The fastest growing segment of the prescription drug market is specialty drugs. The 2014 Express Scripts Drug Trend Report states that specialty drugs account for 1% of prescriptions, but 32% of prescription drug spending. But what are specialty drugs? As it turns out, there is no one widely accepted definition. This may be because the definition of specialty drug has changed over time.
In 2009, IMS developed a definition of specialty drugs that was reviewed and approved by a number of trade associations and IMS clients. Their definition indicated that specialty products had at least five of the following eight attributes:
- Target and treat specific, characteristically chronic, often rare conditions
- Initiated only by a specialist
- Generally not taken orally
- Require special handling (e.g., maintaining a cold chain)
- Involve unique distribution management, administration and/or paperwork
- Very expensive, ranging from $6,000 to $750,000 a year
- May warrant intensive patient supervision and counseling to ensure compliance
- Patients may require assistance in securing reimbursement”.
The first specialty drugs were biologics. According to BIO, the trade association representing biotech companies, a biologic is “manufactured in a living system such as a microorganism, or plant or animal cells. Most biologics are very large, complex molecules or mixtures of molecules.” By contrast, a non-biologic drug “is typically manufactured through chemical synthesis, which means that it is made by combining specific chemical ingredients in an ordered process.” Non-biologic, or chemical, drugs tend to be much smaller, simpler molecules.
The fact that the first specialty drugs were biologics explains several of the characteristics seen in the 2009 IMS (and many other) definitions. Most biologics are proteins, so they cannot be taken orally – they must be injected. Because they are large, complex proteins they can be made less effective by high temperatures, excessive shaking, or exposure to light and they are contaminated by microbials much more easily than chemical drugs. So, they require special handling and storage. Because they must be grown in organisms, they are much more expensive to produce than chemical drugs. This accounts for at least part of their much higher cost.
A good example of a biologic specialty drug is Enbrel (etanercept) which is used to treat inflammatory conditions such as rheumatoid arthritis. The package insert indicates that etanercept in produced by “recombinant DNA technology in a Chinese hamster ovary (CHO) mammalian cell expression system,” and that it is made of 934 amino acids (meaning it is a very large protein molecule). The insert also indicates that the product requires special handling and storage: it should be stored in a refrigerator, not subjected to extreme heat or cold (for example, the insert states “avoid storing Enbrel in your vehicle’s glove box or trunk”, and should not be frozen or shaken. The insert also indicates that Enbrel should be administered as a subcutaneous injection.
Etanercept fits most of the other characteristics in the IMS definition also. It treats specific, chronic, (but not necessarily rare) conditions, treatment is initiated by a specialist, it is very expensive (the AWP for a year’s supply is about $24,000), it requires intensive supervision and monitoring because of side effects, and because of its high cost, patients may need assistance in finding reimbursement. Even well insured patients may face very high copays or coinsurance for the drug.
In the last few years, a number of drugs have come to market that are not biologics and yet are classified as specialty drugs. Some examples are Tasigna (nilotinib), Gleevec (imatinib), and Harvoni (ledipasvir/sofosbuvir). Because they are not biologics, they can be taken orally and do not require special handling or storage. Tasigna, which is used to treat chronic myeloid leukemia, meets most of the other requirements in the IMS definition. For Tasigna, the “unique distribution management, administration and/or paperwork” is a FDA-required Risk Evaluation and Management Strategy (REMS). The REMS requires that Tasigna’s maker, Novartis, make sure that a special Tasigna Medication Guide is given to the patient with each prescription for the drug and that company representatives deliver to and discuss with prescribers a special educational packet explaining the risks of using Tasigna. Gleevec meets most of the requirements that Tasgina meets, but does not require a REMS.
Harvoni, a new treatment for Hepatitis C, meets even fewer of the requirements. It treats a specific condition – Hepatitis C infection – but the condition is neither rare nor (if treated) chronic, treatment should be initiated by a specialist, and it is very expensive. However, it does not have a REMS. And, depending on one’s definition of intensive, it probably does not require intensive patient supervision and counseling.
The point is that over time, the definition of “specialty drug” is getting less and less specific. For example, by 2014 specialty drugs were defined by IMS as “products that are often injectable, high-cost, biologics or require cold-chain distribution. They are mostly used by specialists, and include treatment for cancer and other serious chronic conditions.” This is a much less restrictive definition, which reflects the changing nature of the specialty drug market.
Medicare may have the best idea. Medicare defines a specialty drug for the Part D program as a drug that costs more than $600 a month.