A look at specialty pharmacy dynamics

Specialty drugs remain the fastest-growing area of pharmacy spend, accounting for nearly half of total drug spend. Specialty spend could reach $310 billion across the pharmacy and medical benefit by 2030. Specialty drug trend, a measure of the growth in cost and utilization, remains a critical challenge for clients across our pharmacy benefit management book of business. Careful management strategies are key to effectively control costs for this incredibly important area of pharmacy spend. In 2019, by deploying proven formulary and utilization management strategies, we were able to keep specialty drug trend in the single digits — at 9.3 percent.

Here are some key insights from the 2019 Drug Trend Report and highlights of how we are helping clients stay ahead of the curve while ensuring access to critical specialty drugs for members.

What's Driving Specialty Spend?

While we were able to blunt the impact of drug price inflation in specialty by keeping unit price growth in check despite price inflation, utilization grew 7.7 percent accounting for 80 percent of specialty trend in 2019. We expect that utilization will continue to grow with a robust pipeline of new specialty medications and existing medications obtaining expanded indications to treat additional conditions thus increasing the patient population. In 2019, 32 of the 54 novel agents approved by the U.S. Food and Drug Administration (FDA) and 80 of the 135 expanded indications were for specialty medications. Looking ahead, specialty medications account for 75 percent of the approximately 7,000 prescription drugs currently in development, and nearly twothirds of the 600 drugs expected to win FDA approval by 2022 are specialty medications.

Clients who adopted our most advanced and focused specialtyformulary in this category — called our Advanced Control Specialty Formulary — had a negative price growth of -9.4 percent in 2019.

Our data last year show the impact of cost containment tools for payors. Clients who adopted two or more specialty management programs — such as formulary or utilization management strategies — had significantly lower trend and saw average savings of 8 percent for managed categories.

The autoimmune category, with treatments for conditions like rheumatoid arthritis, psoriasis and Crohn’s disease, accounted for one-third of total specialty pharmacy spending in 2019. Clients who adopted our most advanced and focused specialty formulary in this category — called our Advanced Control Specialty Formulary — had a negative price growth of -9.4 percent in 2019. Currently, the category faces little generic or biosimilar competition, and without careful management, payors risk sharp utilization and cost increases.

Eye Toward the Future

We are closely monitoring trends in specialty pharmacy and innovating to help our clients stay ahead of the curve while ensuring that patients can access clinically appropriate new therapies – that may, in some cases represent a cure. Gene therapies, some of the highest cost specialty medications, have begun to come to market and will require innovative solutions to mitigate their impact. Price tags for currently approved gene therapies range from $475,000 for Kymriah to treat acute lymphoblastic leukemia, to approximately $2 million for Zolgensma, a pediatric treatment for spinal muscular atrophy.^1,2 While most of these treatments will be covered under the medical benefit, they will be a significant cost consideration for payors. We are helping clients anticipate and manage the impact of a significant one-time cost for covering just one or a few employees with our recently launched financial protection solutions.

Our priority is to maximize generic use to ensure access to treatments and contain costs for clients and members.

In addition, biosimilars and specialty generics will play an increasingly important role in specialty management. The FDA has approved a total of 26 biosimilars, of which 17 products have launched, and there are many more in the pipeline.³ As more biosimilars come to market and increase competition within the therapeutic category, there will be greater opportunity for significant payor savings. We also encourage the use of specialty generics to lower costs for both members and payors by taking advantage of competition within therapeutic categories. Our generic substitution rate is higher than many other specialty pharmacies for generic versions of medications for therapeutic classes like multiple sclerosis and oral oncologics used for certain cancers. As prevalence of these types of complex specialty conditions grows, our priority is continuing to maximize generic use to ensure access to important treatments and help contain costs for our clients and members.

In 2019, oncology represented:

• 8.7% of our clients' total pharmacy spend
• >18% of their overall specialty pharmacy spend

Oncology is another category we are closely monitoring. In 2019, oncology represented 8.7 percent of our clients’ total pharmacy spend and more than 18 percent of their overall specialty pharmacy spend. Last year, we launched Transform Oncology Care to help improve the oncology member and physician experience by making it easier for providers to access the latest clinical guidelines, and empowering evidence-based decision making. The program aims to enhance quality of care and outcomes, while helping lower the overall cost of treating this complex condition.

Member Engagement and Cost

Access to clinically appropriate medications and care for members with complex, chronic conditions requiring specialty medications is paramount. Research shows that faster access to the right therapies, along with additional support, can help improve member outcomes while reducing payor and member costs associated with avoidable hospitalizations or complications. Our strategies leverage technology to help members get started on their prescriptions quickly and provide personal support to help them stay on their medications.

Rising health care costs remain a challenge for payors and members, and we remain focused on designing pharmacy benefit solutions to help our clients lower costs and help members afford their medications. Our annual drug trend report provides clients key insights to help understand marketplace trends and pharmaceutical spending from year to year and identify opportunities for innovation in the future.

All data CVS Health, Enterprise Analytics, 2020 unless otherwise noted.

Pipeline Services projections, data 2020 through 2023, as of May 11, 2020.

Savings will vary based upon a variety of factors including things such as plan design, demographics and programs implemented by the plan.

This document contains references to brand-name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Health.

Image source: Licensed from Getty Images, 2020.