Q&A: Ultra-High-Cost Drugs Highlight Complex US Health Care System

For a very small and rare proportion of the US population, treatments for rare diseases that cost upwards of $1 million have become an increasingly significant issue within health care because of their egregious costs but continued patient reliance. Highlighting a challenge between payers, patients, and providers to distribute and access rare medications, these drugs have since been defined by the American Society of Health-System Pharmacists (ASHP) as “ultra-high-cost drugs.”

“With the health care system that we have in the United States, with mostly commercial payers—but also [the] government being one of our largest payers—we end up in a situation where the payers decide if they're going to cover a specific, very, very high-cost treatment or not. In some cases, there are other treatments for these disease states as well. So that makes that coverage decision that much more difficult,” said Erin Fox, PharmD, MHA, BCPS, FASHP.

Fox helped co-author a section of the ASHP 2025 Pharmacy Forecast—an annual report detailing opportunities and challenges pharmacy leaders may face in their profession in the near future. She joined Drug Topics to discuss her section of the report, titled “Managing Ultra-High-Cost Drugs,” and the complexities within US health care that allow these costs to persist.

Fox joined Drug Topics to discuss the complexities within US health care that allow ultra-high-cost drugs to persist. | image credit: Adisorn / stock.adobe.com

Stay tuned for more Drug Topics interviews regarding the 2025 Pharmacy Forecast. As we meet with authors and industry leaders that contributed to the report, we will discuss some of its main sections.

READ MORE: Q&A: The Importance of ASHP’s 2025 Pharmacy Forecast

Drug Topics: To begin your section of the report, you mention the ultra-high costs of gene and cell therapies because of their rare use within the market, accounting for just 0.8% of total pharmaceutical spending. Can you further explain why these drugs are so expensive and why payers have such a hard time accessing them?

Erin Fox: When you think about a very rare disease and all of the work and effort that goes into making a treatment for that, when only a few people will actually ever need that treatment, we don't have the economies of scale that we get with other drug development. At the end of the day, these treatments end up being very high cost.

Then, with the health care system that we have in the United States, with mostly commercial payers—but also government being one of our largest payers—we kind of end up in a situation where the payers decide if they're going to cover a specific, very, very high-cost treatment or not. In some cases, there are other treatments for these disease states as well. So that makes that coverage decision that much more difficult.

Drug Topics: According to the report, one of the key issues leading to ultra-high-cost drugs is the absence of a sustainable payment model. Can you tell us what an improved payment model might look like? How would that model differ from previous structures that have contributed to higher-cost drugs?

Erin Fox: Right now, many people switch insurance plans every year, in some cases. You have that open enrollment period, and then you can switch your payer. If you're on the payer side, you want to know that, if you're going to cover say a $3 million therapy that's going to last perhaps even a lifetime, that you want that patient to stay with you in your health plan. But we don't have any guarantees like that. I think we need to think of a different model for paying for these products that kind of gives a little bit of risk to all of the different parties. We have hospitals who would have to pay for the actual product.

We might get value-based contracts between a payer and a manufacturer where, let's say the patient doesn't get the full benefit of the treatment, then perhaps the manufacturer gives a rebate back to the payer. But what's forgotten in that value-based contracting step is what happens to the hospital that actually paid the $3 million in the first place and did all the work to administer the product to the patient. We need to make sure that we're including health systems in these value-based contracts that could provide a little bit more sustainability for these ultra-high-cost drugs.

Drug Topics: What is ethical allocation and how can it be utilized to benefit patients in need of ultra-high-cost drugs?

Erin Fox: [It’s] such a tricky subject because I think, with the health care system that we have in the US, I'm not sure that we actually even have ethically available care. Not everybody has access to care. So, we're already dealing with an unethical situation where we have ‘haves’ and ‘have nots.’ But really, it's going to come down to, if you want to access one of these high-cost treatments, it really will depend on your insurance. Some people have more choices than other people.

And of course, folks that have more assets than others are going to have more opportunities to access these products as well, even things like having the resources available to maybe go to a different state that offers that treatment, or a different city, stay in a hotel, and all of those extra resources that add costs. Not every patient can afford that. I think it's really tricky to think about how we truly make sure that, of a group of 10 people who all could truly benefit from an ultra-high-cost drug, how do you decide if all 10 can access it, or how do you decide which patients are left behind?

READ MORE: Q&A: Identifying, Addressing Gaps in Primary Care

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Reference

Pharmacy Forecast. American Society of Health-System Pharmacists Foundation. December 9, 2024. Accessed January 17, 2025. https://www.ashpfoundation.org/research/pharmacy-forecast