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The Influence of Specialty Medications on Prescription Drug Spending

November 15, 2016
Posted by: Jamie Zacher, PharmD

Prescription drug spending in the United States in 2015 was estimated to be about $457 billion according to a report from the Department of Health and Human Services.  Specialty drugs account for around 30% of this total.[1] This report also indicates that spending on specialty drugs appears to be rising more rapidly than spending on other drugs.[2] More and more specialty drugs are becoming available each year and this will continue to contribute to the rise in prescription drug spending.

So what exactly is a specialty drug? Specialty drugs are defined as high cost medications that treat complex, chronic conditions, such as cancer, rheumatoid arthritis, HIV, hepatitis, multiple sclerosis, etc. Specialty drugs tend to cost at least $600 per month, some even cost more than $100,000 per year.[3] In addition to the high cost, other characteristics of specialty drugs may include: difficult to administer medications that are prescribed by a specialty physician, manufactured in living systems (biologic), require special handling and/or temperature control, administered through specialized pharmacies, and/or there are few or no alternative treatments for the condition the medication is prescribed to treat.[4]

Looking forward, the specialty drug market continues to grow each year. There are numerous specialty medications currently in clinical trials. Of the new drugs expected to be approved in the United States, at least 60% will be specialty drugs.[5] It is also estimated that by 2020, approximately 9.1% of national health care spending, around $400 billion, will be for specialty drugs alone.   In terms of sales, 7 out of the top 10 drugs will be specialty drugs.[6] This means that by 2020, the amount of money spent on specialty drugs alone will approximate the amount spent for all prescription drugs in 2015.

Although these drugs are expensive, it is important that these medications are available to patients to offer them a new treatment option for their disease when other treatments have failed. The specialty drug market will continue to grow as research continues in new ways to treat patients for years to come and as technology and science evolves.

[1] APSE Issue Brief. Observations on Trends in Prescription Drug Spending. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation; March 8, 2016.

[2] APSE Issue Brief. Observations on Trends in Prescription Drug Spending. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation; March 8, 2016.

[3] Specialty Drugs and Health Care Costs. A fact sheet from the Pew Charitable Trusts; Nov 2015. http://www.pewtrusts.org/~/media/assets/2015/11/specialty-drugs-and-health-care-costs_artfinal.pdf

[4] APSE Issue Brief. Observations on Trends in Prescription Drug Spending. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation; March 8, 2016.

[5] The Growth of Specialty Pharmacy, Current Trends and Future Opportunities. UnitedHealth Center for Health Reform & Modernization; April 2014.

[6] The Growth of Specialty Pharmacy, Current Trends and Future Opportunities. UnitedHealth Center for Health Reform & Modernization; April 2014.

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