Perspectives on Specialty Pharmacy and Drug Spending

Orlando—“[Specialty pharmacy] is front page news today,” said Jim Smeeding, RPh, MBA, executive director, NASP, as he opened a session on current trends and future outlooks on the specialty pharmacy industry.

Doug Long, MBA, vice president, industry relations, IMS Health, started the session with an overview of the growth this industry has seen in the past 10 years. “This market is seeing double-digit growth,” Mr. Long said, noting that the industry has seen a 13% year to date growth, as of June. He noted that causes for this growth include innovation and drug list prices. Specifically, two-thirds of the growth comes from drug list price increases, which contributes 77% to positive brand growth, according to the presentation. For example, in 2013, even generic drug list prices increased by approximately 15%. Mr. Long noted that generic price inflation is due to 2 things: (1) regulatory and quality inspections; and (2) customer consolidation.

In 2013, the specialty pharmacy industry saw the most specialty drug launches than in the 10 years prior, and of the 19 specialty approvals in 2013, 17 were orphan drug status. Orphan designation is assigned to drugs that are deemed safe and effective treatment for the diagnosis or prevention of rare diseases that affect <200,00 people in the United States. One of the most notable drug approvals was for sofosbuvir for the treatment of hepatitis C in late 2013. Mr. Long said, “[Sofosbuvir] is the most successful product introduction of all time,” as the drug is projected to reap $7 to $9 billion in sales by the end of 2014.

Mr. Long discussed what some of the major players in specialty pharmacy are thinking about as this industry continues to grow.

Specifically, pharmacies are thinking about:

            • Purchasing alliances

            • Controlled substance abuse

            • Access to specialty drugs

            • Generic price inflation

Generic manufacturers are thinking about:

            • Purchasing alliances

            • Portfolio optimization

            • Brand drugs

            • Proposed labeling changes

            • Tax inversion

Brand and specialty manufacturers are thinking about:

            • Price

            • Oral specialty

            • Orphan drugs

And, consumers are thinking about:

            • Rising costs

            • Specialty tiers

            • Losing insurance

Mr. Long also noted that complex chronic and rare diseases that require lifelong treatment will be something to consider. He raised the point that a lot of controversy has surrounded the cost of the hepatitis C treatment, sofosbuvir; however, he noted that a one-time $84,000 treatment that can virtually “cure” hepatitis C, is more effective in the long-term compared to the chronic disease management that produces more of a cost burden over time. “You think $84,000 [for treatment] is expensive? Just wait for million dollar gene therapies,” that are on their way, Mr. Long cautioned.

He also mentioned that biosimilars will be coming to market next year, which will influence formularies and payer decision-making. “Payers cannot control the price, but they can control access,” said Mr. Long, noting that manufacturers will soon need to be able to prove that their drug is worth the accompanying pricetag.

Mr. Long broke out some important figures in terms of specialty growth to date:

            • Specialty spending has reached $106 billion

            • Specialty drugs represent 1% of all scripts written

            • Specialty accounts for 30.5% of total drug spending

            • The specialty drug growth rate has reached 18.8%

In addition, the top specialty products moving annual total (MAT) as of June in terms of sales are the following:

            • Adalimumab (Humira^®)

            • Etanercept (Enbrel^®)

            • Sofosbuvir (Sovaldi^®)

            • Infliximab (Remicade^®)

            • Pegfilgrastim (Neulasta^®)

            • Glatiramer acetate (Copaxone^®)

            • Rituximab (Rituxen^®)

            • Efavirenz/Emtricitabine/Tenofovir (Atripla^®)

            • Bevacizumab (Avastin^®)

            • Epoetin alfa (Epogen^®)

Mr. Long projected that by the end of 2014, sofosbuvir would move to the number 1 spot on the list as the top-selling product in 2014.

In addition, the following are the top specialty pharmacy manufacturers MAT as of June, according to specialty drug sales:

            • Amgen

            • Genentech

            • Gilead Sciences

            • Johnson & Johnson

            • Abbott

Again, Mr. Long projected that Gilead Sciences could reach the number 1 spot at the end of 2014, given the expected sales of sofosbuvir, their hepatitis C drug.

Mr. Long also discussed the horizon for oncology medications. As hospitals are buying up oncology practices, this increases the drug prices, as he noted that manufacturers would rather work with outpatient facilities than hospitals because they are complex organizations and difficult to manage. This will continue to be of interest, as David Coury, PharmD, vice president, business development, Acro Pharmaceutical Services, added, “75% of the specialty pipeline is [oncology agents].”

Mr. Long concluded his presentation by noting the following components on the horizon that will affect specialty pharmacy:

            • Hepatitis C market and orphan drugs

            • Generic price inflation      

            • Tax inversions

            • First biosimilars coming to market

            • Continued regulation and reimbursement issues

Lee Goldberg, director, syndicated research, Zitter Health Insights, wrapped up the session with insight on happenings particularly related to prostate cancer and hepatitis C. Mr. Goldberg noted that for the first time, payers are more concerned with hepatitis C than rheumatoid arthritis and oncology.

In addition, recent therapies for prostate cancer have paved the way for introducing step edits and preferred products into the oncology space. Payers are now starting to manage prostate cancer similar to disease states other than oncology, according to the presentation.

Mr. Goldberg noted that guidelines are really driving this trend for prostate cancer and hepatitis C. For example, once the National Comprehensive Cancer Network or the American Association for the Study of Liver Diseases (AASLD) determine that ≥2 drugs are clinically equivalent in terms of treatment efficacy, then manufacturers will need to find another way to convince payers that their drug is superior and thus should be on a preferred tier. Mr. Goldberg said that it is crucial for payers to stay knowledgeable of guideline updates that are rooted in scientific evidence. He noted that it will be interesting to see AASLD’s stance once more hepatitis C drugs in the pipeline come to market, creating more competition in this highly polarized area of treatment.—Kerri Fitzgerald