Restrictive Regulations Put Specialty Drug Patients at Risk: NCPA Study

DALLAS, May 22, 2014 /PRNewswire-USNewswire/ -- Many states have enacted drug regulations that force health plans to allow unqualified drug providers to administer specialty drug therapies, according to a new report from Devon Herrick, senior fellow at the National Center for Policy Analysis (NCPA).

"Nearly half of states have regulations that restrict the ability of drug plans to partner with exclusive pharmacy networks, putting patients' health and wallets at risk," says Herrick.  

Americans spend about $300 billion on prescription drug therapies annually. Although specialty drugs constitute only about 1 percent of prescriptions, they are responsible for one-fourth of prescription drug spending. Advanced drug therapies, or specialty drugs, are high-tech, costly drugs that often require special handling, and stocking them requires a full set of protocols and documentation. The costs of these drugs can be enormous. An annual drug cost of $15,000-$100,000 is not unusual.  Generally, these drugs treat life-threatening diseases, and they typically require monitoring.

• Cancer-treating drugs are the most common type of specialty drugs, making up one-third of total specialty drug spending.
• Drugs for autoimmune disorders, rheumatoid arthritis, and Crohn's disease constitute 15 percent of specialty drug spending, medications for HIV account for 12 percent of specialty spending, and drugs for multiple sclerosis are responsible for 8 percent of specialty drug spending.

Specialty drugs often have more exacting distribution and safety measures than traditional drugs. As a result, specialty pharmacies differ from traditional pharmacies in key ways.

• Because specialty drugs are often fragile, stocking and dispensing them requires sophisticated planning and complex distribution channels, and patients who take the drugs must often be monitored.
• According to a recent survey, two-thirds of physicians agreed that "some" traditional pharmacies are competent to handle and dispense specialty medications, while three-fourths agreed that "most" pharmacies do not possess the expertise to manage complex drugs.

"Most pharmacies are not equipped to dispense these innovative therapies," says Herrick. "That's not just my opinion, but also the opinion of a majority of physicians surveyed." The restrictions proposed by state and federal lawmakers would have detrimental effects on the safety, security, and prices of specialty drugs.

• While supporters claim these regulations would benefit consumers, they weaken the ability of drug plans to negotiate for lower prices and they impede their ability to manage prescription drug benefits safely and efficiently. 
• Without the ability to establish preferred networks, drug plans cannot always ensure the integrity of their networks. Currently, specialty drug makers meticulously track shipments to prevent counterfeit drugs from entering the market. Increasing the number of entities to reimburse raises the likelihood that firms might cut corners or issue counterfeit drugs without detection.
• Because specialty drugs are so costly, unethical medical and drug providers might ignore warning signs that a discounted product is suspect in order to boost their profit margin.
• Counterfeit drugs are a growing problem. Half of all drug expenditures worldwide are made by American patients, making the U.S. a lucrative market for counterfeiters.

The use of specialty drugs is increasing rapidly. "By the end of the decade, perhaps half of drug spending will be on these costly drugs," predicts Herrick. As demand for these products increases, drug plans should be given the freedom to ensure that their products are distributed by qualified providers.

"Patients benefit when their health plan has the flexibility to demand quality in the care provided, and services are negotiated in an environment free from government interference," says Herrick. "Policymakers should authorize a process of competitive bidding among drug plan stakeholders in an atmosphere free of perverse regulations."

Full text: Specialty Drugs and Pharmacies: http://www.ncpa.org/pdfs/st355

The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. We bring together the best and brightest minds to tackle the country's most difficult public policy problems — in health care, taxes, retirement, education, energy and the environment. Visit our website today for more information.

SOURCE National Center for Policy Analysis