Drugmakers know that specialty products are where it's at these days. A recent IMS Institute report showed the U.S. drug market shrinking for the first time last year. But spending on specialty drugs posted double-digit increases. Almost 20%, according to a recent Express Scripts report, in fact.
Future prospects look even brighter for pharma's investment in specialty meds, Express Scripts now says. The pharmacy benefits manager, which obviously has a vested interest in this trend, unveiled a forecast of 40% growth in the segment by 2014--and 67% by 2015.
During a presentation at the UBS Global Healthcare Conference, CFO Jeffrey L. Hall attributed the increase to new specialty drug launches, increased use of specialty meds overall, and inflation. "If that wasn't enough, there are ... anywhere between 600 and 1,000 [specialty] drugs in the pipeline," Hall said.
Companies are pumping up their specialty portfolios with brand buyouts and M&A, and by focusing R&D on pricey drugs targeted not at the mass market, but smaller groups of patients. The reasons aren't complicated: Primary care drugs face increasing generic competition, and developing them requires massive clinical trials. Specialty meds are harder to copy, carry bigger price tags and, with FDA incentives and accelerated development timelines, can get to market with smaller trials under their belts.
Hall's company is looking to capitalize on the trend, too, by offering highly specialized pharmacy services through its Accredo unit. Part of that unit's focus is adherence; keeping patients on track with their therapy can prevent hospitalizations and ER visits,making the PBM's payer clients happy.
But there's a catch. Express Scripts' specialty pharmacy also aims to drive down specialty-drug spending. Employers that pushed all specialty scripts through Accredo--and used programs such as prior authorization and step therapy to hold down usage--cut specialty drug cost increases in half, Hall said. On the medical side of specialty-drug dispensing, the PBM and its clients are looking at pushing for higher discounts, steering patients to lower-cost alternatives and excluding certain drugs altogether so they can be supplied and administered via Accredo instead.
Regardless, the growth numbers are persuasive. Drugs for cancer, multiple sclerosis and inflammatory diseases such as rheumatoid arthritis each set to command higher drug spending than any other drug class besides diabetes. Cancer drugs alone are expected to grow by 77.4% over the next three years. Hepatitis C spending--thanks to a host of new-generation therapies--will grow by a whopping 465.8% by 2015. Meanwhile, spending on almost every class of traditional drugs will drop over the same timeframe, with diabetes and ADHD the only growth areas.
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