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Specialty Pharmacy: Healthcare’s Expensive Conundrum

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Last year, U.S. spending on prescription drugs totaled $263.3 billion—25% of which was spent on specialty drugs. Specialty drugs account for a disproportionate share …

Last year, U.S. spending on prescription drugs totaled $263.3 billion—25% of which was spent on specialty drugs. Specialty drugs account for a disproportionate share
of overall drug spending because of their extremely high cost.

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  • 1. Last year, U.S. spending on prescription drugs totaled $263.3 billion—25% of which was spent on specialty drugs. Specialty drugs account for a disproportionate share of overall drug spending because of their extremely high cost. According to the American Pharmacists Association, specialty pharmacy focuses on high cost, high touch medication therapy for patients with complex disease states. Medications in specialty pharmacy range from oral to cutting edge injectable and biologic products. The disease states treated range from cancer, multiple sclerosis, and rheumatoid arthritis to rare genetic conditions. Our analysis revealed that the average medical costs per member per month for patients with rheumatoid arthritis dropped by 31% when specialty drugs were prescribed. However, pharmacy costs increased by 608% in this population. What this means: the reduction in medical costs of $1.1 million was offset by the total Rx increase of $4.9 million. While these drugs offer tremendous promise in improved longevity and quality of life, their high costs and extended use has put a strain on our healthcare system. Health plans, employers, and other stakeholders are searching for new ways to maintain access to innovative breakthrough therapies for patients while simultaneously ensuring that costs are sustainable. Specialty Pharmacy Traditional vs. Specialty © 2014 Verisk Health Sources: 2013 Express Scripts Drug Trend Report, CNN Money, Verisk Health, Verisk Health Client Data Healthcare’s Expensive Conundrum Spend for Specialty Medications +14.1% Overall Medical Cost Growth +5.4% Spend for Traditional Medications +2.4% Learn more about how we’re helping clients leverage data at: www.veriskhealth.com/dxcg The Rising Cost of Healthcare Cost of Multiple Sclerosis Spotlight on Rheumatoid Arthritis Tweet your answers @veriskhealth #SpecialtyPharmacy In 2013, 60% of new drugs approved by the FDA were expected to be specialty 1Year of tuition at an Ivy League school ~$60,000 11Car payments on 11 vehicles for one year. The average cost per prescription of Copaxone, a specialty drug to treat Multiple Sclerosis, is around $4,000 per month. That could fund: 4Mortgage payments on four houses for one year. Specialty drugs represent only 1% of total prescriptions written in 2013, but constitute 25% of the total pharmacy cost. Spend on Specialty Drugs 25% Prescriptions for Specialty Drugs 1% Average List Cost Per 30-Day Supply TraditionalSpecialty Diabetes (metformin) $94 High Blood Cholesterol (atorvastatin) $43 Inflammatory Conditions (Humira® ) $2,550 Hepatitis C (Solvaldi® ) $30,000 Multiple Sclerosis (Copaxone® ) $4,137 How would you balance innovation and quality of life with rising costs in specialty drugs? $107,625Average cost of CNS class therapy and workers in 9 of 10 For the first time, a group of medications used to treat miscellaneous central nervous system (CNS) disorders is ranked in the top 10 most expensive specialty therapy classes, including Xyrem® (sodium oxybate) for narcolepsy with an average cost per prescription of $8,278.92. Pharmacy Costs +608% $51,017 Medical Costs -31% Because specialty drugs are so expensive, in many cases, they increase the total cost of treating a patient, despite the reduction in medical cost for some conditions. per year: The median annual household income in the United States is Source: 2013 Express Scripts Drug Trend Report largest occupations earn less than that each year. *Based on average monthly mortgage and car payments. Source: Verisk Health

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