Report: Specialty drug trend, costs will continue to rise

Specialty drug trend continues to be driven primarily by claim utilization, accounting for nearly three-quarters of the overall 14.1% gross trend. However, cost per claim plays a larger role in specialty trend than has been observed in recent history. This finding comes from Pharmaceutical Strategies Group's Artemetrx State of Specialty Spend and Trend report, which was sponsored by Walmart. 

The seventh annual report uses integrated pharmacy and medical claims data to provide a holistic view of specialty drug spend and trend.

“Integrated specialty trend, net of rebates, rose to 12.5% in 2022. An increase of 3.6% over 2021, rising specialty drugs costs and increasing utilization is impacting payers despite higher manufacturer rebates,” said Libby Johnson, senior vice president and chief data analytics officer of PSG. The number of members taking specialty drugs continued to rise (4% of members took at least one specialty drug), while the average number of claims per person remained steady.

“Walmart is a people-led company who puts the customer and patient first to deliver quality care and medications they need. Our Specialty pharmacy practice is focused on delivering cost-effective medications to help patients manage their complex conditions,” said Aleata Postell, senior director of Walmart Specialty Pharmacy. “Walmart plans to use the details in the Artemetrx report to inform our approach in delivering on programs and solutions that are driving value for our customers in both cost and services.”

[Read more: Retailers build out their specialty pharmacy offerings]

Postell added, "We’re eager to see the influence of biosimilars in the market and how other factors will impact the specialty pipeline and manufacturer-funded programs. We value the insights of this report and will utilize the data to sharpen our pharmacy strategy and reinforce our commitment to managing costs effectively while delivering the highest possible outcomes."

Key findings of the report:

• The top categories for specialty drug spend remained unchanged over past years, with inflammatory, oncology and multiple sclerosis leading the way, according to the report. For certain market baskets, overall prices declined as innovator brands and biosimilars competed for market share. The shift of spend from the medical benefit to the pharmacy benefit (which now represents 56.3% of specialty spend) observed in previous years continued, allowing for the maximization of rebates and a focus on utilization management. Rebates had a notable impact on average cost per claim, particularly in the pharmacy benefit channel
• The percentage of members taking at least one specialty drug continues to rise, increasing from 3.8% in 2021 to 4% in 2022. Although this increase may appear small, even a slight increase in the percentage of members taking specialty drugs can have substantial cost implications on a per member per year basis. However, within the most recent 3-year time period, utilizers’ average number of specialty claims has held steady at about 5 claims per year. Together these findings suggest that the overall increase in spend is being driven by the introduction of new specialty utilizers rather than by increased claims among those who already take a specialty drug;

[Read more: RxBenefits, RxPharmacy Assurance roll out specialty cost, risk avoidance solutions]

• Although the first biosimilar — Zarxio (filrastim-sndz) — entered the market in 2015, it took several years for biosimilars to have a meaningful impact on overall specialty drug spending. However, the market share of biosimilars is now growing steadily year over year. Overall, biosimilar utilization increased from 20.5% in 2021 to 26.3% in 2022. In 2022, biosimilars for Rituxan (rituximab) and Herceptin (trastuzumab) had double digit increases in market share, and nearly all others increased by at least a few percentage points. The first biosimilar for Humira (adalimumab), Amjevita, launched in the United States at the end of January 2023, and others are coming later in the year. These drugs will likely further increase the market share of biosimilars in years to come. It should be noted that the biosimilar may not offer the lowest net cost if the innovator brand offers large enough rebates or price concessions; and
• Based on a comprehensive evaluation of expected events (e.g., entrance of biosimilars and specialty generics, entrance of new therapies and expanded indications for existing drugs) across the top categories of specialty drug spend, we project the PMPY trend for specialty drugs to continue in the low double digits (around 13% year over year) for the next 3 years — the implication is that PMPY costs will increase almost 50% from 2022 to 2025.

The full report can be accessed online here.