For traditional generic drugs, the current pharmaceutical pipeline is drying up. In an article we published last November, we referenced that 65% of all new drug launches would be specialty drugs by the end of 2023. This is important as new generic drug conversion opportunities will diminish over the next few years.
How does this impact Workers’ Compensation payers? The cost for treatment may rise with the prevalence of Specialty drugs and fewer available generic alternatives.
This article reviews the definition of generic drugs, reasons why patients may not be prescribed a generic drug, and how the rise of specialty drugs and their lower-cost clinical equivalents is something for workers’ compensation payers to monitor.
Generic Drug Overview
The U.S. Food and Drug Administration (FDA) is responsible for approving safe, effective, high-quality drugs and monitors those drugs once they are on the market. Once the FDA approves a generic drug as interchangeable with its brand-name equivalent, the generic drug may be substituted for the brand-name drug. And, according to the FDA, more than nine out of ten of all prescriptions filled in the United States are for generic drugs.
Why Branded Drugs May Be Prescribed Even If a Generic Alternative Exists
Even when a generic drug is available, that does not always mean a doctor will prescribe one. There are a few legitimate reasons why a patient has to take a brand drug in this day and age:
- The patient may have an allergy to a component of the generic (usually one of the inactive ingredients).
- The physician may have a bias for a particular name brand.
- The patient may have a misconception about the difference between the brand and its generic equivalent medication. In fact, due to the 5-10-fold price difference, many patients taking brand-name medications may stop taking essential medications due to price.
Rise Of Specialty Drugs, Biosimilar Alternatives & Pricing Impact
Specialty drugs (also known as biologics) are different from conventional chemical drugs in several ways. They are much more complex because they are made from living organisms or their components, such as proteins, sugars, DNA, cells, or tissues.
Biosimilars are the lower-cost clinically equivalent versions of Specialty drugs and are made from the same living sources, administered the same way, have the same strength and dosage, and most importantly have a highly similar clinical profile with NO clinically meaningful differences in safety, purity, and potency. Biosimilars will have a similar or greater economic impact on future pharmacy costs as Specialty drug introductions escalate.
It is important to note that biosimilars are not the same as biologics but are highly similar to the original brand version. Biosimilars are also approved by the FDA for safety and effectiveness, but they may have minor differences in their composition or manufacturing process when compared to the original biologic. Prescribers and patients should have no concerns as the FDA performs rigorous evaluation and testing before approval.
As stated above, Specialty drugs are starting to take the forefront as generic drug opportunities are diminishing, and they come with an extremely high price tag. These biologics have patent protection and switching to a lower-cost biosimilar may not happen for some time. However, there will be concerted efforts to approve lower-cost medications by looking for an appropriate biosimilar, which is something workers’ compensation payers should monitor.
In the article last November, we discussed Specialty drugs and how expensive they are in today’s market. The highest revenue Specialty drug on today’s market is Humira, an anti-inflammatory drug approved for Rheumatoid arthritis, Plaque psoriasis, Crohn’s disease, and Ulcerative colitis plus other related conditions. The average cost of Humira is around $6,000-$7,000 per month. However, at least nine Humira biosimilars are entering the market with some priced at almost 80% less per month. This will be one of the first tests for branded Specialty drugs, and cost savings will be huge as providers and insurers become more comfortable with biosimilar coverage and prescribing.
What does this mean for Workers’ Compensation payers?
One bit of good news for workers’ compensation payers is that typical industry claims do not necessitate the need for Specialty drugs. Many or most Specialty drugs are prescribed for comorbidities that exist pre- or post-the workers’ compensation claim, but those conditions may complicate or exacerbate the patient’s recovery or treatment. So, this is why it will be critical to assign a knowledgeable nurse case manager to these types of cases and make sure all health care providers – workers’ compensation related or not – are informed about the treatment recommendations.
Here are some critical and highly effective strategies a payer can easily implement as it relates to Specialty drugs and the changing healthcare landscape.
- Avoid rubber-stamping high-dollar medications without understanding why that medication is being prescribed and how the anticipated outcome affects the overall quality of medical care.
- Have a reliable clinical partner who can provide input rapidly without contributing to the fragmentation of ongoing medical care.
- Double-check to see if there is a biosimilar approved by the FDA that can mitigate the brand name list price.
- Finally, develop a continuous feedback loop to monitor holistic outcomes for the injured worker and avoid polypharmacy approaches that over-medicate without measurable benefits.