Specialty Drugs: Unintended Consequences May Slow the Market

A new report states that unintended consequences in the specialty drug market may cause the rapid growth in this field to start leveling off.

The QuintilesIMS report-“Specialty Brands:  The Pharmaceutical Industry’s Salvation, or Impediments to Future Innovation?”-examines how specialty brands might be an impediment to growth. Innovative specialty drugs carry high price tags, wrote author William McClellan. “[I]nnovation-more precisely its price tag-captures the attention of payers and is forcing them to aggressively manage their budgets in ways that are dampening revenues for specialty brand manufacturers.”

Payers are driving down costs through contract negotiations and by aggressively managing patients’ access to these drugs, the report notes.

Among the other findings of the report:

• In 2007, prior to the first rush of specialty drugs, approximately 180,000 patients were exposed to a new brand, but that number dropped to 40,000 in 2015. Payers are paying four times the cost for products that benefit one-quarter of the patients.

• Payers have been successful in getting large price concessions from makers. Net price growth has slowed sharply from 9.1% in 2012 to 2.8% in 2015.

• Within commercial plans, pharmacy rejection rates of specialty launch brands have soared from 12% in 2010 to 33% in 2015. In addition, the average copay rose only 14% from 2014 to 2015, while copay offsets grew more than 32%.

• From 2010 to 2013, innovative specialty brands generated sales approximately three times the size of non-innovative brands, but sales were only two times the size in 2014 and 2015.

• In 2016, 25% of launches were categorized as innovative and 50% were launching into a market of high need, yet these brands are projected to have the lowest average first-year sales since 2013.