Last year, the U.S. Food and Drug Administration (FDA) approved a record-breaking 59 new medicines that will advance healthcare for patients with chronic and rare diseases.
This is great news, because it shows that our scientific understanding of the mechanisms that change the course of disease is leading to pharmaceutical breakthroughs. And the evolution of regulatory requirements like Therapy Breakthrough designation is shortening approval times and getting new treatments to patients faster.
However, this same progress presents significant challenges for the healthcare industry. While recent and anticipated scientific innovation marks much-needed progress for patients, in many cases, the systems designed to promote patient access to these new treatments have not kept pace.
This disparity will undoubtedly impact many areas of healthcare. Payers, distributors and pharmacies will have to address the challenges that come with how a new generation of medicines is covered, reimbursed, distributed and dispensed—in addition to creating the need for effective care strategies that optimize outcomes.
Promising Therapies for Patients with a Variety of Rare and Common Conditions
More than one-quarter of the 59 newly approved medicines were deemed first in class, meaning they’ve created new treatment options for patients where there were none. This includes transformative new therapies like gene and cell engineering, which are having positive long-term or even curative effects and restoring the quality of life for patients with debilitating and often life-threatening conditions.
For example, the landmark late-2017 FDA approval of a gene therapy to treat inherited eye disease helped make this life-changing treatment more widely and readily available—a trend that’s expected to continue with 40 gene and/or cell therapy approvals anticipated by 2022.
Last year also brought significant progress in treating conditions impacting larger populations like migraine, HIV, leukemia, endometriosis and prostate cancer.
For patients with rare diseases (conditions affecting fewer than 200,000 people), 2018 brought important advancements with 34 new orphan drugs to treat conditions like Fabry disease and rickets.
This high number of newly approved orphan medications is remarkable, especially given that orphan drugs take 18% longer to develop than medicines for more prevalent conditions.
Health Plans Will Need New Approaches to Payment and Patient Access
Health plans and pharmacy benefit managers (PBMs) are under intense fiscal pressure to keep patient out-of-pocket and premium costs manageable and ensure patient access to new treatments.
And while new therapies represent high value to patients, some are coming at a high cost. The impact this can have on a health plan’s bottom line is further compounded as new medicines or expanded indications increase the number of patients beginning therapy.
There is urgency to develop and maintain value-based approaches to reimbursement such as outcomes-based contracting and indication-based payment arrangements. But the infrastructure to manage these arrangements can be costly, and the required data isn’t always available.
The success of arrangements that link reimbursement and patient access to a medication’s effectiveness depends on the timely availability of documentation of meaningful and measurable patient outcomes such as lab values or hospital readmission. However this information may not be included in claims data, or it may require data analysis across multiple sources.
Transformative gene and cell therapies being approved at an increasing rate will require new approaches to reimbursement and patient access. The shift from episodic to sustained treatments with long-term benefits is accompanied by high upfront costs that the current volume-based, fee-for-service system is not equipped to manage. There is general consensus that new regulatory and economic models (i.e. drug “mortgages”) are required for these specialized treatments.
Distributors Face Evolving Business Environment and Inventory Control Challenges
The growth of patient-administered specialty medications is changing wholesalers’ customer mix, which is fundamentally shifting their business models. While specialty medications continue to represent about 2% of total prescriptions, the mix of physician-administered and patient-administered medications is shifting.
Physician-administered products, or those frequently categorized as specialty medications due to high cost and/or special handling, are steadily declining among independent physician practices/clinics (i.e. “buy-and-bill”).
This is due in part to new patient-administered therapies replacing physician-administered medications, and the pipeline favoring small molecule drugs over biologics, with the increase in oral medications for cancer and multiple sclerosis as well as self-injectable treatments as examples. And it means that distributors are changing their customer focus as therapies for prevalent diseases evolve to include a more significant role for pharmacies and health systems.
Further, a growing number of products require sophisticated inventory control elements with increasingly complex shipping and storage processes. And the scientific advancement that yields specialty medications sometimes prolongs production. As a result, distributors will face more intense challenges in managing inventory and lead times required by manufacturers to avoid shortages.
Pharmacies Will Have a Stronger Role in Care Coordination and Meeting Requirements for Specialty Medications
As innovative medicines increase fiscal pressure for payers, they are increasingly implementing exclusionary “preferred pharmacy” arrangements to both manage cost to choose pharmacies that demonstrate the best patient outcomes.
A preferred pharmacy arrangement means that patients can only fill a particular medicine at a select pharmacy specified by their health plan. In addition to providing operational services like supply chain management and care coordination with providers, these specialty pharmacies are also delivering patient education and clinical support services while meeting requirements for reporting clinical outcome measures for specific patients.
For community-based pharmacies, the need to scale innovation in providing patient care management programs and operational services related to non-traditional medications will become increasingly important as the availability and number of patients taking complex medications increases.
The Flip the Pharmacy initiative is one example of community-based pharmacies undertaking the effort to enable enhanced patient care services through technology, patient follow-up programs and care planning.
Finally, as increasing cost pressure for payers is creating more complex utilization management processes, professionals in both traditional and specialty pharmacies will be at the forefront of navigating these processes, and can anticipate spending more time navigating payer requirements and assisting patients with strategies to manage their out-of-pocket costs.
How to Get There: Better Health Information
The U.S. healthcare market is unique. Patients, payers, providers, distributors, manufacturers and dispensers are all separate entities with varying and often competing interests that can be inherently difficult to align.
Through our work across the Surescripts Network Alliance over the past 18 years, we’ve learned first-hand that there is no single culprit nor clear and quick fix for the challenges that come with the ever-faster pace of medical innovation.
However, if these system-wide issues go unaddressed, it could limit reimbursement and patient access to new therapies. And this could discourage investment today in the biopharmaceutical innovations of tomorrow.
One of the keystones to fixing these problems is better information, and developing in-depth knowledge of the patient journey for specific populations, total costs of care, patient preferences and pathways to achieving favorable outcomes.
Technology that exists today can deliver this information in the form of actionable intelligence that clinicians can use to make better healthcare decisions, effectively lowering costs while increasing care quality and patient safety.
Electronic prior authorization, for instance, promotes patient-provider satisfaction, saves money and resources, and boosts patient speed to medication therapy. In fact today, the administrative delay for which the manual process is notorious can, in many cases, be shortened or eliminated altogether.
In addition, the headaches associated with specialty prescribing are being explored with the goal of automating the patient enrollment workflow, as well as a number of other powerful tools that can have an even greater impact when made available to the specialty prescribing process.
Collectively, these technologies have the potential to revolutionize the experience for an ever-growing patient population with serious illnesses, and the healthcare professionals who care for them.
Better information simply means more opportunities to manage patient care and empower healthcare professionals to create the best possible outcomes in partnership with their patients. To get there, stakeholders will have to work together to close the information gaps that exist today, and continue to foster innovation by collaborating even more meaningfully across the healthcare system.
Learn more about how the Surescripts Network Alliance convenes the healthcare industry to improve the quality, safety and cost of care in the U.S.