January 6, 2017

Families Fret As Insurers Mull Biogen’s $750K Spine Disease Drug

By Ben Filder

In the past, organizations working in different pockets of the health sector made decisions according to their own business priorities. But as pharmaceutical and life sciences pipelines rebound, consumer choice and provider cost-savings incentives are driving change in the industry’s commercial model. As US specialty drug spending hits an all-time high, purchasers, prescribers and patients are considering price as a key component of a drug’s expected health benefit.

In 2014, the US spent $373.9 billion on medicine, a 13.1% increase over 2013.1 Purchasers have taken notice, and are driving down drug costs using mandatory discounts and price protection clauses in formulary contracts.

Patients are paying more for drugs as they switch to high-deductible health plans3 and face larger out-of-pocket costs for specialty products. And physician groups and the government are becoming more concerned, and vocal, about the financial side effects of expensive new therapies. This is especially true as health systems shift to new payment models based on health outcomes, instead of volume of services provided.

Meanwhile patient advocacy groups are publicly assessing drug effectiveness, and providing money and data to help drug developers discover and develop tomorrow’s new therapies. Both public and private purchasers are opening up their datasets for collaboration and research. Lawmakers are considering legislation that would allow commercial teams to tout the cost benefit of new products. And technology is facilitating the continuity of care outside of the clinic.

As a result, the divisions between biopharmaceutical R&D, Food and Drug Administration (FDA) approval and commercialization are blurring. Patients are deciding which drugs are valuable in the real world. Provider groups are considering the impact of treatment decisions on the total cost of care. And patient data, in aggregate, are being used by insurers to decide when, how and at which price points to make new drugs available. Biopharmaceutical companies cannot afford to sit on the sidelines as patients and health plans negotiate access to their products. Putting drug costs into context requires access to patient data, and evidence connecting drug intervention with patient health outcomes. Collaboration is the key to demonstrating value and ultimately boosting revenues in a system that rewards outcomes and quality over volume: the New Health Economy.

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