Twenty years ago, one of the more effective treatments for rheumatoid arthritis involved gold compounds, which were partially effective in treating the pain and inflammation caused by that illness. Adjusted for inflation, the yearly cost of the gold treatment would be approximately $2,500 in today’s dollars.
In recent times there have been a number of new, more effective and safer drugs for that condition. They are also far more costly than even gold treatments. A comparative discussion of specialty medications is a good place to begin a self-examination of health care costs.
One of the current medications that provides a more effective and safer treatment for rheumatoid arthritis is Enbrel. It was one of the first in this class and, according to consumer reports, the average yearly cost is approximately $29,000. Another specialty medication that has proved to be a great advance in the treatment of Hepatitis C is Sovaldi. Treating Hepatitis C can avoid serious complications, such as cirrhosis of the liver and the need for liver transplants. Yet a 12-week course of Sovaldi costs in the neighborhood of $84,000 or approximately $1,000 per tablet.
Enbrel and Sovaldi are both in the class of medications that are considered specialty medications. These are generally much more expensive than other drugs and most of these medications are unlikely to have generic counterparts in the next few years to help bring down the cost. There is no question that specialty medications are useful drugs that have revolutionized the treatment of some very serious illnesses. It is important that they be made available and affordable to everyone who is truly in need.
There is also no question that if we do not closely examine the use of specialty medications, they will dramatically impact the cost of health care. Industry projections suggest that the cost of providing specialty medications will increase by 12-15 percent annually. While specialty medications currently account for a modest portion of the total cost of care, it is clear that increased utilization will eventually have a significant effect on people’s insurance premiums.
In an attempt to curb the rise in health insurance premium costs, consumers, employers and health insurers throughout the country have resorted to increasing the amount of consumer cost sharing. An unfortunate result of this trend is the number of patients who forego needed, effective treatments because of high out-of-pocket costs.
There are other steps available to offset the upward march of specialty pharmacy costs. As with all of our efforts as a health plan to hold down cost, we first try to make sure that those who truly need treatments will get them and that they are provided only where there is a clear benefit. Physicians and insurance companies have prior authorization processes for all of the specialty medications to ensure lower cost alternatives, when available, have been tried first.
There are also protocols in place to prioritize those who are most in need. For example, in the case of Sovaldi, there are guidelines developed by experts in the field of infectious disease to identify and treat members with early complications from Hepatitis C.
In addition, partnering with pharmacists to ensure that any and all questions are answered before the medication is started and that the treatment plan is carefully followed. As you can imagine, stopping treatment with Sovaldi because of a misunderstanding is a terrible waste of this resource.
Another important component in the prescription for cost reduction is to have a policy discussion that will lead to sensible pricing of these specialty medications — a discussion that allows for a reasonable return on the cost of developing a drug and recognizes that the public has supported much of the basic science and some of the early support for pharmaceutical companies through research grants from the National Institutes of Health. Gilead, the company that developed and currently owns the right to manufacture Sovaldi, had a profit margin of 87 percent in the last quarter. In comparison, Maine hospitals have recently been operating with margins between 2 and 4 percent.
There are a great many organizations that are committed to ongoing self-examination that can reduce the rising costs in health care. The health care industry needs to continue this process of scrutiny with an eye toward adding value to the services that we provide.
Health care in the U.S. has been a significant and growing sector of the economy, both in New England and for the country as a whole, but as the cost of health care has risen significantly in the past 20 years it creates a drag on the rest of the economy.
Avoiding the self-examination and the needed policy changes may result in a health care system so heavy with cost that it will not only negatively impact the economy, it will no longer adequately serve those in need for whom it was truly designed.
Dr. John Yindra, M.D., is chief medical officer for Community Health Options. Yindra also practices family medicine part time at the DFD Russell Medical Center’s Monmouth location.
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