The IMS Institute for Healthcare Informatics has reported spending on specialty pharmaceuticals almost doubled from 2010 to 2015, and spending on this subset of drugs was responsible for 70% of overall drug spending growth during this timeframe.
In 2015, spending on these medications reached $150 billion, a more than 20% increase from 2014. It is anticipated drug spending will continue to increase  and specialty drug sales will reach $402 billion – 47% of prescription drug spending – by 2020.
As growth of these specialty medications continues to climb, strategies employed to control spending are of paramount importance.
Defining Specialty Drugs
Specialty medications can be small molecules or complex biologics. In general, these medications treat complicated, potentially life-threatening conditions such as cancer, hepatitis, nervous system or blood disorders, and autoimmune conditions. Specialty drugs may also be used to treat more common chronic disease states such as asthma or rheumatoid arthritis.
General characteristics of a specialty drug include: a limited distribution network, close patient monitoring, requirements for special handling, a high cost per unit or treatment course, and/or use only in a unique patient population. For 2017, the Centers for Medicare & Medicaid Services (CMS) define a specialty medication as a drug which costs more than $670 per month.
National Pharmaceutical Services (NPS) defines a specialty medication on the basis of having two or more specific attributes as described in the box to the right. Despite variations in the definition of a specialty drug, there is a general consensus regarding which medications are in the specialty category.
Specialty Drug Trends
In 1990, only 10 FDA-approved drugs were considered to be specialty medications. By 2012, there were almost 300 specialty medications.
In 2011 specialty drug spending accounted for 24% – $77.5 billion – of prescription drugs sold in the U.S., and in 2012 spending increased to 39% – $87 billion.
Sales and spending on specialty drugs are predicted to continue to rise in the foreseeable future, and specialty drug sales are anticipated to reach $192 billion by 2016.
New specialty drug approvals and increasing costs per unit of specialty drugs are both contributing to rising specialty spending.
- Each year since 2010, more than half of new drug approvals by the FDA have been specialty medications.
- In 2015, the blockbuster drugs Humira® (adalimumab) and Enbrel® (etanercept) demonstrated more than a 17% increase in the cost per unit, and the brand-name cancer drug Gleevec® (imatinib) exhibited a 19% cost increase.