Specialty drugs up share of per-capita spend as sales growth slows

Even after the boom that the specialty pharmacy sector saw in 2014 with the introduction of new treatments for hepatitis C, the drug class continues to see its share of per-capita spending grow as manufacturers continue to develop more targeted therapies. The changes that the specialty space is seeing have been documented by the Quintiles IMS Institute, both in its report on the use of medicines in 2016 and its issue briefs on the drivers of drug expenditure and the oncology space.

Between 2014 and 2016, the growth rate of specialty revenue growth has been in decline — from close to 25% in 2014 to around 7% in 2016, which is still higher than it was before the hepatitis C treatment boom in 2014. As specialty growth looks set to plateau, the drug class continues to see its share of per-capita spending increase, with a decline in spending on traditional medicines creating space for more specialty share.

The share of net spend that went to specialty rose from 21.8% in 2007 to 39.6% in 2016. In real-number terms, this means that in 2016 for every $895 in real net manufacturer revenue per capita, $384 of it was for specialty, with the other $511 coming from traditional medicines. Among specialty medications, biologic drugs saw 13% growth in 2016, compared with 10% per year for the previous five years. And though 2016 was the year that biologics saw the most competition from biosimilars, biologics with biosimilars competition only accounted for $3.2 billion of the total $102.3 billion that biologics brought in last year, with biosimilars only accounting for $300 million of that figure.

Also increasing is the share of approved new active substances in the specialty space. Though 2016 saw fewer than half the number of new launches that 2015 and 2014 saw, it reflected the larger trend of new active substances largely being for specialty medicines, with many receiving Orphan Drug designation from the Food and Drug Administration. Two-thirds of the drugs with an Orphan Drug designation last year were for cancer, with the rest looking to treat such rare diseases as hemophilia B and cystic fibrosis. QuintilesIMS projects that between 2017 and 2021, the FDA will approve 40 to 45 new active substances.

In terms of continued revenue growth, the QuintilesIMS institute projects new brand spending growth — largely driven by specialty — to grow by $15 billion and $17 billion every year between 2018 and 2021, with new treatments focusing on oncology, immunology and autoimmune disorders.

The oncology space is among the most active disease states within specialty, with more than 68 different agents launching between 2011 and 2016 for more than 22 indications. And the late-stage research and development pipeline features 631 oncology new treatments, or about a quarter of the 2,346-drug pipeline, with a quarter of the cancer drugs seeking to address blood cancers.

“The pace of development in cancer treatments is accelerating, not just because of the number of new medicines in research, but [because] the combination regimens that may have greater effects than the individual drugs, and because of the continuous development of biomarkers and the potential to more appropriately target the right drug to the right patient with minimal waste and risk of non-response,” QuintilesIMS wrote in its Global Oncology report.