Specialty drug spending is expected to more than quadruple by 2020, reaching about $402 billion a year. Fewer than 4% of patients use specialty medications, but they account for 25% of healthcare costs.” – CVS Caremark in Robinson, PharmaVoice. 2014; 12

Most parents in the United States believe their children are special. Most drug manufacturers think their drugs are special, too. Some drugs, however, are more special than others. A 2014 PharmaVoice article defines specialty drugs as “typically high-cost, scientifically engineered drugs used to treat complex, chronic conditions that require special storage, handling, and administration, and involve a significant degree of patient education, monitoring, and management.”

Three problems with the specialty drug market today are the wide-ranging definitions of specialty drugs, the small size of patient cohorts and the high cost of the drugs.

The very definition of specialty drugs varies widely. Insurance company Blue Cross Blue Shield of Michigan and pharmacy benefit manager Express Scripts both define specialty drugs as prescription drugs that require special handling and administration. The Boston Globe expands that definition by adding that specialty drugs work through complex mechanisms. UnitedHealth Center for Health Reform & Modernization adds that specialty drugs are expensive both in total and on a per-patient basis and are used by a small share of the population. The Centers for Medicare & Medicaid Services defines specialty drugs as those that cost more than $600 each month. Such discrepancies cause difficulties in discussions about the current state of the market. A second issue the specialty drug market faces is the small size of patient cohorts. By nature, specialty drugs are designed for a small percentage of the population. That percentage, in turn, is broken into smaller cohorts as specialty medications become more and more personalized. For example, many specialty drugs are used to treat cancer, an area where targeted agents as treatment are becoming more popular and more precise, even gene-specific. Because the medicine is so precise, companies cannot easily mass-produce the drugs.

The high cost of specialty drugs is another problem with the specialty drug market. In 2012, specialty drug spending was $65.8 billion, according to a report from the health insurance industry’s national trade association. Some drugs cost as much as $750,000 per year. By 2019, specialty medications are expected to account for more than half of all pharmacy costs, according to an article in the Express Scripts Lab. Such costs are unsustainable, especially if patients must pay ever-increasing high costs.

The specialty drug market faces three challenges – the greatly varying definitions of specialty drugs, the small size of patient cohorts and the high cost of the drugs. If the pharmaceutical industry can overcome these three challenges, the forecasted changes in the specialty drug market will go smoothly, and all such drugs will get the chance to prove how special they are.