Unit price growth is driving spending increases but utilization growth plays a strong role for certain therapies. This can be a conflict of interest. Specialty Pharmacy Drug List January 2021 This list represents brand-name products in CAPS and generic products in lowercase italics. These strategies are meaningful actions for companies to stay ahead of their pharmacy costs. Taming the Trend: Managing Costs of Specialty Pharmaceuticals for Insurers. This statistic shows oncology spending in the global market by region, in 2010, 2015, and gives a forecast for 2020. Employers Focus on High-Cost Claims, Drug Spending into 2020 Employers will seek to address high-cost claims by looking into new cost control … The American Journal of Pharmacy Benefits. Copay Assistance – Recent guidance from CMS allows plans to exclude copay assistance dollars from a member’s deductible and/or out of pocket maximum. 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. At Abarca, we very deliberately take the fourth quarter of the year to assess what we have learned and find new, better ways to apply it. 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. As specialty drugs grow in importance, they’re also becoming harder to obtain. Focused analyses were conducted for specialty drugs, biosimilars, and diabetes medications. Factors that may influence drug spending in hospitals and clinics in 2020 were reviewed, including new drug approvals, patent expirations, and potential new policies or legislation. Sign up to receive monthly emails covering trends, solutions and industry updates affecting your self-funded healthcare plan. Between 2020 and 2027, retail drug spending under private health plans is projected to increase at an annual rate of 3% to 6%; besides the slow growth of the US biosimilar market, the report cited new costly therapies, mainly specialty drugs, as well as a drop-off in the impact of lower-cost generics. The market estimated to grow from $336 billion in 2018 to a predicted $475 billion to $505 billion by 2023 … This list is not an all-inclusive specialty drug list. … Read on to learn about five best practices that can help companies manage their medication costs. With the pipeline of new medications on the rise, and the introduction of gene therapies, it’s important for organizations to take a step back and review strategies that may help them control the utilization and spend of high-cost medications. Jeff Lagasse, Associate Editor. Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through 2027. 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. But it is also a time for thinking ahead and thinking anew. For more guidance on planning or evaluating your pharmacy benefit management strategy, contact a member of our team today. Work with payers and employers to mitigate spending growth on administered drugs, most of which are high-priced specialty drugs, by delivering those therapies in the safest, lowest cost setting. The ever-expanding pipeline of specialty drugs will drive drug spending in 2020 and beyond. Supplemental indications on existing specialty therapies has led to an increase in use, as well as an aging population of baby boomers contributing to the increased use or volume of specialty drugs being prescribed. The lines are close to intersecting in the Medicare population. 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. 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 … 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. Specialty spending increase since 2011. Insight provided by Bryan Klazinga, VP of Pharmacy Benefits. The growth of the pipeline has led to increases in insurance carriers’ specialty plan spend. INTRODUCTION AND GUIDE TO THE 2020 REPORT U.S. drug channels experienced an eventful 2019. 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. Having a trusted pharmacy benefit manager (PBM) can give you confidence that your investment is being managed properly. To complement that broader ranking, we present below our exclusive list of the top 15 pharmacies based on specialty drug dispensing revenues. Specialty drugs are expected to represent almost 50 percent of total prescription drug spending in 2020. Preparing for 2020 Specialty Drug Spend. Click here if you can’t see the video below. All products on this list require prior authorization for coverage and quantity limits may apply. 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. Specialty drugs or specialty pharmaceuticals are a recent designation of pharmaceuticals that are classified as high-cost, high complexity and/or high touch. 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. Are there other medications in the same class? However, some of these options may not be as viable. For most of us, the end of the year is a time of reflection. Specifically, specialty drugs accounted for 38% of retail and mail-order prescription spending in 2017, compared to 20% in 2010. The specialty drug tsunami is picking up strength and is about to come crashing down on health care plans through 2020. 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%. 50%. Volume by 2020. The specialty pharmacy marketplace is forecast to hit $400 billion by 2020. In just a few years, 1-2% of your population could account for 50% of your pharmacy spend1. annual spending on specialty drugs could reach $400 billion by 2020.3 Clearly, the use of and spend on specialty drugs in the United States appears to be on a fast track with little expectation of slowing down. This includes new payment models, improved coordination and adherence programs, and higher utilization of data analytic capabilities. What prior authorization criteria should be established? Payors spend almost the same amount on specialty drugs administered under the medical benefit. Companies can help mitigate this issue by working with an independent party that can manage the prior authorization process for them. Specialty drugs expenses tend to cost more than nonspecialty drug expenses. 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 drug prices will continue to rise. 8 In 2011, spending on specialty drugs rose 16.3 percent. Temporary Exclusion of Certain Specialty Drugs – There are many questions that are unanswered when a new drug comes to market. Is the medication safe? In 2020, spend will nearly double and specialty will represent half of all drug spend. Specialty drug price inflation for 2020 is predicted to be 23 percent. This is driven mostly by increases in spending in two areas: hormones and synthetic substances and immunosuppressants. Of course, the benefits of specialty medicines for patients are significant and should not be understated. The largest driver of this growth will be the launch of new branded drugs. Quantitative analysis reveals that prescription drug spending (retail and physician-administered, including mail order and specialty) already surpasses inpatient spending in the commercial population. Specialty drugs are often biologics —"drugs derived from living cells" that are injectable or infused (although some are oral medications). Specialty and cancer drugs will continue to drive expenditures. 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. These are all questions that need to be answered before a plan sponsor pays for a high-cost medication. There are several other strategies that companies are looking into to help control their specialty medication costs. Hard decisions about the benefit design will need to be made to sustain the benefit long term. Expert panelists review the causes, diagnostic work-up, management, and emerging therapies inherent in the evolving paradigm of irritable bowel syndrome. In 2006 and 2007, manufacturers increased specialty drug prices 7.9 percent and 8.7 percent, respectively. 1 $500b. Specialty drugs are chemically more complex and are referred to as biologics because they are derived from living organisms or their products, such as a human or animal protein, hormone or antitoxin. As new therapies in specialty segments get approval, health plans and providers will be adopting new strategies for controlling costs. of total drug costs are specialty. Specialty medications could account for 50% of the U.S. drug spend in 2020. Health systems, including inpatient and non-acute environments, can expect a 4.57% increase in pharmaceutical spend for 2020. Specialty drug price inflation is predicted to be 4.23 percent in 2020. Specialty Biosimilar Pipeline $62 Billion Biosimilar Market 2020 – 2024. In 2017, per capita prescription drug spending slightly decreased (down 0.3%) for the first time since 2012. 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. Estimates suggest that it could quadruple by 2020, reaching about $400 billion, or 9.1 percent of national health spending. Specialty and high-cost medications continue to dominate the news. * 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. After that, two more brands are expected to gain FDA approval, driving unit cost trend up in 2022 as utilization steadily increases. Manufacturers are placing more new products in limited distribution to control costs and gather data on use, compliance and adverse events. Drilling down, spending … Specialty drugs may account for up to 40% of employer spend by 2020. Source 1: https://www.pharmacytimes.com/news/something-has-to-give-balancing-specialty-drug-cost-with-value. 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. 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. 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. Strategies such as requiring prior authorization for all drugs that cost over $1,000, exclusion of non-essential drugs, step therapy, 90-day retail, smaller network and balanced copay design should be considered. Conclusion. These national … In looking at the approvals by the FDA for January 2019 through mid-December 2019, 42 new drugs were approved with an estimated two-thirds related to specialty conditions or specialty distribution channels. Learn our five best practices that help companies manage their medication costs. 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. Several new drugs that will likely influence spending are expected to be approved in 2020. Health plan sponsors are rightly concerned about the possibility that their medical costs could skyrocket if a few of their members started treatment. Spending after State Specialty-Drug Out-of-Pocket Caps Treatments for diseases such as hepatitis C and rheumatoid arthritis are effective but expensive. © 2021 Healthgram Inc. All Rights Reserved. The industry is confronting a diverse set of business, political, and legal challenges, some of which have persisted for years: • Total prescription dispensing revenues of retail, mail, long-term care, and specialty pharmacies reached a record $446 billion in 2019. 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. 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. Will authorized alternatives disrupt the trend? The pipeline of specialty medications continues to grow. /news/taming-the-trend-managing-costs-of--specialty-pharmaceuticals-for-insurers, Copyright Specialty Pharmacy Times 2006-2019, 2 Clarke Drive Suite 100 Cranbury, NJ 08512 P:609-716-7777 F:609-716-9038, report from the Center for Drug Evaluation and Research.