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Prescription Drug Supply Chain and Innovation Costs


Michael Thompson: Finally, I want to talk about the prescription drug supply chain. That’s a different animal.

Patricia Haines: Oh, yeah.

Michael Thompson: I know for employers it’s not the biggest spend, but it’s the fastest-growing spend. There’s a lot of attention here, and frankly, a little bit of controversy in this area too in terms of what’s happened. Some of it is the underlying emergence of very innovative drugs and very expensive drugs—specialty drugs. How are employers viewing the specialty drugs, the emergence of these highly, highly expensive—but in some instances very highly effective—drugs that are coming out?

Andrew Crighton, MD: I think there is a lot of concern because of this increased cost, but if you’d sit back and look at how are you reducing the medical spin—I’ll pick on the hepatitis C drugs. Everybody was worried about this, and we saw it an increase in the uptake of the hepatitis C drugs. Once people got treated, it went down, and the medical claims followed too. Those that are curative are great. Those for chronic diseases—that are more disease-modifying, that they have to take for life—may still be concerning. If we look at the medical span, we may still be saving some money. So it’s looking at that total cost of care versus just a silo of the pharmacy.

Patricia Haines: Yeah, I’d agree. I think there’s good news and bad news. Certainly, some of the high-cost drugs that our members are taking are saving on the medical side. Oncology, I’m not so sure, because with all the development in oncology drugs, 2 things are happening, at least in our population. It is extending a period of disability, and it is really not eliminating an ultimate outcome. I don’t know much about the quality of life in between, but I do know that that cancer has moved for us to a chronic disease. It is being managed with very high-cost-infused drugs. I just don’t know if they’re the answer. I think that’s something that I would need more information about.

Bruce Sherman, MD: I think it’s a real ethical dilemma, especially in the setting of cancer. How much should—or how much is acceptable—an employer to spend to prolong life, disability or no disability? And where should that line be drawn to say, “This is cost prohibitive” or, “If you want to purchase this, you can using your dollars, but we as the employer are not going to pay for it.” That’s such a sensitive issue that I don’t know whether we have any easy answers for that just yet.

Patricia Haines: I’m not sure it’s an employer issue. I think it’s an ethical, medical-world issue. How much care is too much care?

Michael Thompson: It is interesting, to that point. At some level employers have kind of ceded determinations on this to their intermediaries—the PBMs [pharmacy benefit managers] and, in some instances, health plans. What is the role of that intermediary, and how are they performing as it relates to drug management? I know we hear some noise, but I’m wondering what you’ve observed.

Andrew Crighton, MD: I think it is difficult. As you said, some of these used to be acute diseases that ended up with death and now are chronic diseases. HIV is along that line too. People are still trying to figure out what that end point should be, and it’s probably going to get worse…. Some of this personalized medicine, based on the genetic markers of these tumors, is going to complicate it even more. The jury is still out on this, and I think it’s going to get murky before it ever gets clear.

Patricia Haines: I will take a slightly cynical view of the intermediaries. Although they’re a necessary evil—if they didn’t exist, we’d have to invent them. Even though they all tout P&T [pharmacy and therapeutics] committees and are constantly looking at clinical efficacy, it’s an economic decision at the end of the day. We had a drug moved from tier 2 to tier 3—a specialty drug, with no alternatives—and we say, “Why, if there’s no alternative?” The whole purpose of tiering on a formulary is to drive to a lower-cost alternative, but there isn’t any. I think it’s because they weren’t getting any rebates. That’s the cynical part of me. But again, they’re necessary. It’s a very complicated purchase. It’s a very complicated business to manage, and I admit that we need them.

Bruce Sherman, MD: From a philosophical standpoint, we have new technologies in the laboratory that are enabling the development of new categories of drugs that we didn’t know could even exist. Those come at a cost. I think it’s incumbent upon us—as employers and coalitions—to push back in the same way on the pharmacy side as we are on the medical side. We need to find ways to align our mutual interests, to find that value and ensure that our purchase of those more expensive drugs is contingent upon those drugs providing value at the patient level.

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