Specialty pharmaceuticals are projected to account for more than one-third of the global pharmaceutical market by 2021. So what are the drivers behind the growth?

The US accounts for more than half of the specialty pharmaceutical market and more than half of growth in that sector. DCAT Value Chain Insights examines the market and leading products.

Specialty pharmaceuticals: definition

The definition of specialty pharmaceuticals varies according to the source, but specialty pharmaceuticals are generally defined as having one or more of the following characteristics: complex to manufacture and store; difficult to administer and often in injectable or infusible formulations; high in cost, both in total and per-patient cost; and challenging for patients to take without ongoing clinical support (1). Express Scripts, a pharmacy benefit management organization, in its 2016 Drug Trend Report, defines specialty medications to include injectable and noninjectable drugs typically used to treat chronic, complex conditions and may have one or more of the following qualities: frequent dosing adjustments or intensive clinical monitoring; intensive patient training and compliance assistance; limited distribution; and specialized handling or administration. In providing market information on specialty drugs, QuintilesIMS defines specialty products as medicines that treat specific, complex chronic diseases with four or more of the following attributes: initiated only by a specialist; require special handling and administration; unique distribution; high cost; warrants intensive patient care; and might require reimbursement.

Specialty pharmaceuticals: market numbers

Total global spending on all medicines is forecast to reach $1.5 trillion by 2021, up 33% from 2016 levels, but down from recent high growth rates in 2014 and 2015, according to a recent analysis by QuintilesIMS, Outlook for Global Medicines Through 2021: Balancing Cost and Value. Specialty medicines are projected to increase their share globally, particularly in developed markets. Specialty medicines’ share of global spending has risen to less than 20% ten years ago to 30% in 2016 and is projected to increase to 35% by 2021, approaching half of total spending in US and European markets, according to QuintilesIMS. The rise primarily will be driven by the adoption of new breakthrough medicines, but also will be a key focus of payers and constrained by cost and access controls as well as a greater focus on assessments of value, according to the QuintilesIMS study.

Seven developed countries (the US, the EU5 [France, Germany, Italy, Spain, and the UK]), and Japan accounted for 79% of specialty pharmaceutical sales in 2016, according to information from QuintilesIMS. The US led in market share at 53%, followed by the EU5 at 19% and Japan at 7%. “Pharmerging” countries, a term used by QuintilesIMS to identify low-income countries with high pharmaceutical growth, accounted for 8% of the market for specialty pharmaceuticals in 2016 and the rest of the world 13%. On a growth basis, these seven countries (US, EU5, and Japan) accounted for 81% of specialty pharmaceutical growth in the period of 2011 to 2016. Consistent with its market share, the US led in specialty pharmaceutical growth in this period, accounting for 58% of growth, followed by the EU5 at 17%, and Japan at 6%. Pharmerging countries contributed 8% of the growth and the rest of the world at 12%. While specialty medicines will continue to increase in share in developed markets, and approach half of medicine spending in the U.S. and EU5 by 2021, in pharmerging markets specialty medicines will continue with lower share of 5–20% of total medicines spending, according to information from QuintilesIMS.

On a molecule basis, biologics slightly lead small molecules among specialty pharma products, but small-molecules have made recent gains. In 2011, biologics accounted for 58% of the specialty pharmaceutical market and small molecules 42%, according to information from QuintilesIMS. By 2016, small molecules had increased their share to 47%, and biologics accounted for 53%.

Specialty pharmaceuticals: therapeutic classes and top products

In its 2016 Drug Trend Report, Express Scripts ranked the top 15 therapeutic classes by per-member-per-year (PMPY) spend using commercial sales (i.e., excluding Medicare plans). Of the 15 classes, specialty drugs accounted for five therapeutic areas (inflammatory conditions, oncology, multiple sclerosis [MS], HIV, and hepatitis C). Specialty drugs accounted for three of the top therapeutic classes (inflammatory, oncology, and MS). Based on its PMPY spend, drugs for inflammatory conditions were ranked as the leading therapeutic sector, oncology ranked third, and MS drugs fourth. HIV drugs ranked sixth and hepatitis C drugs ranked eleventh. Traditional drugs accounted for 10 of the other leading therapeutic classes, which included from top to bottom: diabetes, pain/inflammation, high blood cholesterol, attention disorders, high blood pressure/heart disease, asthma, depression, contraception, heartburn/ulcers, and skin conditions.

Medications to treat inflammatory conditions and diabetes remained the two most expensive therapy classes when ranked by PMPY spend. Specialty drugs to treat inflammatory conditions (such as rheumatoid arthritis and psoriasis) remained the most expensive drug class, with a 26.4% trend. Diabetes, a traditional product class, was ranked second by spend. Together, these two classes contributed 21.1% of total drug spend for 2016.

Of the given specialty therapy classes ranked in the top 15 in 2016 due to their high PMPY spend, hepatitis C drugs was the only top specialty therapy class with a downward trend (-34%) reflecting lower utilization and unit costs. Three other specialty therapy classes (inflammatory conditions, oncology and HIV) all had large increases in both utilization and unit cost; this resulted in positive trends greater than 20% for each class in 2016.

In 2016, all but two of the top 10 specialty drugs increased in PMPY spend. Nine drugs increased in unit cost; six in utilization. AbbVie’s Humira Pen (adalimumab) remained the most expensive drug overall, accounting for 11.3% of total specialty drug spend. Gilead Sciences’ Harvoni (ledipasvir and sofosbuvir), which treats hepatitis C, had the largest decline in spend among the top specialty drugs, according to Express Scripts’ 2016 Drug Trend Report.

Humira Pen and three other specialty drugs for treating inflammatory diseases were in the top 10 specialty pharma drugs in 2016 based on PMPY spend according to the Express Scripts analysis. These included the non-pen version of AbbVie’s Humira Pen (adalimumab), Amgen’s Enbrel (etanercept), and Johnson & Johnson’s Stelara (ustekinumab). Three drugs for MS – Biogen’s Tecfidera (dimethyl fumarate), Teva Pharmaceutical Industries’ Copaxone (glatiramer), and Novartis’ Gilenya (fingolimod)– and one each for HIV, Gilead Sciences’ Truvada (emtricitabine/tenofovir disoproxil fumarate), and oncology (Celgene’s Revlimid [lenalidomide]) make up the rest of the top 10 specialty drug list.

In looking at Medicare spending, the top 10 specialty drugs accounted for 37.7% of PMPY spend for all Medicare specialty drugs in 2016. They represented only four therapy classes with five oncology drugs, two for inflammatory conditions, two for MS, and one for hepatitis C. Together, the five oncology medications in the top 10 – Celgene’s Revlimid (lenalidomide), AbbVie’s and Johnson & Johnson’s Imbruvica (ibrutinib), Pfizer’s Ibrance (palbociclib), Astella’s and Pfizer’s Xtandi (enzalutamide), and Johnson & Johnson’s Zytiga (abiraterone) – contributed 17.1% of Medicare specialty drug spend, according to the Express Scripts report. The two inflammatory drugs in the top 10 in Medicare spending were AbbVie’s Humira Pen (adalimumab) and Amgen’s Enbrel (etanercept) and the two MS drugs were Biogen’s Tecfidera (dimethyl fumarate) and Teva Pharmaceutical Industries’ Copaxone (glatiramer). Harvoni, the hepatitis C drug, was the only specialty drug in the top 10 that decreased in both PMPY utilization and unit cast.

Reference

1. “Emerging Trends in the Specialty Drug Industry,” Drug Topics, June 2017.