Report: Specialty drug costs will skyrocket in next two years

Costly treatments for rheumatoid arthritis, multiple sclerosis, cancer, and, especially, hepatitis C are expected to drive unprecedented growth in U.S. spending on specialty drugs in the next two years. Some analysts say that’s not good news for consumers or most pharmacists.

Express Scripts noted in its recently released Drug Trend Report that the 2013 growth in specialty drug spending had reached 14.1%. However, costs associated with specialty drug spending are expected to skyrocket 63% between 2014 and 2016, the report stated.

Less than 1% of all U.S. prescriptions are for specialty medications. However, specialty drug spending makes up 27.7% of the country's total pharmacy spend, the report said.

Much of expected increase in specialty drug spending will be driven by a new hepatitis C therapy that costs $84,000 for a 12-week course of treatment, the report said. As an estimated 3.2 million Americans have hepatitis C, Express Scripts predicts that the United States will spend 1,800% more on hepatitis C medications in 2016 than it did in 2013.

Steve Miller"Never before has a drug [sofosbuvir (Solvaldi, Gilead Sciences)] been priced this high to treat a patient population this large, and the resulting costs will be unsustainable for our country," said Steve Miller, MD, chief medical officer at Express Scripts. "The burden will fall upon individual patients, state and federal governments, and payers who will have to balance access and affordability in a way they never have had to before.

"The current pricing mentality around innovative products is unprecedented and unreasonable," Miller said. "Standing side-by-side with many of the country's largest plan sponsors, we are going to drive toward a pricing environment that is fair for patients, payers, and manufacturers."

A significant advance

The steep cost of sofosbuvir - the costly hepatitis C pill - has spurred Express Scripts and others to cry foul. But Gilead maintains that the cost is justified.

“We believe the price of Sovaldi reflects the value of the medicine. Sovaldi represents a significant therapeutic advance over other available therapies, as it has shortened the duration of treatment to as little as 12 weeks and has reduced or completely eliminated the need for interferon injections, depending on the patient’s genotype,” the company said in a statement. Sofosbuvir is the first FDA-approved drug to treat hepatitis C without interferon, which must be injected and can cause debilitating side effects.

“The cost of the entire HCV regimen of 12 weeks of Sovaldi with interferon and ribavirin is consistent with and in many cases actually less than the cost of the previous protease inhibitor based regimens - with shorter duration of therapy, increased tolerability, and higher efficacy,” the company said.

The company also stated that it has a patient assistance program to ensure that cost does not keep sofosbuvir from patients with high copays or inadequate insurance. 

Sucking out the volume

Stephen W. Schondelmeyer, PharmD, PhD, director, PRIME Institute, College of Pharmacy, University of Minnesota, said the costs of drugs such as sofosbuvir should be a concern to everyone fearful that patients who need such therapies will be priced out. 

Schondelmeyer, who is a member of the Drug Topics editorial board, said that pharmacists and pharmacies should also be concerned about a related trend. “More and more PBMs and insurance companies are requiring specialty drugs to be dispensed through selected pharmacies. As specialty drugs make up more of the total drug spend, they will suck the volume right out of retail.”

Sofosbuvir is by no means the only factor driving up the cost of specialty drugs. According to the Express Scripts’ report:

•   Inflammatory conditions, multiple sclerosis, and cancer accounted for 60% of total specialty spend in 2013. This included brand-price inflation of 15% in 2013.

•   In 2013, the largest percentage increase (39.2%) in specialty drug spending was for drugs to treat central nervous system disorders, including Huntington's disease, narcolepsy, and Parkinson's disease.

•   Diabetes agents constituted the most-expensive drug class in 2013. The report predicts spending on diabetes drugs to have double-digit annual rate increases over the next three years. This is attributed to new medications and price inflation for existing brands.

“We anticipate that specialty trend will increase slightly in 2014 to 16.8%, after which it will rise even higher, closer to 20% by 2016,” the Drug Trend Report said.

“Utilization is likely to increase as indications expand and specialty therapies are prescribed more often. However, [per-member-per-year] spend for specialty medications is likely to be driven primarily by the continued development of expensive, highly targeted therapies and by brand inflation,” the report stated.