Need proof that orphan indication’s the way to go? The demand for specialty medications – and their premium pricing – is driving up the total American spend on medication, a new study says.
A revenue darling for most budding biotechs, specialty drugs acccounted for $124.1 billion of medication dollars spent, out of a total of $373.9 billion overall, according to a new study from the IMS Institute for Healthcare Informatics. Cancer, hepatitis C and autoimmune disease are the main drivers, with orphan indications filling in the gaps of the specialty medicine super-spend.
Of course, medication costs rose across the board in 2014. The total spending on U.S. medications rose 10.3 percent in 2014, And the total dollars spent on medicine rose 13.1 percent that year, to $373.9 billion – up from a 3.2 percent increase in 2013.
There’s a growing number of innovative treatment options out there – but these specialized therapies come with a high price tag. Patent expiries have slowed spending growth, but branded medications keep increasing their price tags. Of course, this is expected to level out next year, IMS says.
Specialty med costs grew 26.5 percent in 2014 alone. While five years ago they accounted for 23 percent of the total medication spend, it’s increased to a third. New drugs accounted for $20.3 billion in cost growth for 2014, with more than half – $11.3 billion – from the four new Hep C treatments, including Sovaldi, that made it big on the market. IMS says:
The drug R&D pipeline has shifted to specialty medicines over the past decade and 42% of the late stage pipeline is now specialty, up from 33% ten years ago. Ten Breakthrough Therapies launched in 2014 after the 2012 FDASIA Act granted new approval authorities to the FDA.
The FDA has a range of new incentive programs including efforts to encourage drug development for antibacterial resistance. In addition the number of orphan drugs launched peaked again with 18 in 2014 and 61 in the last five years. Cancer remains the most common orphan category, and increasingly very rare “ultra-orphan” drugs, for populations fewer than 10,000, are being developed.
Here’s how that breakdown looks, according to specialty medication segment:
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Some notable points:
- Spending on specialty medicines increased $54 billion in the last five years, which is 73% of overall medicine spending growth in that period.
- Autoimmune disease, hepatitis C and oncology accounted for $34.7 billion of that increased spending. Hepatitis C in particular was king – more than 161,000 patients started treatment for the disease in 2014.
- The multiple sclerosis spend grew 24.4 percent, thanks to new drugs that have new mechanisms of action and more convenient dosing
- Some $20.2 billion of the drug spend came from newly approved, branded drugs – and 78 percent of those dollars came from specialty drugs.
The report found that more new medications were launched in 2014 than any year since 2001, and included 23 breakthrough therapies and orphan drugs. IMS says:
Aided by expedited approval pathways and FDA incentive programs for rare and infectious diseases, a robust late-phase pipeline with more than 530 distinct research programs is expected to maintain the high number of launches seen in the past five years into the future.
Biosimilars will change up the medication landscape soon, though – these cost increases aren’t expected to be sustained.
Image courtesy of Flickr user CarbonNYC]
