A report from CVS Caremark details the ongoing growth of specialty drug spending, both in absolute terms and as a portion of overall pharmaceutical costs. (CVS Caremark Report) Specialty drugs are difficult to categorize; some are viewed as specialty because of route of administration–injection or infused versus oral; and some because of site of administration–in a physician’s office or other outpatient setting. But many specialty drugs are now self-administered. What does tend to group them together is they are larger, more complex molecules and their use often requires not just special attention to administration but monitoring following use. They are usually expensive to develop and a course of treatment is very often thousands, if not tens of thousands of dollars. While they initially were used to treat rarer diseases, now they are very common as cancer agents and for chronic diseases. For the pharmaceutical manufacturers they have been a godsend; as small molecule, oral drug research hit a dry spell and existing ones went generic, revenues were falling dramatically. Specialty drugs are replacing that lost revenue and will be harder to genericize. For payers, these drugs are difficult to manage because some are typically covered under the pharmacy benefit while many are covered by medical benefits because they are administered in a provider setting.
The specialty category currently accounts for 25% of all drug spending and is growing in the 15-25% range, while non-specialty per member spending is actually declining slightly. Specialty drugs dominate new launches, and this trend will accelerate as the FDA has initiated its Breakthrough Therapy designation, which dramatically cuts approval times. Spending on specialty pharmacy is projected to rise from $87 billion in 2012 to over $400 billion in 2020. The report describes various approaches payers are taking to try to control spending in this area and be sure use is appropriate. Obviously, plans are attempting to get price concessions and rebates, as they did with brand names. There is almost universal prior authorization and other utilization management techniques for these drugs. Often a sole supplier is used to provide, administer and monitor use of the drug. But all these efforts are likely to do little to stop the soaring use and cost of these drugs, many of which do provide significant benefits for patients. But patients also are bearing more of the cost through higher copays and coinsurance and for many the expense makes them almost unaffordable.