Intent on finding new tools to help manage the soaring cost of drugs, Aetna has begun setting up a joint venture specialty pharmacy that will concentrate on managing the cost and use of the high-cost pharmaceuticals being prescribed to its chronically ill members. Aetna Specialty Pharmacy is being set up as a joint venture between Aetna and Priority Healthcare, which has considerable experience in the specialty pharmaceutical business from both a management and clinical side. The two companies say they will ready a 45,000-square-foot headquarters for the operation, slated to begin in the third quarter of next year. The companies provided no other financial details. "This venture will create an integrated specialty pharmacy operation that will provide high quality care while seeking to effectively manage the specialty pharmacy expenditures for our membership," says Eric Elliott, vice president and Head of Aetna Pharmacy Management. "Our goal is to enhance Aetna's core pharmacy benefit management competency in a way that benefits our members and employers. A critical component to providing specialty pharmacy care is coordination with physicians; that is a primary focus of this partnership." The new operation will manage the drugs received by patients being treated for a host of chronic maladies, from cancer to cystic fibrosis and multiple sclerosis. Highly targeted medicines that tackle their conditions are a central focus of the biotech community, and some of the drug costs associated with severe illnesses can be extraordinarily high. The cost for Erbitux, which delivers an average of two months of extra life at a cost of $30,000, is one example of the economics at work behind Aetna's decision. "Today it's not as well coordinated as we expect to do it," says Kevin O'Donnell, vice president of business development in Aetna's pharmacy group. "You have folks in Aetna doing specialty management, and vendors doing counseling and so forth. Rather than confusing the patient, this makes it more seamless to the patient and the physician." Clinically, it just makes sense to stay on top of these drugs, says O'Donnell, so that you can improve patient outcomes and avoid adverse reactions or forcing patients to start all over again from scratch. By having a dedicated operation that is in regular contact with doctors and patients, he adds, Aetna can make sure that patients are getting —and taking — the right medicines in the right doses. Aetna — one of the biggest insurers in Middle Tennessee — is also clearly interested in leveraging its huge expenses against the best prices that are available. Aetna alone spends more than a billion dollars a year on specialty drugs. And nationally that figure is growing at a torrid 20 percent to 30 percent a year. "Looking at it from the financial perspective," says O'Donnell, "we negotiate discounts today with the vendors." The new joint venture brings all their leveraging power into in central spot. The joint venture makes good sense for Aetna, says Christian Miles, an analyst with AM Best. The cost of biotech drugs has been rising at a rapid pace, and the partnership gives the big insurer a better handle on negotiating prices and managing their use. And it's likely to be quickly imitated by other insurers. Both Highmark and the Florida Blues plans have outlined a specialty pharma approach of their own in recent years. And other health plans are likely to follow Aetna's lead, especially as some 300 new biotech drugs in the pipeline make their pricey arrival in the marketplace, further driving up costs. "To some extent it is the trend and to some extent we're the trendsetter," says O'Donnell. Whichever, this is one field where Aetna clearly plans to stay in the lead.