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Specialty Drugs — Issues And Challenges

by Federal Affairs

July 8, 2015

Key Takeaways

27 of 51Specialty drug approvals by the FDA exceeded traditional drug approvals for the first time in 2010—a trend that has continued each year since. In 2014, 27 of the 51 drugs approved by the FDA were specialty drugs.

 

6% increaseThe Centers for Medicare & Medicaid Services (CMS) projects sustained increases in drug spending of 6% or more annually from 2015 to 2022, as both drug prices and utilization increase.

 

product hoppingAnti-competitive strategies used by some drug manufacturers, such as “evergreening” and “product hopping,” restrict access to less costly, high-value generics and therapeutic alternatives.

 

Innovative strategies with a brilliant light bulbHealth plans have developed a number of innovative strategies to address unsustainable increases in the prices of specialty drugs.

 

Background

Spending on specialty drugs represents an increasing share of U.S. prescription drug spending and is growing at a rapid and unsustainable rate. Addressing these cost trends is critical to ensuring a sustainable health care system and achieving affordability for businesses and consumers. In 2014, U.S. spending on prescription drugs totaled nearly $379 billion—almost a third of which was spent on specialty drugs.

Specialty drugs—which are generally understood to be drugs that are structurally complex and often require special handling or delivery mechanisms—are typically priced much higher than traditional drugs. While some of these drugs have been groundbreaking in the treatment of cancer, rheumatoid arthritis, multiple sclerosis, and other chronic conditions, the cost of treating a patient with specialty drugs can exceed tens of thousands of dollars a year. The treatment regimen for some of the most expensive specialty drugs can cost $750,000 per year. Compounding the financial impact of these drugs is the changing demographics of those who use them. Historically these drugs have targeted diseases affecting very small populations—sometimes as few as a thousand individuals nationally. But over time and with breakthroughs in the understanding of disease and clinical pathways, these drugs are now used to treat chronic conditions affecting tens of millions of patients.