Next Frontier in Health Care: Specialty Drugs

I drink tea, never coffee, a habit I picked up as a young boy from my grandmother and great-grandmother. They liked to gossip while sipping their brews, elbows propped on their kitchen table, and afterward would push their chairs away, sit back and place one warm, wet tea bag atop each of their closed eyes. Once I asked what they were doing, and my grandmother assured me, “It’s good for you,” then proceeded to hold forth on the value of various home remedies.

It turns out that the caffeine in tea can restrict the blood vessels under your eyes, thus reducing puffiness, so Mama Nor and Rari were on to something. But I always wondered, how did they know? The answer, of course, is that they had generations of trial-and-error results handed down to them; the best methods survive and evolve.

By industrializing this process of investigation and experimentation, pharmaceutical companies have dramatically expanded and accelerated it. In just the past couple of decades, drug pioneers have created new ways to fight dozens of serious health problems, reducing suffering and the need for surgery and extending life spans for millions of patients. My mom takes bisoprolol to keep her blood pressure down, Flovent for her asthma, Levoxyl to regulate her thyroid and simvastatin to control her cholesterol. And if your family is anything like ours, modern pharmaceuticals are one of the biggest reasons to be happy that you are alive, and will grow old, in 21st-century America.

I am bringing all this up because this month I want to examine one of the next great frontiers in health care for people who are approaching or already in retirement: specialty drugs, which are medicines, often produced biologically, that treat specific complex and chronic diseases. In recent years scientists have begun to learn how the genes that regulate diseased cells work. And now, usually by extracting and modifying substances from healthy cells, they are homing in on the molecular processes of those problem genes. For instance, Humira, made by Abbott Laboratories, is a drug originally built from human antibodies. In the body it attaches itself to a specific protein that triggers inflammation, thereby preventing the chemical from binding to tissue cells. As a result, for patients with rheumatoid arthritis, Humira doesn’t just offer relief from pain; it helps stop the disease from spreading.

As stunning as recent advances in pharmacology have been, specialty drugs promise whole new kinds of miracles. Sprycel, from Bristol-Myers Squibb, targets a range of proteins that spur the growth of cancerous cells; people with chronic myeloid leukemia can take it orally once or twice a day rather than undergoing chemotherapy. Breast cancer and multiple myeloma, too, are cancers that patients can now fight with pills, thanks to advances in specialty-drug therapies. Blood-cell deficiencies and even multiple sclerosis are yielding to biotech-driven treatments.

The catch, of course, is cost. Because most specialty drugs typically face little competition, they carry staggering price tags. Humira can cost $45,000 a year, Sprycel, $54,000, and they aren’t unusual. In 2008 the AARP wrote that “the drugs are costly, commanding prices 10 to 100 times higher than other prescription drugs.” Specialty drugs now account for a quarter of all pharmaceutical expenditures in the U.S. and will rocket from $73 billion to $99 billion next year, says AARP.

As you age, you become more prone to the kinds of diseases specialty drugs treat and more vulnerable to these rapidly rising costs—even if you have coverage through insurance or Medicare. That’s because most copayments often don’t apply to expensive medications, including almost all specialty drugs. Instead, many insurers charge patients a portion, typically 25 to 35 percent, of the overall cost, which can total thousands of dollars a month: 86 percent of Medicare Part D plans and 10 percent of private insurance plans now force patients to share costs rather than make copayments, according to Avalere Health, a Washington, D.C., consulting firm.

Unfortunately, while the bludgeon of cost-sharing will cause patients to struggle to pay for the wonder drugs, it probably won’t drive down health care costs for Medicare or the overall economy. While increasing the cost of copayments can reduce the use of most prescription drugs by 30 to 50 percent, instituting expensive tiers for specialty drugs lowers their use by just 1 to 21 percent, according to a 2006 study by the Rand Corp. That’s because specialty drugs are so effective and there are so few alternatives that people keep using them even when their costs rise.

So before the scramble to shift costs to consumers grows any more frantic, employers, insurers and the government should consider other moves to increase affordable access to specialty drugs.

First, Uncle Sam should enable the development of generic biologics. Under current law, if a company wants to make a generic version of a drug, it just has to prove that its product has the same active ingredients as the brand-name version. But the law applies only to chemical, not biologic, products, because it was enacted in 1984, when biotechnology hardly existed. Most specialty drugs come from substances produced in live cells, and the companies that make them face little competition even after their patents expire. That free ride makes little sense; as Sen. Orrin Hatch (R-Utah) put it in 2005, it “essentially acts as a second patent to keep off-patent biological products off the market.” Fortunately, as part of its 2010 budget, the Obama administration announced it will “accelerate access to make affordable generic biologic drugs available through the establishment of a workable regulatory, scientific and legal pathway.” Let’s hope that plan prevails over biotech-company lobbyists.

Second, doctors and, to a lesser extent, insurance plans, must make sure they are giving specialty drugs to patients who truly need them. Left to their own devices, drug companies, which by some estimates spend almost twice as much on advertising and promotion as on R&D, will try to market nearly every new medication as a blockbuster. And pharmacy benefit managers (the companies that are supposed to manage drug costs for insurers) have actually been cutting their own deals to distribute specialty drugs, which makes you wonder how they would ever want to limit the price or sales of those drugs. So it’s the players closest to patients who need to look out for everyone’s wallets. Here, there’s more good news from Washington: In February’s stimulus package, the feds allocated $1.1 billion to compile data for the first time on the comparative effectiveness of various medical treatments.

Insurance companies need to find ways to connect their reimbursements more directly to the improvements patients achieve in their health, rather than the amount and type of drugs doctors prescribe. Aetna, for instance, has been looking into a “pay for performance” approach, where it would negotiate prices for a drug based on how well it worked in individual patients.

The research and development arms of the pharmaceutical industry have helped bring aging Americans a quality of health and life most never dreamed they would see. It’s up to the rest of us to make sure the business, with its tendency to monopolize and its addiction to marketing, doesn’t block the widespread availability of its most amazing achievements.