U.S. drug prices rose an estimated 12% to 13% last year, and consumers are being asked to pay more of the total cost as health insurance deductibles and co-payments increase.
“Drug cost has been the single biggest driver of healthcare spend over the last two years. It wasn’t prior to that,” says Dr. John Bennett, chief executive officer at Capital District Physicians’ Health Plan, a non-profit based in Albany, N.Y.
Certain pharmacies have contributed to higher drug prices by driving customers to expensive treatments instead of cheaper generics, pharmacy benefit managers say. Many help drugmakers to cover the out-of-pocket costs for consumers, lightening their load but leaving health insurers to pay the rest.
Independent pharmacies and their drugmaker partners counter that Express Scripts, CVS and OptumRx together control more than two-thirds of the market through their own mail-order operations. The specialty pharmacies say that the benefit managers are trying to curb the explosive growth of smaller, independent players.
“Our philosophy of ensuring that patients get the medicine their doctors prescribe is threatening Express Scripts’ profiteering and exposing what we believe is a lack of care for patients and respect for physicians,” Horizon Pharmaceuticals Chief Executive Timothy Walbert said last week.
Express Scripts has cut reimbursement to Linden Care, a New York-based pharmacy that distributed Horizon drugs.
A Booming Business
Specialty pharmacies were first formed in the 1970s to deliver products requiring special handling to doctors’ offices and hospitals, including therapies for cancer, HIV/AIDS or hemophilia. The field has evolved to include mail-order operations that offer services for complex, high-cost drugs, often for rare or chronic diseases.
The growth of such pharmacies has been fueled by a record number of specialty treatments coming to market for everything from hepatitis C to cystic fibrosis. Pembroke Consulting estimated that the number of accredited specialty pharmacies would jump by nearly 100 to a total of 250 in 2015.
Diplomat Pharmacy Inc, the nation’s largest independent specialty pharmacy, is the sole distributor of three medications for very small patient populations: Exelixis Inc’s thyroid cancer drug Cometriq, Teva Pharmaceutical Industries leukemia drug Synribo and Keveyis, a treatment for temporary paralysis made by Taro Pharmaceuticals.
“We handle drugs for complex, chronic conditions. Many were previously a death sentence,” says Sean Whelan, chief financial officer. Net income at Diplomat, which went public in 2014, nearly tripled in the first nine months of this year from the same period a year ago.
