According to a National Business Group on Health survey, specialty drugs account for 50 percent of most employers’ prescription drug spending but are prescribed to just 1.5 percent to 2 percent of plan enrollees. What are specialty drugs and how can their costs be contained?
Specialty drugs are expensive medications directed at complex diseases such as cancer or multiple sclerosis. Often containing “biologics” derived from living cells, many specialty drugs are injected by health providers or infused intravenously, while others are taken orally or self-injected. In many cases, the intervention of a health care provider is required to administer the drug and monitor the patient.
Though Medicare defines drugs for which the negotiated price is $670 per month or more per month as specialty drugs, there are other ways of categorizing these unique products. A Pharmaceutical Care Management Association article suggests these common attributes can also be used:
- Prescribed for a person with a complex or chronic medical condition, defined as a physical, behavioral, or developmental condition that may have no known cure, is progressive, and/or is debilitating or fatal if left untreated or under-treated;
- Treats rare or orphan disease indications;
- Requires additional patient education, adherence, and support beyond traditional dispensing activities;
- Is an oral, injectable, inhalable, or infusible drug product;
- Has a high monthly cost;
- Has unique storage or shipment requirements, such as refrigeration; and
- Is not stocked at a majority of retail pharmacies.
The growth of specialty drugs over the last few decades reflects the increasing ability of pharma manufacturers to develop new, complex medications to tackle equally complex conditions. But along with the introduction of products, the country has experienced wild surges in spending on specialty drugs.
According to a December 2017 AARP report, the average annual price of specialty drugs tripled between 2006 and 2015, going from $17,838 to $52,486. A more recent report puts the average annual price of a specialty drug in 2017 at almost $79,000. The authors also noted that “average annual increases in the retail prices of widely used specialty prescription drugs have consistently exceeded the general inflation rate.”
So what is the secret to lowering specialty drug prices?
Some are looking across the US borders for relief. While It is generally illegal to import drugs into the United States, states can request permission to do so from the U.S. Secretary of Health and Human Services. Utah recently voted to allow its Department of Health to purchase drugs from Canada, pending HHS approval and many other states are pursuing similar paths.Other methods currently employed include creating specialty drug tiers, using coinsurance for cost sharing, and imposing prior authorization and/or step therapy.