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

SAN DIEGO, April 2, 2013 /PRNewswire/ -- Health insurers should use both medical and pharmacy data to forecast specialty drug costs which are predicted to rise to 50 percent of commercially insured total drug costs by 2018, according to a new study by pharmacy benefit manager Prime Therapeutics (Prime). The study will be presented today at the Academy of Managed Care Pharmacy (AMCP)'s 25th Annual Meeting & Expo in San Diego.

The study found that in 2009, specialty drugs those that require special handling, are typically injected, and are more expensive than traditional drugs represented 20 percent of all drug (medical and pharmacy benefit) costs. In addition, by September 2012, specialty drugs increased to 28.7 percent of the total costs. Based on average increases in recent years, researchers predict specialty costs will increase 15 percent per year, while non-specialty costs will remain flat. As a result, specialty costs are expected to make up 50 percent of the overall drug costs by 2018, for commercially insured individuals.

Patrick Gleason, PharmD, FCCP, BCPS, director of health outcomes at Prime, explains, "The increasing rate of specialty drugs expenses is due to increased non-specialty generic drug use; expected continued pharmaceutical manufacturer, annual, double-digit price increases; increasing specialty drug use and future pipeline of new specialty drugs."

"Specialty drugs offer life-saving treatments for patients, but they also come with a high price tag," added Gleason. "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. The rise in use combined with the high cost of these drugs will become an increasing strain on health care budgets over the next five years.

To identify monthly drug specialty and non-specialty costs and forecast when specialty drugs will become 50 percent 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.

"In just five years, we expect specialty drugs to account for half of all drug spending," said Gleason. "This could become an alarming number for health plans and plan sponsors who haven't actively prepared to manage this significant area. 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."

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