Specialty drugs have been one of

the bright spots in the pharmaceutical industry, accounting for nearly 30

percent of total pharmacy spend on the commercial side in 2013, despite

accounting for less than 1 percent of all US prescriptions. Spending on

specialty drugs increased 14.1 percent that year, and is expected to increase

another 63 percent by 2016. At the same time, spending on six of the top 10

traditional therapy classes dropped, primarily because of lower unit costs.

Yet state systems and commercial

insurers globally are pushing back against these high-cost drugs. Plans are

designing special formularies for specialty drugs, implementing oncology

pathways to reign in costs, and shifting coverage from the medical benefit to

the pharmacy benefit, which may put greater financial responsibility on

patients. Indeed, 61 percent of commercial plans (75 percent of covered lives),

and 87 percent of Medicare Advantage and prescription drug plans, charged a

co-insurance rather than co-pay for specialty drugs in 2013. In late 2014, state Medicaid directors sent

an eight-page letter to Congress urging "an immediate federal

solution" to the cost of specialty drugs.

Providers are also pushing back.

In April 2013, an international coalition of cancer experts released a call to

action decrying the “astronomical” cost of certain drugs. The letter followed

the actions of oncologists at New York’s Memorial Sloan-Kettering Cancer Center

in 2012 who publically refused to prescribed the drug Zaltrap (ziv-aflibercept)

for colon cancer because it was twice as expensive as similar therapies. Their

outcry eventually led the drug’s manufacturer to slash the price in half.

Now, in 2015, we are entering an era of money-back guarantee as St Jude's Hospital started offering its' patients a money-back guarantee on an implantable cardiac resynchronization device called the Quadra CRT system that it introduced in 2011. St. Jude will refund hospitals 45 percent of the Quadra’s cost if a patient needs corrective surgery within a year.

But, can kind of money-back guarantee apply to drugs as easily? Payers seem to think so.

However, as Dr Koop famously stated 'Drugs don't work in patients that don't take them.'

Patient adherence to all drug categories is notoriously low after 3 months. So, pharma companies now face an even bigger challenge. Not only must the drug work in everyone it is indicated for, but pharma must now take responsibility for patients actually taking their drugs so that this barrier to effectiveness is also overcome.

To combat the risk of significant

revenue loss from these drugs, manufacturers need to determine pricing and

marketing based on more than just recouping research investment and hitting

profit goals. Analytics must include combining efficacy, patient efficacy outcomes, value and patient adherence to determine optimal pricing. The only analytics I can see capable of doing this effectively are artificial intelligence powered pharma analytics.

And I know where to get that. :)