OBJECTIVES

The introduction of highly effective, but expensive, specialty drugs has raised questions about factors influencing payer coverage decisions. We evaluated the association of specialty drugs’ upfront costs, cost-effectiveness, and other characteristics with the restrictiveness of U.S. private payer coverage.

METHODS

Based on the Tufts Medical Center Specialty Drug Evidence and Coverage Database, we identified 1,066 coverage determinations for 91 drug-indication pairs across 17 largest of the US commercial payers. We constructed a binary dependent variable as “more restrictive coverage than the drug’s FDA label? (yes/no),” and categorized possible explanatory factors as follows: (1) drug-level characteristics (e.g. time in the market, available alternatives, safety warnings, orphan drugs); (2) indication-level characteristics (e.g. chronic disease, continuous treatment); and (3) value (e.g. cost-effectiveness, upfront costs, incremental upfront costs). In statistical analyses, we developed multi-level random-effect logistic regression models to account for the correlation across coverage decisions.

RESULTS

The following characteristics were significantly associated with increased odds of more restrictive coverage: (1) additional alternatives (adjusted odds ratio, OR: 1.20, 95% confidence interval, 1.15-1.26) ; (2) safety warnings (OR: 3.81, 2.64-5.40); (3) chronic disease (OR: 5.82, 2.15-15.8); (4) having a treatment duration exceeding one year (OR: 1.56, 1.05-2.31); and (5) cost-effectiveness between zero and $50,000 per quality-adjusted life year saved, relative to the cost-saving comparator (OR: 2.22, 1.43-3.45). Orphan drug status was associated with less restrictive coverage (OR: 0.39, 0.27-0.57). After adjusting for other characteristics, both upfront cost and additional upfront cost were not significant predictors of restrictive coverage.

CONCLUSIONS

Our model suggests that high upfront cost is not a significant contributor in explaining restrictiveness of specialty drug coverage. However, specialty drugs targeted a chronic disease – a proxy for measuring the timing of benefits – have the greatest impact on the restrictiveness of coverage.