Specialty drugs in the United States

Medications must be either identified as high cost, high complexity or high touch to be classified as a specialty medication by Magellan Rx Management. Specialty pharmaceuticals are defined as "high-cost oral or injectable medications used to treat complex chronic conditions". Other criteria used to define a drug as specialty include "biologic drugs, the need to inject or infuse the drug, the requirement for special handling, or drug availability only via a limited distribution network". Most of the prescriptions filled by Pennsylvania-licensed Philidor Rx Services, a specialty online mail-order pharmacy, which mainly sold Valeant Pharmaceuticals International Inc expensive drugs directly to patients and handled insurance claims on the customers' behalf, such as Solodyn, Jublia, and Tretinoin, would be considered specialty drugs. High complexity Specialty drugs are more complex to manufacture. They are "highly complex medications, typically biology-based, that structurally mimic compounds found within the body". Biologics "may be produced by biotechnology methods and other cutting-edge technologies. Gene-based and cellular biologics, for example, often are at the forefront of biomedical research, and may be used to treat a variety of medical conditions for which no other treatments are available." ===High touch=== Some specialty drugs can be oral medications or self-administered injectables. Others may be professionally administered or injectables/infusions. Specialty drugs may be "difficult for patients to take without ongoing clinical support". Limited availability Specialty drugs might have special requirements for handling procedures and administration including the necessity of having controlled environments such as highly specific temperature controls to ensure product integrity. They are often only available via a limited distributions network such as a special pharmacy. Specialty drugs may be "challenging for providers to manage". Rare and complex diseases Specialty drugs may be taken "by relatively small patient populations presenting with complex medical conditions". ==History==

"Specialty pharmacies have their roots in the 1970s, when they began delivering temperature-controlled drugs to treat cancer, HIV, infertility and hemophilia." According to The American Journal of Managed Care, in 1990 there were 10 specialty drugs on the market. Not all specialty drugs are orphan drugs. According to Thomson Reuters in their 2012 publication "The Economic Power of Orphan Drugs", there has been increased investing in orphan drug research and development partly since the U.S. Congress enacted the Orphan Drug Act, giving an extra monopoly for drugs for "orphan diseases" that affected fewer than 200,000 people in the country. According to a 2010 article in Forbes, prior to 1983 drug companies largely ignored rare diseases and focused on drugs that affected millions of patients. By 2001 Shire was one of the fastest growing specialty pharmaceutical companies in the world. By 2001 CVS's specialty pharmacy ProCare was the "largest integrated retail/mail provider of specialty pharmacy services" in the United States. It was consolidated with their pharmacy benefit management company PharmaCare in 2002. In their 2001 annual report, CVS anticipated that the "$16 billion specialty pharmacy market" would grow at "an even faster rate than traditional pharmacy due in large part to the robust pipeline of biotechnology drugs". When an increasing number of oral oncology agents first entered the market between 2000 and 2010, most cancer care was provided in a community oncology practices. By 2008 many other drugs had been developed to treat cancer, and drug development had grown into a multibillion-dollar industry. In 2003 the Medicare Prescription Drug, Improvement, and Modernization Act was enacted—the largest overhaul of Medicare in the public health program's 38-year history—included Medicare Part D an entitlement benefit for prescription drugs, through tax breaks and subsidies. In 2004 the U. S. Centers for Medicare and Medicaid Services (CMS) prepared a report on final guidance regarding access to drug coverage enacted under in which they included the specialty drugs tier in the prescription drug formulary. At that time CMS guidelines included four tiers: tier 1 includes preferred generics, tier 2 includes preferred brands, tier 3 includes non-preferred brands and generics and tier 4 included specialty drugs. In 2006 in the United States there was no standard nomenclature, so sellers could call the plan anything they wanted and cover whatever drugs they wanted. By 2008 most prescription medication plans in the United States used specialty drug tiers, and some had a separate benefit tier for injectable drugs. Beneficiary cost sharing was higher for drugs in these tiers. By 2011 in the United States a growing number of Medicare Part D health insurance plans—which normally include generic, preferred, and non-preferred tiers with an accompanying rate of cost-sharing or co-payment—had added an "additional tier for high-cost drugs which is referred to as a specialty tier". By 2014 in the United States, in the new Health Insurance Marketplace—following the implementation of the U.S. Affordable Care Act, also known as Obamacare—most health plans had a four- or five-tier prescription drug formulary with specialty drugs in the highest of the tiers. ==AARP==

According to an AARP 2015 report, "All but 4 of the 46 therapeutic categories of specialty drug products had average annual retail price increases that exceeded the rate of general inflation in 2013. Price increases by therapeutic category ranged from 1.7 percent to 77.2 percent." Risk evaluation and mitigation strategies (REMS) On September 27, 2007 President George W. Bush amended the Food and Drug Administration Amendments Act of 2007 (FDAAA) to authorize the FDA to require Risk Evaluation and Mitigation Strategies (REMS) on medications if necessary to minimize the risks associated with some drugs". These medications were designated as specialty drugs and required specialty pharmacies. When the FDA approves a new drug they may require a REMS program which "may contain any combination of 5 criteria: Medication Guide, Communication Plan, Elements to Assure Safe Use, Implementation System, and Timetable for Submission of Assessments". "In 2010, 48% of all new molecular entities, and 60% of all new specialty drug approvals, required a REMS program." Risk-reduction mechanisms can include the "use of specialized distribution partners". Breakthrough therapy In 2013 the FDA introduced the breakthrough therapy designation program which cut the development process of new therapies by several years. This meant that the FDA could "introduce important medicines to the market based on very promising phase 2 rather than phase 3 clinical trial results". Shortly after the law was enacted, Ivacaftor, in January 2013, became the first drug to receive the breakthrough therapy designation. On February 3, 2015 New York-based Pfizer's drug Ibrance was approved through the FDA's Breakthrough Therapy designation program as a treatment for advanced breast cancer. It can only be ordered through specialty pharmacies and sells for "$9,850 for a month or $118,200 per year". According to a statement by the New York-based Pfizer the price "is not the cost that most patients or payors pay" since most prescriptions are dispensed through health plans, which negotiate discounts for medicines or get government-mandated price concessions. When Randy Vogenberg of the Institute for Integrated Healthcare in Massachusetts and a co-leader of the Midwest Business Group initiative, began investigating specialty drugs in 2003, it "wasn't showing up on the radar". By 2009 specialty drugs had started doubling in cost and payers such as employers began to question. Vogenberg observed that by 2014 health care reform had changed the landscape for specialty drugs. There is a shift away from a marketplace based on a predominately clinical perspective, to one that puts economics first and clinical second. (See Drug development). In addition, there are often fewer drug choices for rare or hard-to-treat diseases. This results in less competition in the marketplace for these drugs due to patent protection, which allows these firms to act as monopolists (See Drug Price Competition and Patent Term Restoration Act). Due to this lack of competition, policies that serve to limit prices in other markets can be ineffective or even counter-productive when applied to specialty drugs. High prices for specialty drugs are a problem for both patients and payers. Patients frequently have difficulty paying for these medications, which can lead to lack of access to treatment. Specialty drugs are now so expensive that they are leading to increases in insurance premiums. Control of specialty drug prices will require research to identify effective policy options, which may include: decreasing regulation, limiting patent protection, allowing negotiation of drug prices by Medicare, or pricing drugs based on their effectiveness. Insurance payer definition In the United States, private insurance payers will favour a lower-cost agent preferring generics and biosimilars to the more expensive specialty drugs if there is no peer-reviewed or evidence-based justification for them. According to a 2012 report by Sun Life Financial the average cost of specialty drug claims was $10,753 versus $185 for non-specialty drugs and the cost of specialty drugs continues to rise. With such steep prices by 2012 specialty drugs represented 15-20% of prescription drug reimbursement claims. Patient advocacy groups that lobby for payment for specialty drugs include the Alliance for Patient Access (AfPA), formed in 2006 and which according to a 2014 article in the Wall Street Journal "represents physicians and is largely funded by the pharmaceutical industry. The contributors mostly include brand-name drug makers and biotechs, but some—such as Pfizer and Amgen—are also developing biosimilars." In 2013 AfPA director David Charles published an article on specialty drugs in which he agreed with the findings of the Congressional Budget Office that spending on prescription medications "saves costs in other areas of healthcare spending". He observed that specialty drugs are so high priced that many patients do not fill prescriptions resulting in more serious health problems increasing. His article referred to specialty drugs such as "new cancer drugs specially formulated for patients with specific genetic markers". the most significant increase in prescription drugs in the United States in 2014 was due to "increased inflation and utilization of hepatitis C and compounded medications". "Excluding those two therapy classes, overall drug spend would have increased only 6.4%. The cost of "the top three specialty therapy classes—inflammatory conditions, multiple sclerosis and oncology—contributed 55.9% of the spend for all specialty medications billed through the pharmacy benefit in 2014. The U.S. spent 742.6% more on hepatitis C medications in 2014 than it did in 2013; this therapy class was not among the top 10 specialty classes in 2013. ==Specialty pharmacies==

As the market demanded specialization in drug distribution and clinical management of complex therapies, specialized pharma (SP) evolved.„ By 2001 CVS' specialty pharmacy ProCare was the "largest integrated retail/mail provider of specialty pharmacy services" in the United States. McKesson Specialty Care Solutions, a division of McKesson Corporation, is "one of the largest distributors of specialty drugs, biologics and rheumatology drugs to community-based specialty practices". It is "a leader in the development, implementation and management of FDA-mandated Risk Evaluation and Mitigation Strategies (REMS) for manufacturers". For example, in order ProStrakan Group plc, an international pharmaceutical company based in the UK works with McKesson Specialty Care Solutions to administer its FDA-approved Risk Evaluation and Mitigation Strategy (REMS) program for Abstral. Specialty pharmaceuticals or biologics are a significant part of the treatment market, yet there is still additional work that should be done to manage costs.  Defining biologics has been described as a matter of perspective, with variation between chemists, physicians, payers, microbiologists and regulators. A payer may define a biologic by cost, while a biochemist may look at composition and structure and a provider at means of delivery or action on the body. Due to the complexity, risk of adverse events and allergic reactions associated with biologics, management is very important for the safety of patients.  Management includes areas from patient education and adherence to the delivery of the medication.  These medications often require very specific storage conditions and monitoring of temperature, the level of agitation and proper reconstitution of the drug .   As more biologics are being designed to be self-administered pharmacists are supporting the management of these drugs.  They make calls to remind patients of the need for refills, provide education to patients, monitor patients for adverse events and work with primary care provider offices to monitor the outcomes of the medication.  Debate around the act raised some important questions about the efficacy of biologics and their continued high costs. Some call for insurers to pay only the cost of production to manufacturers until the benefit of these biologics can be proven long-term, stating that insurers should not bear the full cost of products that may be unreliable or have only limited efficacy. This is a new direction in managing the high costs of specialty pharmaceuticals and not without challenges.  One of the barriers is strict regulation by the Food and Drug Administration of what pharmaceutical manufacturers may communicate to the public, limiting that communication to formulary committees for managed care, for example.   Additionally, studies tend to be constructed using observational design, instead of as randomized controlled trials, limiting their usefulness for real-world application. Difficulties experienced with patient adherence to specialty pharmaceuticals also limit the availability of real-world outcomes data for biologics. In 2016, real world data evaluating the efficacy of biologics was only publicly available for multiple myeloma through ICER (where biologics were found to be overpriced for their outcomes) and for hepatitis C treatment (which achieved high cure rates—90%—for patients co-infected with HIV and Hep C) through Curant Health.   These studies show how useful value-based pricing may become for cost-containment in the field.  The good news is that there are effectiveness studies on biologics currently underway aiming to provide more of this data. ==Regulation==

Biologics or biological products for human use are regulated by the Center for Biologics Evaluation and Research (CBER), overseen by the Office of Medical Products and Tobacco, within the U.S. Food and Drug Administration which includes the Public Health Service Act and the Federal Food, Drug and Cosmetic Act. "CBER protects and advances the public health by ensuring that biological products are safe and effective and available to those who need them. CBER also provides the public with information to promote the safe and appropriate use of biological products." ==Specialty market participants==

There are multiple players in specialty drugs including the employer, the health plan, the pharmacy benefits manager and it is unclear who should be in charge of controlling costs and monitoring care. Alexion is thus seeking a stronger position in the lucrative rare disease market, and is willing to pay a premium to obtain that position. Companies like Magellan RX Management provide a "single source for high-touch patient care management to control side effects, patient support and education to ensure compliance or continued treatment, and specialized handling and distribution of medications directly to the patient or care provider. Specialty medications may be covered under either the medical or pharmacy benefit." The Academy of Managed Care Pharmacy (AMCP) designates a product as a specialty drug if "[i]t requires a difficult or unusual process of delivery to the patient (preparation, handling, storage, inventory, distribution, Risk Evaluation and Mitigation Strategy (REMS) programs, data collection, or administration) or, Patient management prior to or following administration (monitoring, disease or therapeutic support systems)". Health plans consider "high cost" (on average a minimum monthly costs of $US1,200) to be is a determining factor in identifying a specialty drug. Retail pharmacies The top ten specialty pharmacies in 2014 were CVS Specialty parent company CVS Health with $20.5B in sales, Express Scripts's Accredo at $15B, Walgreens Boots Alliance's Walgreens Specialty at $8.5B, UnitedHealth Group's OptumRx at $2.4B, Diplomat Pharmacy at $2.1B, Catamaran's BriovaRx at $2.0B, Specialty Prime Therapeutics's Prime Therapeutics at $1.8B, Omnicare's Advanced Care Scripts at $1.3B, Humana's RightsourceRx at $1.2B, Avella at $0.8B. All the other specialty pharmacies accounted for $22.4B of sales in 2014 with a total of $78B. Hospitals and physicians In 2010 the United States enacted a new health law which had unintended consequences. Because of the 2010 law, drug companies like Genentech informed children's hospitals that they would no longer get discounts for certain cancer medicines such as the orphan drugs Avastin, Herceptin, Rituxan, Tarceva, or Activase. This cost hospitals millions of dollars. There is a debate about whether specialty drugs should be managed as a medical benefit or a pharmaceutical benefit. Infused or injected medications are usually covered under the medical benefit and oral medications are covered under the pharmacy benefit. Self-injected medications may be either. "Many biologics, such as chemotherapy drugs, are administered in a doctor's office and require extensive monitoring, further driving up costs." By 2011 the oral medications for cancer patients represented approximately 35% of cancer medications. Prior to the increase in cancer oral drugs community cancer centers were used to managing office-administered chemotherapy treatments. At that time "the majority of community oncology practices were unfamiliar with the process of prescribing and obtaining drugs that are covered under the pharmacy benefit" and "conventional retail pharmacy chains were ill-prepared to stock oral oncology agents, and were not set up to deliver the counseling that often accompanies these medications". == U.S. national market share ==

According to IMS Health "Specialty pharmaceutical spending is on the rise and is expected to increase from approximately $55 billion in 2005 to $1.7 trillion in 2030, according to the Pharmaceutical Care Management Association. That reflects an increase from 24% of total drug spend in 2005 to an estimated 44% of a health plan's total drug expenditure in 2030." The SP/SD network faces common strengths such as "in-depth clinical management, coordinated/comprehensive care, and early limited distribution network success" and common weaknesses, "lack of ability to customize services, poor integration experience and outcomes, and strained pharma relations". Specialty companies like Genzyme and MedImmune were acquired and are transitioning to a new business model. Basta described how Hubs have been around since about 2002 "starting out as "reimbursement hubs"", usually provided as a service by manufacturers to help patients and providers navigate the process of obtaining permission to use, and reimbursement for, expensive specialty therapies". Industry observers look to pioneering efforts by Genentech and Genzyme under the tenure of Henri Termeer, "when some of their earliest biotech products entered the marketplace". and health outcomes were compromised. when it was classified by FDA as an orphan drug and a specialty drug to treat infantile spasms. Questcor, a biopharmaceutical company, focuses on the treatment of patients with "serious, difficult-to-treat autoimmune and inflammatory disorders". Its primary product is FDA-approved Acthar, an injectable drug that is used for the treatment of 19 indications. At the same time Questcor created "an expanded safety net for patients using Acthar", provided a "group of Medical Science Liaisons to work with health care providers who are administering Acthar" and limited distribution to its sole specialty distributor, Curascript. The 2007 pricing model brought "Acthar in line with the cost of treatments for other very rare diseases". Sovaldi is on the World Health Organization's most important medications needed in a basic health system and the steep price is highly controversial. In 2014 the U.S. spent 742.6% more on hepatitis C medications than it did in 2013. for obtaining manufacturing licenses on old, out-of-patent, life-saving medicines including pyrimethamine (brand name Daraprim), which is used to treat patients with toxoplasmosis, malaria, some cancers, and AIDS, and then increasing the price of the drug in the US from $13.50 to $750 per pill, a 5,455% increase. In an interview with Bloomberg News, Shkreli claimed that despite the price increase, patient co-pays would be lower, that many patients would get the drug at no cost, that the company has expanded its free drug program, and that it sells half of the drugs for one dollar. Captive pharmacies In 2015 Bloomberg News used the term 'captive pharmacies' to describe the alleged exclusive agreements such as that between the specialty mail-order pharmacy Philodor and Valeant, mail-order pharmacy Linden Care and Horizon Pharma Plc. In November 2015 Express Scripts Holding Co.—the largest U.S. manager of prescription drug benefits—"removed the mail-order pharmacy Linden Care LLC from its network after concluding it dispensed a large portion of its medications from Horizon Pharma Plc and didn't fulfill its contractual agreements". Express Scripts was "evaluating other 'captive pharmacies' that it said are mostly distributing Horizon drugs". In 2015 specialty pharmacies like "Philidor drew attention for the lengths they went to fill prescriptions with brand-name drugs and then secure insurance reimbursement. ==Trans-Pacific Partnership==

According to Pfenex, a clinical-stage biotechnology company, the proposed terms in the Trans-Pacific Partnership, a trade agreement between twelve Pacific Rim countries, meant that all participating countries had to adopt the United States' lengthy drug patent exclusivity protection period of 12 years for biologics and specialty drugs. ==Popular culture==

In 1981 an episode of the television series Quincy, M.E. starring star, Jack Klugman as Quincy, entitled "Seldom Silent, Never Heard" brought the plight of children with orphan diseases to public attention. In the episode, Jeffrey, a young boy with Tourette syndrome, died after falling from a building. Dr. Arthur Ciotti (Michael Constantine), a medical doctor who had been researching Tourette syndrome for years wanted to study Jeffrey's brain to discover the cause and cure for the rare disease. He explained to Quincy that drug companies, like the one where he worked, were not interested in doing the research because so few people were afflicted with them that it was not financially viable. In 1982 another episode "Give Me Your Weak" Klugman as Quincy testified before Congress in an effort to get the Orphan Drug Act passed. He was moved by the dilemma of a young mother with myoclonus. == Further reading ==