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Specialty Pharmacy

Why Do Employers Care?

For the first time in 2010, the number of specialty drugs approved by the FDA surpassed that of traditional drugs, kick-starting a trend that we're continuing to see year after year.1 While only a small fraction (approx. 4%) of the patient population uses specialty medications, these costly drugs now account for 25% of total US drug spending and is the fastest growing cost in most employers' health benefits.2 Employers are facing annual trend increases ranging from 18% to 30% due to generic and brand drug inflation and, most notably, to new breakthrough specialty medications.3-4 It is predicted that specialty pharmacy spend will outpace that of traditional pharmacy by 2018 (Figure 1).5 What's more, there is substantial price variation among these drugs based on where the patient receives the medication (Figure 2).

At this stage, specialty pharmaceuticals most commonly address complex conditions such as cancer, respiratory illness, central nervous system disorders and inflammatory conditions such as rheumatoid arthritis and psoriasis. However, this catalog is expected to expand and diversify immensely in the coming years.

PMPY = Per Member, Per Year.

Figure 2.

What Can Employers Do?

With specialty medication costs rising dramatically, employers continue to seek solutions that will mitigate their drug spend and allow them to take back control (Figure 3).

Figure 3.
Large Employers' Specialty Pharmacy Benefit Management Techniques, 2015 and 2016

Source: National Business Group on Health. Large employers' 2016 plan design survey. August 2015.

Consider the following specialty drug management strategies:

  • Implement a comprehensive utilization management (UM) strategy grounded in medical necessity/eligibility criteria.
  • Implement a prior authorization strategy dictated by medical necessity/eligibility criteria.
  • Implement a step therapy program, encouraging the use of lower-cost generics as first lines of treatment.
  • Consider putting quantity limits in place to ensure proper dosage as well as patient tolerance and adherence.
  • Consider formulary exclusions or "exclude at launch" strategies.
  • Consider adding additional specialty drug tiers to your formulary to incentivize the use of lower-cost alternatives.
  • Explore the savings potential behind shifting certain specialty drugs from the medical to pharmacy benefit to allow for greater visibility, more creative cost control strategies and increased oversight.
  • Maximize savings by working with a narrow network of specialty pharmacies or by channeling patients through the most cost-effective specialty pharmacy network.
  • Ensure that your PBM is keeping you apprised of potential changes and/or developments in the pipeline.

The National Committee on Pharmacy Benefits and Specialty Medicine focuses on ways employers can optimize these, and other strategies for specialty medication management. Please visit our Specialty Pharmacy Management Series for an in-depth look at a variety of specialty topics of interest to employers.

References (show references)

1 AHIP (July 2015). Issue brief: Specialty drugs – Issues and challenges. Retrieved from

2 PWC (June 2014). Medical cost trend: Behind the numbers 2015. Retrieved from

3 Express Scripts. The 2013 drug trend report. Retrieved from previous%20reports%20pdfs/drug%20trend%20report%202013.ashx

4 Express Scripts. The 2014 drug trend report highlights. Retrieved from

5 Artemetrx (2013). Specialty drug trend across the pharmacy and medical benefit. Retrieved from

Page last updated: February 29, 2016

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