuticals as Drivers of Health Care Costs by Bradford R. Hirsch of Duke University and colleagues

Existing FDA Pathways Have Potential to Ensure Early Access to, and Appropriate Use of, Specialty Drugs by Aaron S. Kesselheim of Brigham and Women's Hospital and coauthors

Specialty Medications: Traditional and Novel Tools Can Address Rising Spending on These Costly Drugs by Alan M. Lotvin of CVS Caremark and colleagues

Analysis & Commentary--Specialty Pharmaceuticals: Policy Initiatives to Improve Assessment, Pricing, Prescription, and Use by James C. Robinson of the University of California, Berkeley and coauthor


Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears monthly in print, online, on mobile and on iPad. Additional and late-breaking is found at in Web First papers, Health Affairs Blog, Health Policy Briefs, Videos and Podcasts, and more.

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