Issue Brief: Specialty Drugs—Issues and Challenges
February 2014

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Overview

Contents

Prescription Drug Cost Trends 

The Centers for Medicare & Medicaid Services (CMS) estimates that prescription drug spending was approximately 9.4 percent ($263.3 billion) of all health care spending in 2012, growing only 0.4 percent from 2011... it projects sustained increases in drug spending from 2015-2022 of six percent or more annually as both drug prices and utilization increase.

The Prescription Drug Market 

...increased FDA approvals for specialty drugs, near-monopoly pricing, and the growing need for effective treatments—experts project that “spending on specialty drugs is expected to skyrocket over the next decade and beyond” and “intensifying the cost and access trade-offs that payers and purchasers already face.”

Health Plan Efforts to Manage Specialty Drug Spending While Assuring Access to High Quality Care 

  • Integration of Pharmacy and Medical Benefits
  • Policies to Maximize Treatment Adherence
  • Growing Role of Specialty Pharmacies
  • Utilization and Pharmacy Management.

Policy Options to Promote High-Quality, Cost-Effective Drug Coverage 

  • Encouraging alternative payments and incentive structures—such as coverage with evidence development—for new drugs and technologies.
  • Shortening the exclusivity period for generic biologics—to promote greater price competition and earlier access to lower-cost specialty drugs or bio-similars.
  • Remove barriers at the state level that restrict the use of biosimilars.
  • View full report to see more policy options. 

U.S. Spending on Prescription Drugs, 2012

U.S. Spending on Prescription Drugs, 2012 

The treatment regimen for some of the most expensive specialty drugs can cost $750,000 per year. 

 
  • Components of Commercial Trend, 2012Components of Commercial Trend, 2012
  • Selected Conditions, Top Medical Conditions and Specialty Drugs, 2010Selected Conditions, Top Medical Conditions and Specialty Drugs, 2010
  • FDA Traditional and Specialty Drug Approvals, 2005-2012FDA Traditional and Specialty Drug Approvals, 2005-2012