How Do We Pay for Specialty Pharmacy?

Specialty medications should not be defined by their cost and should instead be defined by their efficacy.

Specialty pharmacy has been at the forefront of the pharmacy world for the past few years. Innovative new therapies are being researched and developed every day.

Some of the disease states that are often treated by specialty medications include different types of cancers, multiple sclerosis, rheumatoid arthritis, and HIV. These therapies are life changing, but is are the cost. This puts the pharmacy benefit managers (PBMs), plan sponsors, and patients in a tough position financially speaking.

Specialty pharmacy has grown at a rapid pace over the past decade. With research and development improving, as well as new disease states being discovered, there is no shortage of need for specialty medications and for good reason.

These medications prolong life and allow the patient to enjoy a semi-normal lifestyle and go to work. Let’s examine Humira, for example, with 2 injections per month able to help a patient with rheumatoid arthritis. It allows patients to complete their daily activities again, such as walking without pain, cooking, or cutting the grass, for example. I’d say that’s worth it.

What are specialty medications?

This is one of the problems regarding specialty pharmacy. There is a lack of a true definition, and when you open something like this up for interpretation, it creates grey areas. Many plan sponsors would categorize specialty medicine as high cost drugs; however, although that is often true, it is not an accurate way to describe them.

To me, specialty medications are biologics or a medication that requires extreme special handling. Biologics are made from living organisms or contain components of living organisms. The special handling can be using personal protective equipment or specific temperature requirements.

Administration of the specialty medications is crucial and must be done the right way. These medications are often thought of as injectables. Although most of them are injectable or infused, they can also be oral or inhaled.

Are there generic specialty medications?

In short, yes, however, there are not a lot of generic specialty medications. And to add on to that, the newer approved branded medications often push aside the older medications, as they are more refined and have fewer adverse effects. However, there is another alternative in biosimilars.

Biosimilars are not technically generics, they are a highly similar alternative to the biological medication. Unlike generics, biosimilars are a brand name medication themselves and would require a new prescription to be dispensed because they are not interchangeable with a specialty medication.

They’re expensive, but how expensive?

According to multiple recent studies, specialty medications account for 50% of all drug spend. In 2019, that number was roughly $500 billion, which means that specialty medications cost approximately $250 billion. Just a few years ago specialty spend was roughly 25% of all drug spend. These numbers are growing fast and don’t seem to be slowing down any time soon.

How do we drive down cost?

In a word: Competition. As stated earlier, biosimilars are still brand name medications and can also be quite expensive. When there are more medications on the market, manufacturers will have to reduce costs to remain competitive.

Within the drug pipeline, more high-cost specialty medications will be coming soon. There are hundreds in clinical trials and quite a few awaiting approvals as new disease states are discovered and need treatments.

Do PBMs have an answer?

I don’t know if they have an answer, but they have a few different options.

They could:

  • Create or add specialty tiers to the formulary
  • Create just a specialty copay
  • Increase deductibles
  • Increase member cost shares
  • Implement utilization management programs

The prices of these medications put a strain on both the patient and the PBM. Therefore, finding a way to balance the cost share is a huge part of the industry right now. The members are in need of help, but so are the PBMs.

Conclusion

Since working at a specialty pharmacy, I have been able to speak with some of these patients. One question that I always ask is “Do you feel like your medication is helping you?”

When I hear a yes on the other end of the phone, it assures me that I am in the right field of pharmacy. They often tell me how grateful they are that we are here for them. This can only brighten up your day and make you smile.

Specialty medications should not be defined by their cost and should instead be defined by their efficacy. While I understand that price is a big factor, we cannot deny patients the treatment that they need and that works for them. Specialty medications will continue to be at the forefront of every pharmacy conversation for the near future.

About the Author

Ryan Fitzmaurice earned his Doctor of Pharmacy degree from Lake Erie College of Osteopathic Medicine (LECOM) School of Pharmacy and earned his Masters of Pharmacy Business Administration (MPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines. He has spent the past several years working across the industry including retail pharmacy management, specialty pharmacy, and 340B pharmacy.