Specialty medicines are now 53% of spending, up from 27% in 2010 and driven by growth in autoimmune and oncology therapies.
The specialty drug industry is poised for continued and accelerated growth. More than 40 drugs in the specialty pipeline are expected to be FDA-approved within the next 10 months to 12 months, according to AllianceRx Walgreens Prime.
All indicators suggest a continued rise in specialty product as evidenced by the rich pipeline, Tracey James, R.Ph., senior vice president, pharmacy services, said by email. “When you factor biosimilars and gene and cell therapies into the mix, the industry is poised for continued and accelerated growth.”
Like all medications – including oncology therapies and biosimilars – gene and cell products require a lot of money to develop and test. “With such a significant expenditure in research for each disease, combined with a limited number of patients per disease, a large price tag is often necessary for manufacturers to receive return on investment,” James said.
For example, already approved gene and cell therapies average between $400,000 and $850,000, with one product priced just over $2 million dollars. “Despite the high costs, manufacturers argue the upfront cost is worth the long-term savings in many cases,” she said.
Specialty medicines are now 53% of spending, up from 27% in 2010 and driven by growth in autoimmune and oncology therapies, according to IQVIA Institute for Human Data Science. Immunology, oncology and neurology will be the main sources of growth through 2025, IQVIA predicts. Oncology spending will exceed $110 billion by 2025, up from $72 billion in 2020 and continuing at a slower growth rate due to the impact of biosimilars and new drug launches increasingly focused on rare cancers. Immunology will exceed $130 billion in the United States by 2025, with growth slowing after 2023.
IQVIA’s report find that the largest proportion of new medicines launched in the past five years has been specialty drugs, and specialty spending per person has doubled from $285 in 2010 to $572 in 2020. Specialty medicines treat relatively few patients and have costs far higher per patient than traditional medicines.
Growth in specialty drug spend can be attributed to an increase in product offering, more advanced research and development, and smaller, more targeted populations in need of such drugs, James said. “Additionally, these medications often require special handling or physician administration, complicating distribution channels and increasing costs.”
Overall, the average amount that patients pay for out-of-pocket costs for prescriptions has dropped, according to IQVIA. But 8% of patients have annual out-of-pocket costs more than $500 in commercial plans and 1.8% pay more than $1,500 out-of-pocket for prescriptions. In Medicare, 17% of patients pay more than $500 out of pocket, and 4% pay more than $1,500 out of pocket.
James said both formulary status and plan benefit design influence a patient's out-of-pocket costs. AllianceRx Walgreens Prime helps patients connect with copayment assistance programs. The company has invested in tools and technology to help connect qualified patients with resources that help patients start and stay on therapy.
"We recently launched a new financial navigation technology platform that identifies patients with financial risk and automatically connects them with personalized financial assistance resources, when necessary," James said. "This includes manufacturer assistance programs and national foundations, and also provides access to local charitable foundations and government programs.”