NCPA - National Center for Policy Analysis


September 19, 2007

Doctors rely on medicines approved for other diseases to try to save patients for whom all other treatments have failed.  But as new medicines come to market at ever-higher prices, insurers are pushing back, limiting coverage of high-priced medicines used to treat relatively small groups of patients -- categorized as "specialty pharmaceuticals"  -- to only the disease for which they are specifically approved by the Food and Drug Administration, says the Wall Street Journal.

Specialty pharmaceuticals comprise the fastest-growing part of health spending, insurance officials say:

  • By pushing generics, insurers have clamped down on spending on other types of medicines, which rose 6 percent in 2006, according to Express Scripts, Inc., one of the largest pharmacy-benefit managers.
  • By contrast, spending on specialty drugs soared 21 percent last year; they accounted for nearly a quarter of total drug spending in the United States, according to Health Strategies Group, a New Jersey consulting firm.

Insurers say they must limit use of the most expensive drugs to control health-care costs, which are surging at a 7 percent to 8 percent annual rate and continue to outpace inflation. It makes sense, they say, to require proof that a drug works in a patient's particular disease before doling out tens or hundreds of thousands of dollars.

Others disagree.  "A lot of patients are being denied potentially effective therapies.  What's happening is totally arbitrary and it's 100 percent correlated to when the prices went up.  Ten years ago, we never got questioned on our medical decision to prescribe the medicine with the best chance of helping our patients," says James Vredenburgh, an oncologist at Duke University Medical Center.

Source: Geeta Anand, "As Costs Rise, New Medicines Face Pushback," Wall Street Journal, September 18, 2007.

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