In 2024, the U.S. pharmaceutical market size was estimated at $634 billion, and by 2030, it is expected to grow to nearly $884 billion.1 What is driving the increase in cost? How does this industry keep growing?
Twenty to thirty years ago, the focus of pharmaceutical companies was creating new and novel medication therapies to treat existing conditions such as hypertension, pain, high cholesterol, and diabetes. Between 1987 and 2011, the Food and Drug Administration approved between 3 and 15 new drugs each year. Then, the business of new drug approvals began to take off with approval number reaching 59 in 2018, 53 in 2020, and 37 in 2022 and 55 in 2023.2
Much of this growth can be attributed to the increasing geriatric population and the rising numbers of chronic diseases including cancer, behavioral health conditions, pain management and cardiac conditions that are managed in group health and increasingly in workers’ comp claims as part of an injured worker’s total health.
A Twist on Big Pharma
The pharmaceutical companies aren’t stopping there. Over the last decade, they began expanding their portfolio of products beyond novel medications by creating 'boutique' drugs.
Different from specialty medications, which treat complex or rare conditions and may require special handling, storage, or administration, and are often dispensed through a specialty pharmacy.
Different from compounded medications, which are mixed by a pharmacist for a specific patient's needs.
‘Boutique’ drugs take traditional big pharma medications and give them a twist.
- Combining two existing drugs (hello, Duexis)
- Launching a new strength of an existing drug (ibuprofen 300 mg)
- Delivering an existing drug a new way (meloxicam 15 mg tablets vs. 10 mg capsules)
With no additional clinical or therapeutic value, you have to wonder if these medications – and their high costs – are necessary.
The Challenge of Boutique Drugs
In workers’ compensation, one of the challenges of the boutique drugs is that state formularies rarely address medications at the strength level. This often means that 'boutique' medications are allowed by state formularies and, consequently, approved by payers without a clinical review − even when lower cost, equally effective medications are readily available.
“As a pharmacy benefit manager, our goal is to make sure that every injured worker gets the right medication at the right time for the right duration. And we try to do this at an appropriate cost for our clients,” stressed Julie Black, Senior Clinical Account Executive for MyMatrixx by Evernorth. “These boutique drugs may be deceiving as, technically, they do check a few of those boxes. But you have to look closer at the therapeutic value of the prescribed drug and what alternatives are available at a more reasonable cost,” Black continued.
Taking action is essential
MyMatrixx keeps a close eye on the ever-expanding list of FDA-approved drugs, including the boutique drugs, and we have processes throughout the claim lifecycle to educate stakeholders on their use and find ways to recommend alternatives.
“Boutique drugs are ending up on state formularies due to their broad nature, and while our formulary management efforts are one of our great benefits, we don’t have the power to remove drugs from a state formulary,” said Black. What we can do, however, is find opportunities to meet with state regulators to educate them on the use of these drugs and discuss their ways to exclude them from state formularies.
Within our book of business, we lean heavily on clinical data, so we can identify when these high-cost medications are hitting our claims. We can use this information to initiate a One Drug Review to analyze the use of the high-cost boutique drug within a claim and recommend a therapeutically equivalent alternative that is appropriate for the patient.
“As the boutique drugs are identified in market, we also take the opportunity to educate our clients about the drugs through bulletins and blog posts, so as claim handlers see them come across their claims, they learn to pause and ask questions before they hit approve,” explained Black.
“Boutique medications are adding thousands of dollars to workers’ compensation claims and causing reserves to increase unnecessarily,” stressed Black. Taking action on these drugs with a clinical review is essential to providing the most appropriate and cost-effective medications to patients.
For more information on MyMatrixx clinical solutions contact sales@mymatrixx.com.
Partner Post:
This is a sponsored post from WorkCompWire marketing partner MyMatrixx by Evernorth.