Build Your Business with Specialty Medications
What you need to know about this growing market
Although the definition of specialty medications continues to evolve, one thing is certain: Specialty is a booming area of healthcare, with dramatic increases in spending taking place and expected to continue. By 2020, spending on specialty drugs is expected to quadruple, to $402 billion a year, and account for 40% of what health plans spend on drugs.1
As you consider how to expand your retail business to include management of specialty prescriptions, here are answers to four commonly asked questions.
1. What is a specialty medication?
Specialty medications treat chronic, rare and complex conditions. The top three specialty therapy classes — which account for more than 60% of specialty spending billed through pharmacy benefits — are for inflammatory conditions, such as rheumatoid arthritis; multiple sclerosis; and cancer.2 In general, specialty drugs:
- Are expensive, ranging from approximately $6,000 to $350,000 a year, and some can even cost $750,000 or more.3
- Require special handling, case administration or monitoring of side effects.
2. What are the economics of specialty medications?
Specialty medications tend to be for conditions affecting only a relatively small number of patients. For example, among the new drugs introduced in 2013, 17 are for conditions that affect fewer than 200,000 people in the United States.4
However, the margin between net acquisition costs and third-party reimbursements for specialty medications can be attractive, ranging between 5% and 10%. Since these margins are on prescriptions that can cost thousands of dollars, the total profits can be significant.5 But, there are additional costs associated with filling specialty prescriptions related to proper handling and storage, additional layers of authorization, patient counseling, and managing the complex cases.
During the pilot program of Health Mart® Specialty Solutions, participating pharmacies experienced an additional lift of up to 5 to 10 non-specialty prescriptions associated with each new specialty prescription filled.
3. What is the forecast for specialty pharmaceuticals?
While total spending for traditional medications rose 2.4% in 2013, spending for specialty medications jumped 14.1%, according to the 2013 Drug Trend Report. Use of traditional medications increased less than 1%, while specialty drug utilization was up 2.5%. More than a quarter of total prescription spending, 27.7%, was for specialty drugs.6
Spending on the top 10 specialty therapy classes is expected to increase an average of about 17% annually from 2014 through 2016.7
The number of specialty drugs on the market grew from 10 in 1990 to more than 300 in 2012.8 Further, in 2013, 70% of the new drugs that the Food and Drug Administration approved were specialty products, including eight new cancer treatments.9 In addition, hundreds of specialty drugs are in the development pipeline. The FDA’s new “breakthrough therapies” approval process can put specialty drugs on the fast track to market, and the lack of generic or biosimilar products can keep prices high.
4. Where are patients filling their specialty prescriptions?
Currently, the retail market for specialty drugs is fairly consolidated, as nearly two-thirds of the revenue for pharmacy-dispensed specialty drugs goes to three companies — Express Scripts, CVS Caremark and Walgreens — according to Adam Fein, president of Pembroke Consulting. However, smaller pharmacy benefit managers, hospital systems and physician practices are opening their own specialty pharmacies.10 As a result, the number of accredited specialty pharmacy locations has been doubling in recent years.11
Preparing to Serve the Specialty Market
Any retail pharmacy that wants to dispense specialty medications needs the capabilities to:
- Store and handle specialty products
- Manage prior authorizations and patient assistance programs
- Track patient adherence and outcomes
- Execute risk evaluation and mitigation strategies
- Provide case management (MTM)
- Offer 24/7/365 call support for patient education and counseling on side effects
For more information about the growing specialty pharmacy market and the capabilities required to become a specialty pharmacy, check out the National Association of Specialty Pharmacy and the Specialty Pharmacy Certification Board.
To learn about McKesson’s specialty at retail solutions for independent pharmacies, email email@example.com or call 800.212.2606.