Specialty drugs will account for 50% of all drug costs by 2018

Health insurers should use both medical and pharmacy data to forecast specialty drug costs, which are predicted to rise to 50% of commercially insured total drug costs by 2018, according to a new study presented at the Academy of Managed Care Pharmacy’s 25th Annual Meeting & Expo in San Diego, in April.

The study, by pharmacy benefit manager Prime Therapeutics (Prime), found that in 2009, specialty drugs-those that require special handling, are typically injected, and are more expensive than traditional drugs-represented 20% of all drug (medical and pharmacy benefit) costs. Three years later, specialty drugs increased to 28.7% of total drug costs. Based on average increases in recent years, researchers predict specialty costs will increase 15% per year, while non-specialty costs will remain flat. As a result, specialty costs are expected to make up 50% of the overall drug costs by 2018, for commercially insured individuals.

“Specialty drugs offer life-saving treatments for patients, but they also come with a high price tag,” said Patrick Gleason, PharmD, FCCP, BCPS, director of health outcomes at Prime. “In the years ahead, health insurers and plan sponsors will need to increase their focus on managing specialty drugs to ensure the most cost-effective outcomes for their members.”

Although specialty drugs have historically been associated with rare medical conditions, they are being used more frequently for the treatment of more common chronic conditions such as rheumatoid arthritis and multiple sclerosis. Other factors behind the rise in specialty drug expenses include: Increased non-specialty generic drug use, annual double-digit price increases from pharmaceutical manufacturers, increasing specialty drug use and a robust pipeline of new specialty drugs.

To identify monthly drug specialty and nonspecialty costs and forecast when specialty drugs will become 50% of all drug expenditures, researchers from Prime reviewed integrated pharmacy and medical data from 6.8 million commercial members between January 2009 and September 2012.

The rise in use combined with the high cost of these drugs will become an increasing strain on healthcare budgets over the next 5 years.

“This could be alarming for health plans and plan sponsors who haven’t actively prepared to manage this significant area,” Dr Gleason said. “Health insurers will need to increase their attention on specialty drugs and focus on four management opportunities: drug distribution channel, utilization management, contracting activities, and coordination of care.”