Spending on Expensive Specialty Drugs Triples since 2003

Specialty drugs are a relatively small part of total prescriptions filled at the pharmacy, but they are a dramatically increasing part of total prescription spending. A new study from the University of North Carolina at Chapel Hill reveals that just 1.8 percent of drugs make up 43.2 percent of spending in 2014.

The work, led by Stacie Dusetzina, an assistant professor at the UNC Eshelman School of Pharmacy and Gillings School of Global Public Health, shows a dramatic increase from 2003, when specialty drugs accounted for just 11 percent of the money spent by commercial health plans on prescription drugs obtained at pharmacies.

“There’s a story here of very expensive drugs used by relatively small groups of patients for conditions for which there are few options,” said Dusetzina, who is also a member of the UNC Lineberger Comprehensive Cancer Center. “But we also have commonly used drugs for which there might be acceptable substitutes being prescribed for very large groups of patients.”

Dusetzina reviewed prescriptions obtained by patients enrolled in commercial insurance plans from 2003 to 2014 to explore trends in the prescribing of specialty drugs using the Truven Health MarketScan Commercial Database.

For this study, a “specialty” drug was defined as a product that costs $600 or more for a 30-day supply which is the Centers for Medicare and Medicaid Services threshold for allowing a product to be placed on a specialty tier. To account for inflation, all costs were adjusted to represent 2014 dollars. Her findings were published in the journal Health Affairs.

Dusetzina’s analysis shows that the use of specialty products tripled between 2003-2014, from 0.6 percent of all prescriptions in 2003 to 1.8 percent in 2014. Spending by commercial health plans on specialty drugs tripled over the same time. In 2003, specialty drug accounted for just 11 percent of spending on prescriptions; by 2014 they comprised more than 43 percent of prescription spending by commercial health plans. The number of unique products that met the $600 per month threshold also increased over time, increasing from 3 percent of products in 2003 to nearly 12 percent in 2014.

The top three prescription drugs contributing to commercial health plan spending in 2014 were treatments for rheumatoid arthritis (Humira and Enbrel), followed by the new hepatitis C drug, Sovaldi. Sovaldi was the most expensive drug per fill, at $28,083 in 2014.

Treatments for diabetes (Lantus SoloSTAR, Humalog, Victoza and Januvia), high cholesterol (Crestor and atorvastatin calcium), pain (Celebrex and OxyContin) and attention deficit hyperactivity disorder (Vyvanse and methylphenidate hydrochloride) also contributed to high spending, primarily because of the high number of prescriptions for them.

In addition to looking at total spending on specialty and nonspecialty medications, Dusetzina considered how much patients were paying for drugs over time and found that out-of-pocket spending was decreasing for patients using lower-priced nonspecialty drugs and increasing for specialty drugs. The average amount spent out of pocket for patients filling nonspecialty drugs prescriptions decreased from $19 to $11 per month over the study period, while out-of-pocket spending increased for specialty drugs from $41 to $77 per month. Commercial plans can charge patients differently for specialty drugs.

“Prescription-drug spending in the United States will likely continue to increase as payers grapple with providing coverage for important and expensive therapies,” Dusetzina said.

Ways to reduce prescription drug spending include greater use of generic substitutes for brand-name drugs and implementing payments for high-priced medications that are more closely tied to the drug’s effectiveness, she said.

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