Specialty Pharmacy Spending Continues to Grow

Annual specialty drug spending found to be 17% higher per member in the individual market compared with the employer market.

A report by Blue Cross Blue Shield (BCSBS) analyzed the growth in specialty drug costs from 2013 to 2014 through a sample size of about 70.5 million BCBS members per year.

The analysis revealed a 26% increase in the annual spending of specialty pharmacy from 2013 to 2014. The increased costs of specialty drug treatments, including the price and selection of drugs, were found to be the main drivers of spending growth.

Annual specialty drug spending was found to be 17% higher per member in the individual market compared with the employer market in 2014. The main difference between these markets was the utilization rates by condition, which was higher for individual members in viral infections, cancer, and hepatitis treatments.

This did not include multiple sclerosis or inflammatory conditions. The study authors said that in order for specialty drugs to remain sustainable, they must be affordable to consumers.

The report included 15 of the most expensive or common specialty drug categories, which account for more than 80% of total specialty pharmacy costs.

Drugs used to treat cancer, inflammatory conditions, multiple sclerosis, hepatitis, and HIV are the 5 highest costing drug categories. The 10 other drug categories represented smaller contributions to overall expenditures and were grouped in the “other” category.

When the categories were broken down, the study revealed that about $14.6 billion was spent on specialty pharmacy drugs for the top 15 categories in 2013, about two-thirds of which treat multiple sclerosis, cancer, and inflammatory conditions. For 2014, the total spending increased 26% to $18.4 billion.

Although spending increased in each of the drug categories, hepatitis C specifically rose 612%, and as a result of the introduction of new drugs, there was a $29 annual increase per member.

Currently, the increase in spend is occurring faster in specialty drugs covered by insurance under the pharmacy benefit compared with the medical benefit. This is a result of 2 trends, including the number of oral and self-injectable specialty medication increasing as a result of technology advancements and the “pharmatization” of specialty drugs.

Pharmatization refers to health plans shifting existing medications billed through the medical benefit over to the pharmacy benefit in order to improve medication management.

With the approval of sofosbuvir (Sovaldi) and ledipasvir/sofosbuvir (Harvoni), hepatitis C had the most dramatic cost increase of more than 400% from 2013 to 2014. However, other hepatitis treatment costs had similar drug increases for multiple sclerosis and inflammatory conditions (14% and 15% increase, respectively).

For multiple sclerosis, the drug cost increase was driven by uniform double-digit increases in price for top volume drugs and the approval of dimethyl fumarate (Tecfidera) in 2013. For inflammatory diseases, the increase was mainly because of higher prices for existing drugs.

Although the increased spending for specialty pharmacy rose nationally between 2013 and 2014, some regions had higher annual per member cost increases than others. Researchers found that the Southern United States, in particular, had the greatest annual per member cost increase, despite having some of the lowest specialty pharmacy costs in 2013.

In the future, biosimilar drugs could help cut costs, but new proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitors could end up increasing costs for insured members, the report concluded.