Global Health Journal (Dec 2019)
Policy options for addressing the high cost of specialty pharmaceuticals
Abstract
The cost to U.S. consumers of specialty drugs is too high, and cost-sharing obligations are reducing patient access to affordable and life-changing medications. While accounting only for approximately 2% of prescriptions filled, specialty drugs accounted for nearly 45% of the U.S. drug spend in 2018, and this rate continues to rise. This review analyzes the current state of the U.S. specialty drug market and recommends six policy options for decreasing out-of-pocket costs to consumers. A systematic review was conducted, gathering articles from peer-reviewed and government resources published from January 2014 to May 2019 using databases such as PubMed, OVID, and the Congressional Research Service (CRS). Articles were reviewed for unique and relevant information relating to cost specialty drugs, industry trends, underlying legislation and policy challenges, and viable policy options. The findings show that, while the cost of specialty drug prices is growing, the rate of growth is projected to slow to a compound annual growth rate (CAGR) of 4 to 7% between 2019 and 2023, as compared to a CAGR of 7.2% from 2014 to 2018, largely due to the Food and Drug Administration's approval of 10 new biosimilars in 2018 and early 2019. However, specialty drug spending as a percentage of total spending continues to rise and can cost payers and patients more than USD 3,500 on average per month. We recommend six policy options for reducing consumers' out-of-pocket cost obligations: (1) discourage “pay-for-delay” agreements and patent evergreening; (2) align incentives across the specialty drug supply chain with value-based pricing; (3) tighten orphan drug eligibility or impose a sales tax on drugs if the sales tax exceeds a specified threshold until federal subsidies are recouped; (4) increase transparency in transactions between specialty drug supply chain stakeholders; (5) tax the direct-to-consumer advertising of specialty drugs and use the proceeds to fund public research; and (6) support copay cards and patient assistance programs. While the consensus across the industry is that the out-of-pocket costs of specialty drugs to patients are too high, industry stakeholders must agree about which set of policy options to implement. Lawmakers must explore options for reducing the out-of-pocket costs of specialty medications and gather public input on how to best align stakeholder incentives across the specialty drug supply chain.
