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The Pulse of the Pharmaceutical Industry

QuintilesIMS white paper: Large benefit for small numbers

Written by: | | Dated: Tuesday, August 1st, 2017


QuintilesIMS on the impact that specialty drugs have had on the healthcare marketplace

This is an excerpt from the QuintilesIMS white paper “Specialty brands: The pharmaceutical industry’s salvation, or impediments to future innovation?”

The white paper can be downloaded at


The good news … is that innovation is addressing diseases with high-unmet need such as oncology, autoimmune diseases, and central nervous system (CNS) disorders. But, there is a complicating factor in the economic story: the patient population benefiting from launch brands is becoming smaller. In 2007, on average, approximately 180,000 patients were exposed to a launch brand. That number has decreased year over year ever since. By 2015, only 40,000 patients on average were being exposed to launch brands. This has created the perfect health-economic storm for payers whose budgets are taking the hit. They are now paying four times the cost for products that benefit one quarter of the patients. This leaves them with less in their budgets to cover the lion’s share of their insured population.

Payers have two tools in their arsenal to address this economic challenge. Either they can negotiate with pharmaceutical companies for deeper rebates, or they can aggressively manage patient access to launch brands … they have been using both tactics heavily.

… (I)n recent years, payers have been successful in getting steeper price concessions from manufacturers. Consequently, the industry’s net price growth slowed sharply in just three years – from 9.1 percent in 2012 to 2.8 percent in 2015 …

Payers can limit patient access to expensive launch brands in two ways: they can decrease formulary coverage and/or increase the patient’s co-pay. To measure the impact of decreasing formulary coverage, we can track the percentage of prescriptions presented to pharmacists that insurers reject due to lack of coverage … (W)ithin commercial plans, pharmacy rejection rates have soared from 12 percent in 2010 to 33 percent in 2015.

Similarly, we should be able to quantify the impact of co-pay increases by examining prescription abandonment at the pharmacy. Recently, average co-pays in commercial plans for newly launched products increased by 20 percent from 2014 to 2015. So, one would expect abandonment rates to also increase. Yet, they’ve remained fairly stable from 2010 to 2015. Why? By triangulating this information with insight into the growing use of co-pay assistance programs, we arrive at the probable answer: the industry’s efforts to help patients with out-of-pocket costs has offset the effect of the co-pay increases imposed by insurers. The average final co-pay that patients paid rose only 14 percent from 2014 to 2015, while co-pay offset costs grew more than 32 percent. Thus, launch teams are being hit by a one-two punch. They are granting deeper rebates to payers and paying out more in patient-support programs …

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