From Lab to Liver: Understanding the Complexities of the Pharmaceutical Industry

Physicians are the sole decision makers in selecting appropriate medications for patients. This is a common misconception. In actuality, choice of therapy is determined by a collaboration between many sources, including pharmacists, physician assistants, nurses, and even patients.

 

What goes on behind the scenes before a patient gets a medication?

The process of how a new medication gets to a patient is complex because it integrates many players. Below is an example of this journey.

  1. A pharmaceutical manufacturer (eg. Pfizer) develops a new medication (Lyrica).

  2. The medication is sold to a wholesaler (McKesson), that distributes it to several pharmacies (CVS, Walgreens).

  3. The pharmacy is paid for the product by receiving money from 1) the patient, and/or 2) the Pharmacy Benefit Manager (PBM). A PBM (Express Scripts) is a middleman that negotiates pricing and develops formularies for a Third-Party Payer/Health Insurance Company (Cigna).

  4. The PBM pays the pharmacy for the product, but also receives money, called rebates, directly from the manufacturer. These rebates help lower costs, and get medications onto a formulary.

  5. If a prescriber writes a prescription for a medication that is not approved by the Payer, the prescriber may be required to communicate with a pharmacist before moving forward.

In the end, a managed care pharmacist employed by a PBM/Payer can utilize a formulary to act as a stop-gate and ensure that a patient is prescribed the most appropriate medication based on cost and therapeutic outcome. 

 

Why does it matter which medication a physician prescribes?

Formularies restrict prescribers by reducing the number of choices when selecting a medication for a patient. Though it may seem like an inconvenience, these restrictions are put in place to ensure that patients receive optimal therapy using evidence-based medicine.

Even if a medication is approved for an indication, managed care pharmacists aim to identify the niche population within the indication that would see the most benefit from the medication. It is inappropriate to use a new medication in a patient for which the benefits have not been shown to outweigh the risks when compared to an older, more studied, less expensive alternative.

 Photo by  rawpixel  on  Unsplash

Photo by rawpixel on Unsplash

Managed care pharmacists are in charge of assessing the information provided by a manufacturer and establishing prescribing standards. It takes upwards of six months after a new medication approval to conduct the necessary cost/benefit analyses and prospective budgeting to accommodate new medications into the healthcare system. As new specialty medications are becoming more expensive, this process will become more difficult and time-consuming.

 

Why are medications so expensive?

On average, it takes $2.5 billion and 15 years to bring a new medication to market, and the success rate for a medication to get through the development process is approximately 6.2%. Once a medication is discovered, the manufacturer files for a 20-year patent. Certain factors can increase this number, but the medication spends a majority of its patent life in development. After the patent life expires, generic alternatives enter the market, and the manufacturer finds it more difficult to earn back the money that was invested to develop the product.

There are many reasons that manufacturers need a return on their investment. It is a driving force for innovation. Also, many companies have a portfolio of medications that are in development, and the ability to bring new life-saving medications to market in the near future is dependent upon how the company is performing in the present.

 

How can we improve patient access to medications?

While managed care pharmacy is always focused on improving the future, proper planning in the present will help manage the volatile and exciting pipeline of expensive specialty medications. H.R. 2026, the Pharmaceutical Information Exchange (PIE) act, is a bill in Congress that aims to increase pre-approval information exchange between manufacturers and managed care pharmacists. This will ultimately reduce the time it takes for patients to gain access to medications. Managed care pharmacists who are armed with clinical and economic information can allocate funds in advance and make better decisions, allowing prescribers to select medications that maximize value.

 

References:

  1. DiMasi JA, Grabowski HG, Hansen RA. Innovation in the pharmaceutical industry: new estimates of R&D costs. Journal of Health Economics 2016;47:20-33.

  2. Biotechnology Innovation Organization. Probability of success for new drugs in the U.S. by development phase between 2006 and 2015, by drug classification. Statista. Accessed Mar 2018. Web.

  3. U.S. Food and Drug Administration. Frequently asked questions on patents and exclusivity. Updated Feb 2018. Web.

  4. Cantrell SA. New drugs, but slow access - here’s how to speed breakthroughs to patients. The Hill. Jan 2018. Web.

 

 Soham Shukla, Pharm.D. Candidate 2019, is the immediate past president of the Rutgers Academy of Managed Care Pharmacy. He also serves on the AMCP National Student Pharmacist Committee, and was an intern in the AMCP Foundation/Pfizer Managed Care Internship program in 2017.

Soham Shukla, Pharm.D. Candidate 2019, is the immediate past president of the Rutgers Academy of Managed Care Pharmacy. He also serves on the AMCP National Student Pharmacist Committee, and was an intern in the AMCP Foundation/Pfizer Managed Care Internship program in 2017.

 Sumie Kakehi, Pharm.D. Candidate 2020, serves as the Vice President of Rutgers Academy of Managed Care Pharmacy, and was an intern in the AMCP Foundation/Pfizer Managed Care Internship program in 2018 She is also a sister of Lambda Kappa Sigma, a professional pharmacy sorority.

Sumie Kakehi, Pharm.D. Candidate 2020, serves as the Vice President of Rutgers Academy of Managed Care Pharmacy, and was an intern in the AMCP Foundation/Pfizer Managed Care Internship program in 2018 She is also a sister of Lambda Kappa Sigma, a professional pharmacy sorority.

 Nihal Narsipur, Pharm.D. Candidate 2019, serves on the Rutgers Academy of Managed Care Pharmacy Board of Directors, and is interested in pursuing a career in the pharmaceutical industry upon graduation.

Nihal Narsipur, Pharm.D. Candidate 2019, serves on the Rutgers Academy of Managed Care Pharmacy Board of Directors, and is interested in pursuing a career in the pharmaceutical industry upon graduation.

 Jane Yi, Pharm.D. Candidate 2020, serves as President of Rutgers Academy of Managed Care Pharmacy.

Jane Yi, Pharm.D. Candidate 2020, serves as President of Rutgers Academy of Managed Care Pharmacy.