Insurers Limit Coverage Of Some High-Cost 'Specialty Drugs'

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Health insurers "are pushing back" against the high cost of new "specialty drugs" by limiting coverage of the drugs "to only the disease for which they are specifically approved by [FDA] -- or for which there is extensive evidence of efficacy in clinical trials, the Wall Street Journal reports. Insurance officials say specialty drugs, which can cost thousands of dollars, that are used to "treat relatively small groups of people ... comprise one of the fastest-growing parts of health spending," according to the Journal.

Spending on specialty drugs increased by 21% last year and accounted for nearly one-quarter of total drug spending in the U.S., according to New Jersey consulting firm Health Strategies Group. Meanwhile, an emphasis on using generic medications held spending increases for other drugs at 6% last year, according to pharmacy benefit manager Express Scripts.

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The Journal reports that insurers "have little leverage in negotiating the prices of many specialty drugs because they often extend lives and lack competition." In addition, doctors -- particularly oncologists -- rely on using medications off-label to try to treat patients for whom other medications have failed. However, while insurers "almost always are required" to pay for FDA-approved "lifesaving drugs," the companies have "leeway when a medication isn't specifically approved" for a disease, the Journal reports.

Insurers maintain that they must limit use of the highest-cost drugs to control health care costs, which continue to outpace inflation. Mohit Ghose, spokesperson for America's Health Insurance Plans, said, "We're trying to bring new drugs to consumers, but trying to do it with employers getting the best value of every health care dollar spent in the system."

However, James Vredenburgh, an oncologist at Duke University School of Medicine, said, "A lot of patients are being denied potentially effective therapies," adding, "What's happening is totally arbitrary, and it's 100% correlated to when the prices went up. Ten years ago, we never got questioned on our medical decision to prescribe the medicine with the best chance of helping our patients" (Anand, Wall Street Journal, 9/18).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Weekly Health Disparities Report, search the archives. The Kaiser Weekly Health Disparities Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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