According to the Department of Health and Human Services, 50% of total drug spending in 2021 was represented by specialty drugs. And in 2024, another report projects specialty drug costs to increase by nearly 15%. These staggering statistics underscore the significant financial burden imposed by specialty drugs on healthcare systems and patients alike.
What Are Specialty Drugs?
Specialty drugs represent a distinct category within pharmaceuticals that encompasses medications tailored for specific, often complex, medical conditions. They typically require a prescription by a specialist, intravenous administration, special handling, and careful patient management that aligns with strict compliance and safety protocols. While specialty drugs can be used to treat many different types of medical conditions, they often fall into therapeutic areas like rheumatology, gastroenterology, enterology, and oncology.
The Biggest Factor Driving Escalating Costs of Specialty Drugs
Unlike conventional medications, specialty drugs are typically biological agents, engineered to target specific pathways within the body with precision. To create these drugs, sophisticated genetic engineering techniques are used, which leads to costly manufacturing practices.
These are not simple generic drugs that are easily mass-produced. Biological agents are large, complex items that must be made and genetically engineered in laboratories. That means more time and a lot more money.
Average Cost of Specialty Drugs
Costs vary widely with specialty drugs, and the financial burden is felt across all medical conditions and patient demographics. Some agents are less expensive, while others can range from a few hundred dollars per dose to millions.
Discovering Affordability with Biosimilars
But there is hope on the horizon when it comes to cost management. Biosimilars are bioequivalent alternatives that offer a more cost-effective option, typically entering the market at a 20-30% lower price point than their originator counterparts.
Not only are they less expensive, but some biosimilars can be used for many different disease states, and they often have fewer side effects. This goes a long way to providing financial relief for both patients and the healthcare systems that serve them.
Main Challenges in Accessing and Affording Specialty Drug Therapies
Health system budgets have gone up astronomically in recent years, and the complexity around reimbursement is one of the biggest challenges. Will you get reimbursed for the original product or the biosimilar? The answer to that question determines which one you keep in the hospital pharmacy and how you make those changes.
Some of the biosimilars that have been around for over five years are becoming more widely used and accepted, and insurance companies are reimbursing them at a slightly better rate than the original. So that’s helping drive the market in that area.
An interesting thing that we’re seeing is the shifting of prior authorization from nurses to pharmacy. When the pharmacist is able to speak directly to all of the people involved, there’s a much quicker turnaround and a higher rate of costs being recovered.
Another challenge is drug shortages. When a manufacturer of specialty drugs is shut down – and they were the only one producing a particular specialty drug – then there’s suddenly a shortage of life-saving medication. Another manufacturer may scramble to try and start producing it, but that takes time and can drive up the cost.
Then there are challenges on the patient side. Affordability is clearly an obstacle, but there are also the logistics of multiple – sometimes daily – visits to the hospital for infusions, which could take hours. And patients may be on multiple specialty drugs, forcing them and their medical team to decide which meds they can afford. For someone grappling with a chronic illness, it all starts to take a toll.
If your team is facing any of these challenges, contact CompleteRx today.
Policies and Regulations for Specialty Drug Management
While specialty pharmacies have very specific guidelines as well as state and federal regulations to follow, regular pharmacies and hospital pharmacies don’t have any new regulations in regard to specialty drugs.
This is still a fairly new area of practice, but most health systems have internal policies around various issues, like whether some biosimilars can be interchanged with others, depending on cost-effectiveness.
Another policy that’s important to understand – especially when it comes to specialty drugs – is white bagging vs. brown bagging. White bagging occurs when a medication is delivered to the hospital on behalf of a specific patient. This limits the hospital, though, because the staff don’t have any control. It may or may not be the correct medication, so patient safety could be an issue. It could accidentally be sent to the wrong location, which delays treatment. Because the hospital didn’t order it, they can’t use any leftovers to treat another patient, and the medication is wasted.
Brown bagging is when the specialty medication is delivered directly to the patient and they bring it to the hospital. The risks here are that the medication may not have been refrigerated properly, or it may have been damaged.
Generally, hospitals have a policy to try and do as much of their own ordering as possible to make sure that they receive the right drug for the right patient, that the drugs come in on time, they are not damaged, and they can be properly dosed.
Hospital Pharmacy Strategies for Specialty Drug Management
Effective management of specialty drug costs requires a proactive and multifaceted approach, with hospital pharmacies playing a pivotal role in driving innovation and efficiency. Here are some actionable strategies and tips for mitigating the rising costs of specialty drugs:
Dose Optimization
- Implement dose optimization protocols to maximize the utilization of specialty drugs while minimizing waste.
- Consider adjusting dosing schedules and tailoring dosages based on patient characteristics, such as weight, to achieve optimal therapeutic outcomes.
Just-in-Time Inventory Practices
- Adopt a just-in-time inventory strategy to minimize excess inventory and reduce the risk of drug waste.
- Order medications as needed – based on patient demand and treatment schedules – to optimize resource utilization and mitigate financial strain.
Leverage Multi-Dose Vials
- Utilize multi-dose vials whenever possible to maximize efficiency and minimize waste.
- By extracting multiple doses from a single vial, hospital pharmacies can reduce costs and enhance resource utilization, thereby optimizing cost-effectiveness.
Patient Education and Support Services
- Enhance patient education and support services to empower individuals to navigate the complexities of their treatment with confidence.
- Provide comprehensive information on medication adherence, potential side effects, and available financial assistance programs to facilitate informed decision-making and improve patient outcomes.
Collaboration with Payers
- Foster collaborative relationships with payers to advocate for policies that promote equitable access to specialty drugs while ensuring fiscal sustainability.
- Engage in proactive dialogue with insurance providers to explore alternative reimbursement models and negotiate favorable pricing agreements.
Looking Ahead
As the landscape of healthcare continues to evolve, the rising costs of specialty drugs remain a pressing concern for hospitals and healthcare systems. If we can understand the underlying factors driving cost escalation, implement proactive management strategies, and foster collaboration across interdisciplinary teams, we can navigate this complex terrain with resilience and efficiency.
Through innovation, strategic planning, and a steadfast commitment to patient-centered care, we can forge a path towards a more sustainable and equitable future for specialty drug access and affordability.
If you need help with strategies for specialty drug management, reach out to speak with a member of our team.
