PBMs and insurers have been sounding the alarm on rising specialty drug costs for years, especially as the number of drugs topping the $100,000 threshold rose.
However, it's clear—both from the pharmaceutical industry's pipeline of drugs targeting high unmet medical needs and from patients willing to pay high prices for treatments that previously didn't exist—that there is a market for high-priced specialty drugs.
Prescription drug spending grew 2.9% to $263 billion in 2011 over the previous year. CMS officials, in their annual spending review published in Health Affairs, attributed rising drug spending to growth in prescription drug prices, specifically citing brand-name and specialty drugs and increased spending on new brands.
Specialty drugs made up 17.6% of Express Scripts' pharmacy benefit spending in 2011 and will likely account for more than 25% of spend per member per year by 2014.
“This has incredible implications for healthcare,” said Dr. Steve Miller, Express Scripts' senior vice president and chief medical officer. “Because if you think that the generic wave was going to take care of your pharmacy spend and that we could all take a sigh of relief, that sigh period is over. These are going to come fast and furious.”
Onyx Pharmaceuticals, a South San Francisco-based biopharmaceutical company, last July received FDA approval for its multiple myeloma drug, Kyprolis. A study of 266 patients found that 23% of those patients reported complete or partial disappearance of their tumors after treatment.
An Onyx spokeswoman said the company looked at factors like unmet medical need and the size of the population before settling on a $9,950 monthly price tag for the drug.
Approval isn't the only time that drug prices are considered. The costs of already pricey multiple sclerosis treatments, many of which have been on the market for years, tend to rise by 20% each year, even with the arrival of costly new drugs such as Sanofi's Aubagio.
Several of the drugs approved during the FDA's fiscal 2012 have already raised their prices. Incyte's Jakafi reported a 9% increase in November, while Vertex Pharmaceutical's Kalydeco rose to $25,603 in 2013 from its launch price of $24,500 in 2012.