Marketplace Trends Shape Specialty Landscape

The specialty drug marketplace is expanding and evolving, offering hope for members with difficult and even life-threatening conditions. Rising drug costs and a rapidly changing treatment landscape present challenges and opportunities for payors and their members. Understanding the current market forces and specialty pipeline is essential to being able to adapt and proactively manage this complex area.

Over the past decades, more treatments have been classified as specialty drugs.https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2706163/ Despite making up only 2 percent of overall prescriptions, specialty medications now account for more than half of pharmacy spend. Because these drugs often come with high price tags, the active drug pipeline remains a key challenge for payors seeking to balance member access and cost. 

The pipeline is brimming with newly approved specialty drugs, recent launches, new indications and expanded indications, and a few big generic launches.

2022-2024 anticipated robust pipeline:Pipeline Services projections, data 2022 through 2024, as of October 18, 2021. New drug count includes new molecular entities, new biologics, biosimilars, new combinations, new formulations, CAR-T and non CAR-T projections by Pipeline Services

	544 new drugs
	367 new specialty drugs
	237 supplemental specialty indication drugs

Potential launches to keep an eye on:

Growth in price and utilization

Price increases remain a concerning trend, especially for innovative products offering new or more effective treatments. Research shows the average launch price grew from $2,115 in 2008 to $180,000 in 2021 – a 20 percent annual increase.https://jamanetwork.com/journals/jama/article-abstract/2792986 The study also found more than 47 percent of new drugs now cost $150,000 or more a year.

“The trend in prices for new drugs outpaces growth in prices for other health care services,” the researchers wrote in the Journal of the American Medical Association. Moreover, the cost for many popular brand-name drugs doubles every seven to eight years.https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2734804

Another trend worth noting is increased utilization and expanded indications of specialty drugs. For specialty, the utilization trend is largely driven by plan members new to treatment and top disease categories – oncology, atopic dermatitis, and psoriasis. 

Treating autoimmune conditions such as psoriasis and rheumatoid arthritis is now the greatest contributor to specialty growth, accounting for almost half of all specialty utilization trend. The expected rise of these treatment categories makes pipeline management even more important. 

New treatments drive non-specialty trend

Disease categories driving non-specialty utilization include anti-diabetics, anti-obesity, and migraine therapies. The pipeline is rich with new drug launches and line extensions in these therapeutic categories. All have the potential to impact payor trend.

Gene therapies and biosimilars gain momentum

Gene therapies have the potential to treat or even cure rare, complex diseases that were previously untreatable and often fatal. Three FDA-approved gene therapies are already on the market – Luxturna, costing approximately $425K per eye; Zolgensma, costing approximately $2.1M per patient; and Zynteglo, costing $2.8M per patient. Up to 15 gene therapies are expected to receive approval in 2023, including several with first-in-class status.

While they show great promise, gene therapies are extremely costly and can be financially overwhelming for affected plan members, as well as small employers and self-insured clients that provide benefits.

Meanwhile, more companies are making biosimilars, which increases treatment options, competition, and savings opportunities. Since 2015, there have been 37 approvals and 25 launches in the U.S. biosimilar market. Over the next several years, many reference brands will lose patent exclusivity, including top specialty drugs like Humira, Stelara, Tysabri, Actemra, and Enbrel. In fact, multiple Humira biosimilars are expected to launch in 2023 and significantly disrupt the market. 

To maximize their savings potential, we may encourage uptake of the biosimilar as the lower-cost alternative or utilize the biosimilar to negotiate a lower net price for the reference brand.

Our unique approach

Up to 49% savings on specialty spend

CVS Health has been able to keep drug cost under control while maintaining appropriate access and adherence for patients.

Keeping ahead of the market and staying connected with providers and members helps maximize cost savings. At CVS Health, we use integrated strategies and innovative technology to inform management decisions, contain rising costs, and achieve lower overall specialty trend.