Increased Number of Specialty Drugs Gives Insurers a Headache

As researchers have succeeded in finding treatments for many chronic medical conditions, the specialty drug market has likewise seen significant growth. Pharmaceutical companies are focusing more intently than ever on developing and bringing to market highly specialized medications to delay disease progression, alleviate symptoms, or even cure certain illnesses.

This is excellent news for patients, who may soon see effective new medications available for such conditions as cystic fibrosis, hepatitis C, multiple sclerosis, and high cholesterol. However, employers and insurers are finding the increased availability of such drugs, and their attendant high price tags, somewhat challenging.

In the United States, benefits companies are struggling to deal with the potentially staggering financial impact of some of these medical advances. For example, an improved multiple sclerosis therapy currently in development is expected to add $40,000 to the average annual cost of treating an MS patient. Similarly, a new drug that treats high cholesterol in patients unable to use the more common treatment of generic statins increases current monthly treatment costs by $1,000. These are just two of many examples. With an estimated 100 to 200 types of specialty drugs in development today, industry sources expect that pharmaceuticals will eventually account for 30 percent of all health care spending.

To help devise a specialty drugs strategy for their benefit plans, some major employers are turning to independent advisors: consultants who specialize in predictive analyses of pharmaceutical developments that may result in spending surges for companies that are self-insured. These firms also provide evaluations of whether the expense of such drugs could offset other costs. Additionally, some companies are adopting the policy of requiring prospective employees to sign an employment “commitment contract” before approving any level of specialty drug coverage.