The cost of innovation: A closer look  at specialty  drugs

Specialty drugs, used to treat complex illnesses such as cancer and hepatitis C, are in the spotlight, sparking discussion around how society will pay for high-cost therapies in the future. Last year, 70% of all medication approvals by the Food and Drug Administration (FDA) were for specialty drugs. Many more are in the pipeline. In this infographic, HRI explores how specialty drugs are impacting the US healthcare system now and in years to come.

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Methodology

Specialty medications include injectable and noninjectable drugs that are typically used to treat chronic, complex conditions and may have one or more of the following qualities: frequent dosing adjustments or intensive clinical monitoring; intensive patient training and compliance assistance; limited distribution; and specialized handling or administration.

For this publication, specialty drugs have been defined as those listed in the specialty drug list for CVS Caremark. Drugs in this list were identified within comprehensive drug sales data sourced from EvaluatePharma. This data forms the basis of the categorization of total drug sales into specialty and traditional drug sales for 2013 and projected drug sales in 2020. The percentage of sales labeled as specialty were assumed to remain constant within each therapeutic category (e.g. Cardiovascular, Dermatology, Respiratory) from 2013 to 2020, notwithstanding economic factors. Projections into 2020 rely on prescription drug sales growth predicted by CMS National Health Expenditure data to account for economic factors and legislative factors such as the Affordable Care Act.

Total prescription drug costs by payer and by medical condition were calculated using data from the Medical Expenditure Panel Survey (MEPS). Drug data from MEPS cover retail prescription drug expenditures. No over-the-counter medication sales are included, nor are prescription drugs used during hospital visits, outpatient visits, or office-based provider visits. The percentage of specialty drugs within each therapeutic category calculated using the EvaluatePharma dataset was mapped to the medical conditions utilized by MEPS. This allowed HRI to weight specialty expenditures by payer and by condition. Expenditures by payer means the outlays for a particular party (i.e. Medicare or out of pocket by the consumer). It does not mean expenditures by everyone with a particular type of insurance. For one condition category (the "hemorrhagic, coagulation, and disorders of white blood cells" category), there was not enough information in the MEPS data to measure drug spending by payer. Thus for this category, PwC assumed the average distribution of drug spending by payers.