There are several other strategies that companies are looking into to help control their specialty medication costs. However, some of these options may not be as viable. Specialty drugs are often biologics —"drugs derived from living cells" that are injectable or infused (although some are oral medications). In 2020, spend will nearly double and specialty will represent half of all drug spend. Manufacturers are placing more new products in limited distribution to control costs and gather data on use, compliance and adverse events. The lines are close to intersecting in the Medicare population. These are all questions that need to be answered before a plan sponsor pays for a high-cost medication. The base case outlook in the next five years forecasts that net medicine spending in the United States will increase from $344 billion in 2018 to $420 billion in 2023, an aggregate growth of $76 billion and lower than the $84 billion growth seen over the past five years. Independent Prior Authorization Review – In many cases, the PBM that manages the prior authorization, not only owns the pharmacy dispensing the product, but also maintains the relationship with the manufacturer who often has a say in the review criteria. This can be a conflict of interest. Unit price growth is driving spending increases but utilization growth plays a strong role for certain therapies. Preparing for 2020 Specialty Drug Spend. of total drug costs are specialty. Multiple sclerosis: During 2020, top drugs such as Gilenya ® (fingolimod), Tecfidera ® (dimethyl fumarate) and Ocrevus ® (ocrelizumab) will face competition, causing declines in unit cost that could spill over into 2021. Managed Benefit Design – The first strategy that must be employed in order to pay for life saving cures is that plan sponsors must have the rest of their benefits tightly managed. … Specialty and high-cost medications continue to dominate the news. Specialty drugs more than doubled as a share of retail fills for the overall U.S. population between 2010 and 2017, according to a study using various sources and published in Health Affairs, growing from 1% to 2.3%. In Drug Channels Institute's list of the top 15 pharmacies of 2019, we show that many of the largest U.S. pharmacies are now central-fill mail and specialty pharmacies operated by PBMs and insurers. Sign up to receive monthly emails covering trends, solutions and industry updates affecting your self-funded healthcare plan. As specialty drugs grow in importance, they’re also becoming harder to obtain. Volume by 2020. Spending after State Specialty-Drug Out-of-Pocket Caps Treatments for diseases such as hepatitis C and rheumatoid arthritis are effective but expensive. Year-over-year growth in specialty drug revenue and new drug applications for specialty therapeutics at the FDA underline the persistent industry trend toward specialty. Copay Assistance – Recent guidance from CMS allows plans to exclude copay assistance dollars from a member’s deductible and/or out of pocket maximum. This statistic shows oncology spending in the global market by region, in 2010, 2015, and gives a forecast for 2020. In 2017, per capita prescription drug spending slightly decreased (down 0.3%) for the first time since 2012. Drug price forecast projects 4.5 percent increase in hospital drug spending for 2020 Pharmaceutical costs are already a large share of most health organizations' budgets and this year's inflation rate may increase drug budgets. Of course, the benefits of specialty medicines for patients are significant and should not be understated. The American Journal of Pharmacy Benefits. These strategies are meaningful actions for companies to stay ahead of their pharmacy costs. This includes new payment models, improved coordination and adherence programs, and higher utilization of data analytic capabilities. 1 Specialty drugs may account for up to 40% of employer spend by 2020. Here are a few other approaches that some organizations may be looking into: High-dollar specialty drugs can take a big hit to a company’s bottom line. Specialty spending increase since 2011. Read on to learn about five best practices that can help companies manage their medication costs. This is driven mostly by increases in spending in two areas: hormones and synthetic substances and immunosuppressants. In 2020, nine of the ten best-selling drugs by revenue will be specialty drugs, compared with three drugs in 2010, and seven in 2014.9 TOP SPECIALTY DRUG THERAPIES RANKED BY PERCENT OF SPECIALTY SPENDING10 Drug name Therapy class Percent of specialty spending Method of administration Humira® (adalimumab) Inflammatory conditions 11.9% Injection Enbrel® (etanercept) Inflammatory … In a recent IQVIA report it was pointed out that while specialty medicines were only 2.2% of prescription volume it is projected that by the end of 2020 specialty medications will account for nearly 50% of the nation’s drug spending. * Drugs that are injected or infused in a medical setting (such as a doctor’s office or outpatient hospital facility) are customarily billed under the medical benefit. Payors spend almost the same amount on specialty drugs administered under the medical benefit. All products on this list require prior authorization for coverage and quantity limits may apply. The growth of the pipeline has led to increases in insurance carriers’ specialty plan spend. Expert panelists review the causes, diagnostic work-up, management, and emerging therapies inherent in the evolving paradigm of irritable bowel syndrome. Health systems, including inpatient and non-acute environments, can expect a 4.57% increase in pharmaceutical spend for 2020. Companies can help mitigate this issue by working with an independent party that can manage the prior authorization process for them. What prior authorization criteria should be established? Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through 2027. Drilling down, spending … During the COVID-19 pandemic, this could mean moving treatments completely out of the inpatient setting to an outpatient clinic, physician’s office or even the patient’s home. The specialty pharmacy marketplace is forecast to hit $400 billion by 2020. The specialty drug tsunami is picking up strength and is about to come crashing down on health care plans through 2020. Several new drugs that will likely influence spending are expected to be approved in 2020. Organizations can design their plans in a way that works with their PBM to ensure copay assistance is not accumulated towards the member’s out of pocket. Are there other medications in the same class? The largest driver of this growth will be the launch of new branded drugs. In 2015, pharmaceutical spending grew 8.1% on a per capita basis and in 2014 these costs had grown 11.5%, particularly because new specialty drugs came to market. These national … Specifically, specialty drugs accounted for 38% of retail and mail-order prescription spending in 2017, compared to 20% in 2010. For most of us, the end of the year is a time of reflection. Is the medication safe? © 2021 Healthgram Inc. All Rights Reserved. Coinsurance on Specialty Medications – In order to maximize assistance without significantly impacting the member, companies could look to provide 20% coinsurance with no maximum for specialty brand medications. As new therapies in specialty segments get approval, health plans and providers will be adopting new strategies for controlling costs. Taming the Trend: Managing Costs of Specialty Pharmaceuticals for Insurers. For 2020 we expect overall prescription drug spending to rise by 4.0% to 6.0%, whereas in clinics and hospitals we anticipate increases of 9.0% to 11.0% and 2.0% to 4.0%, respectively, compared to 2019. Since specialty drugs don’t typically face competition from generics or even from other specialty drugs in certain instances, manufacturers have not hesitated to raise prices annually. For more guidance on planning or evaluating your pharmacy benefit management strategy, contact a member of our team today. The role of specialty drugs in the pharmacy industry; Our latest data on specialty pharmacy accreditation; Commentary on PBM’s role in the specialty industry; The data are drawn from our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. After that, two more brands are expected to gain FDA approval, driving unit cost trend up in 2022 as utilization steadily increases. 50%. Jeff Lagasse, Associate Editor. Quantitative analysis reveals that prescription drug spending (retail and physician-administered, including mail order and specialty) already surpasses inpatient spending in the commercial population. The more self-insured organizations know about strategically designing their plan benefits and specialty drug requirements, the better they will be able to maintain prescription drug benefits for their members. 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