The top 5% of health care users based on total expenditures [High Resource Patients (HRP)] account for roughly half of all health care costs. The distribution of health care expenditures for HRP is likely to differ from the overall population. By examining spending patterns of HRP, we can better understand the components of health care expenditures that drive overall spending. We performed a retrospective analysis of managed care enrollees across the full age and care spectrum, by examining health care claims obtained from the IMS LifeLink Health Plan Claims (HPC) Database. A total of 15,587,257 health plan members met our selection criteria, of which 779,364 were classified as HRP. We compared expenditures during CY2011 by place of service (Outpatient, Inpatient, Pharmacy) and payer type (Commercially insured, Medicare Advantage, and Medicaid managed care) between the full population and HRP. Inpatient hospitalization accounted for more direct health care expenditures for HRP (40.0%) than expenditures from pharmacy services (18.1%) or from major outpatient places of service [Ambulatory Surgical Center (ASC) 20.3%, Physician Visits (PV) 4.9%, and Emergency Department (ED) 2.7%]. The share of overall expenditures attributed to inpatient services was higher for HRP compared to the full population (24.6%) while the share of expenditures attributed to pharmacy and outpatient services was reduced (Rx: 21.4%, ASC: 19.7%, PV: 11.7%, ED: 4.5% in the full population). This pattern was observed across payer type. The use of physician-administered pharmaceuticals did not alter this spending pattern. Policy efforts to address health care cost inflation can only succeed if they address HRP, who drive overall health care spending disproportionately. Understanding patterns of spending in this population can help in devising cost reduction strategies. Policy makers should focus on integrated care for HRP, including appropriate use of pharmaceuticals, so as to potentially reduce costly downstream inpatient expenditures.

Novel specialty biopharmaceuticals hold great promise for patients living with complex and chronic conditions. However, high research and development costs, special handling, and other necessary enhancements to patient support programs all contribute to frequently higher prices for these products. This study sought to assess the value of specialty pharmaceuticals through an examination of the clinical, functional, and economic benefits of these treatments for the top three disease areas by pharmaceutical spend: rheumatoid arthritis (RA), multiple sclerosis (MS), and breast cancer (BC). A systematic review of market research and cost-effectiveness articles was conducted for each disease area to assess clinical, functional, and economic outcomes associated with specialty medicine treatments versus the previous standard of care. All RA clinical (ACR) and functional (HAQ) outcome articles were classified as positive. The median cost-effectiveness ratio was $37,000 per QALY. All MS clinical outcome (relapse rate) articles were positive. The MS functional outcome (EDSS) findings were less conclusive. The median cost-effectiveness ratio was $220,000 per QALY. The majority of BC articles yielded statistically inconclusive results for survival. All functional outcome (QLQ-C30) articles were positive. The median cost-effectiveness ratio was $49,000 per QALY. All endpoints reflect a population average treatment response and did not account for the presence of patient heterogeneity of treatment effect. Novel specialty therapies hold great promise for arresting disease progression and improving quality of life for the three conditions associated with the highest specialty pharmaceutical spending. These findings demonstrate a strong value proposition for specialty pharmaceuticals in general, and suggest even greater substantial potential individual patient benefit with consideration of patient heterogeneity.

The use of Comparative Effectiveness Research (CER) is intended to help patients and providers make sound health care and treatment decisions. However, little is known about the impact of CER on financial incentives for medical innovation and, ultimately, the health of future generations. Using a microsimulation approach, we analyze the impacts of potential CER policies on biomedical innovation and population health in the United States and Europe. We selected three clinical scenarios that reflect broad trends for assessing the impacts of CER policies on innovation returns: growth in personalized medicine; increasing demand for head-to-head trials; and changes in size and complexity of trials. We estimated the impact on development costs, revenue, and the timing of returns (lags between development, approval, and reimbursement coverage). These scenario-specific impacts were then generalized to the US and European markets, and a range of estimated effects of CER policies were compiled. We simulated the impact of changes in current innovation incentives on producer output and the health of future populations in year 2060 using the Future Elderly Model (FEM). Under most scenarios, CER policies would have negative impacts on innovation, and lead to substantial reductions in population life expectancy. Population life expectancy was estimated to be reduced by 14.1% (range, 9.0% to 15.6%) by 2060 due to CER policies related to trends in personalized medicine, 4.4% (-8.1% to +5.5%) related to active comparators, and 7.4% (-11.4% to +10.2%) related to increased trial complexity. Only with multiple innovation-friendly assumptions (such as trial cost reductions, relatively high price increases, and large market size growth driven by personalized medicine), do CER policies generate increases in innovation output and corresponding social value. The potential long-run consequences of CER on innovation and future health calls for careful consideration of CER policies that encourage and incentivize innovation.