Managed Care - March 2008 - (Page B14) Chapter 2 Perspectives on the Value of Biologics This chapter defines biologics, presents an overview of drug spending trends in the United States, and looks at tools for assessing the value of health care. It concludes with a discussion of the treatment of rheumatoid arthritis, which commonly affects the working-age population, as a model for applying value judgments to a biologic therapy. To get to greater efficiency in health care, we will need a more serious commitment to funding research on appropriate care and on the evaluation of medical technologies, and we will need to adopt health care practices that promote value. — ALAN GARBER, MD, PhD, Health Affairs, 2007 Biologics are drugs made from living organisms and genetically engineered to produce specific therapeutics. A biologic is defined in various ways, depending on who is using the term. As a group, biologics often are referred to as biopharmaceuticals, targeted therapies, specialty pharmaceuticals,1 and high-cost, high-maintenance drugs. A good working definition of biologics is drugs made from living organisms and genetically engineered to produce specific therapeutics. The majority of these drugs are injected or infused, although some oral forms have been developed. In contrast, conventional or traditional prescription drugs are produced through chemical synthesis, and most are taken orally. The Centers for Medicare & Medicaid Services defines specialty drugs as those that regularly cost $500 or more for a 30-day supply (CMS 2006). Biologics on the market today are designed to manage cancers, rare diseases such as Gaucher disease, and a handful of hard-to-treat chronic conditions, such as intestinal disorders, psoriasis, multiple sclerosis, and rheumatoid arthritis (RA). Biologics also are being developed for common chronic conditions, such as diabetes and heart disease. Biologics are distributed by specialty pharmacies, because they are time sensitive or need special handling, such as refrigeration or freezing, and thus require a different distribution channel. The costs involved in providing these drugs to patients, the high costs that patients themselves must incur, and questions about the efficacy of these products have raised critical issues about the value of biologics. 1 The term specialty pharmaceuticals often is used interchangeably with biologics, but specialty drugs also include nonbiologic products with high costs or that require special handling. U.S. health care spending As a percentage of GDP, U.S. health expenditures have increased dramatically since 1960 and are projected to continue to increase. Annual health care spending reached $2.2 trillion in 2007, or 16.3 percent of GDP, and is expected to grow at an annual rate of 6.7 percent during the next decade, reaching $4.3 trillion by 2017 — when it will account for 19.5 percent of GDP (Keehan 2008). With the exception of a span of 3 years (1992–1994), every year from 1978 through 2003 produced double-digit increases in prescription drug spending (Catlin 2008). Although annual increases since then have fallen back to the singledigit range, drug spending is poised again to become one of the fastest-growing components of U.S. health care spending. Already, the seeds for this trend have sprouted; the implementation of Medicare Part D, new indications for existing drugs, and the increased use of specialty drugs combined to accelerate drug expenditure growth dramatically in 2006 — up 8.5 percent, compared with a 5.8 percent growth rate in 2005 (Catlin 2008). Over the next decade, drug spending 14 BIOLOGIC THERAPY MANAGEMENT
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