UpClose with Ken Dowell, Pharmacy Practice Leader, Evergreen Rx

New Biotech Drugs on the Horizon
Breakthrough Treatments Pose Greater Financial Risk

While the pharmaceutical market in the U.S. reached an all-time high of $334 billion in 2005, it actually grew by only 10% during the same period, the lowest percentage gain in recent history. New generics, safety issues, lack of new blockbusters and the success of over-the-counter switches are attributed to the slowing in growth.

But looming in the background and gaining speed quickly is the growing storm of biotech drugs which are expected to double within the next three years. Currently there are 90 biotech drugs available, representing 15 per cent of the drug spend. With more than 600 biotech drugs in the FDA approval process and more than 276 in development, the biotech genetic drug business is expected to become a $90 billion a year business by 2010.

While the average costs of some of these new wonder drugs are estimated around $20,000 per member per year, some therapies can reach catastrophic levels, presenting a different convergence of risk for payors. To give just one example, recently a patient on a new purified hemophilia drug spent six days in a hospital for routine surgery and the billed charges were $950,000.

Even though plan sponsors currently spend 8-30 per cent of biotech drug costs on less than one percent of plan participants, the trend in the development of future genetic drugs is to focus on new age diseases that are growing in prevalence. These include Rheumatoid Arthritis, Multiple Sclerosis, Hepatitis C, Psoriasis, Pulmonary Arterial Hypertension and a range of oncology therapies.

These classes of drugs are designated specialty drugs because they can be administered to patients in a variety of settings such as a physician’s office, by a home health care nurse, in a hospital setting or self-administered by the patient, creating additional risks to payors often overlooked in traditional insurance coverage.

Additionally, many of these costly wonder drugs are typically made of living cells through genetic engineering, making it difficult to make exact generic copies – another consideration for future benefit costs.

For patients, these new drugs can represent breakthrough treatments that offer new hope. For plan sponsors they represent growing financial risk, a new challenge in managing pharmacy benefit costs and a growing ethical dilemma that comes with our culture’s insatiable demand for the latest and greatest drugs and treatments.