The Role of Specialty Drugs in Private Sector Healthcare Spending

Published in: The American Journal of Pharmacy Benefits, v. 5, no. 6, Special Issue, 2013, p. SP23-SP27

by Seth A. Seabury, Dana P. Goldman, Darius N. Lakdawalla

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OBJECTIVE: The use of specialty drugs is controversial because of their comparatively high cost. However, the extent to which containing cost growth in specialty drugs would contribute to aggregate healthcare savings is unclear. STUDY DESIGN: Retrospective analysis of medical and pharmacy claims from a large, private sector claims database from 2000 to 2009. METHODS: We estimated the share of medical, pharmacy, and total expenditures attributable to specialty drugs for all patients, and for patients taking specialty drugs. To better understand the patterns of specialty drug use for at-risk patients, we computed the share of spending on specialty drugs for patients in the top 25th, 10th, 5th, and 1st percentiles of spending. RESULTS: We found that 1.6% of all patients used a specialty drug, accounting for 2.8% of total spending and 9.3% of pharmacy spending from 2000 to 2009. While specialty drug use was more common for patients in the highest cost groups, the share of spending attributed to the specialty drugs remained modest (no more than 5.6%). Spending on specialty drugs grew from 1.0% of total spending in 2000 to 3.7% in 2009. At current growth rates, our estimates suggest that even the complete elimination of specialty drugs would stave off less than a year's worth of healthcare cost growth over the next decade. CONCLUSIONS: Specialty drugs account for a modest share of total healthcare spending, even among the highest cost patients. Even dramatic reductions in spending on specialty drugs would have only a modest effect on total healthcare costs.

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