What's the Difference between a Specialty Drug and a Non-Specialty Drug?

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In the past 30 years, a distinct trend has emerged in the pharmaceutical industry. With advancements in science and technology, pharmaceutical manufacturers have expanded their pipelines to launch new “specialty” drugs designed to treat rare, complex diseases. 

Adoption has been rapid: from the 1990’s to the 2000’s, the number of specialty drugs has grown from 30 to over 500. By 2023, 65% of new drug launches are expected to be specialty drugs 

Looking forward to the future of pharmacy, it’s critical to understand how a specialty drug is defined, how it differs from traditional, non-specialty drugs, and how specialty is impacting employers’ benefit plan designs.  

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Specialty Drugs Typically Treat Rare or Complex Diseases

Until recently, specialty drugs were developed to treat less common conditions, including “orphan” diseases that affect fewer than 200,000 people in the U.S. Specialty medications are typically biologic medications, meaning the drug is made from living organisms and targets a specific part of the disease process. Specialty drugs treat certain cancers, multiple sclerosis, narcolepsy, and other care-intensive conditions.

In contrast, non-specialty drugs treat both chronic and acute diseases that affect larger populations in the U.S. In contrast to specialty medications, non-specialty drugs are typically small-molecule medications, meaning they are chemically synthesized. The most common non-specialty medications treat conditions like cardiovascular disease, high blood pressure, and diabetes.

While specialty drugs were originally designed to treat only rare diseases, as time has progressed, specialty drugs are increasingly being developed to treat common chronic diseases, such as asthma and eczema.

Specialty Drugs are Only Filled at Specialty Pharmacies

Another key difference between specialty and non-specialty drugs is where you can fill them. Non-specialty drugs are dispensed through nationwide retail chains, community retail pharmacies, and mail-order pharmacies.  

On the other hand, specialty drugs are generally dispensed from distinct specialty pharmacies, which are far fewer in number than traditional pharmacies. Specialty drugs require intensive packaging, handling, storing, and monitoring, which is why their distribution is restricted. For example, some specialty drugs must be kept at a certain temperature, otherwise, the medication will spoil. Others require significant monitoring and data collection, usually mandated by the Food and Drug Administration, which further limits the number of pharmacies that are permitted to dispense a drug.

Many pharmacy benefits managers (PBMs) have created their own specialty pharmacies where members can access specialty drugs. For example, if an employer provides their members with a pharmacy plan through CVS, members might fill their Humira prescriptions at the CVS Specialty Pharmacy, whereas they’d fill a non-specialty Lipitor prescription at a neighborhood retail pharmacy. 

Specialty Drugs are More Expensive

Finally, the biggest difference between specialty and non-specialty drugs is cost. Specialty medications are overwhelmingly more expensive than traditional, non-specialty medications. For example, the average price of a 30-day supply of a branded non-specialty drug is around $400. In contrast, a 30-day supply of a branded specialty drug is around $6,000 (Source: Truveris’ truGuard Quarterly Reporting).

What drives this 15x price difference? Specialty drugs are complicated to manufacture, plus they serve a small target population. This leads drug manufacturers to set higher list prices for these novel treatments as compared to non-specialty treatments. Specialty medications also tend to have fewer competitors in the marketplace, which keeps prices high. Other market conditions, such as the vertical integration within the PBM and specialty pharmacy industry, further contribute to higher costs.

How Should Plan Sponsors Approach Specialty?

Plan sponsors, who shoulder most of these costs, must find creative ways to manage specialty costs. Employers should ensure their members have access to these life-changing medications, while managing the financial risk associated with their use. For a comprehensive approach, plan sponsors should secure a procurement partner that can evaluate the financial, clinical, and operational aspects of specialty programs. Plan sponsors should also ensure the ongoing monitoring of their pharmacy benefits contract, which will highlight optimization opportunities in regard to specialty drug dispensing. 

To learn more about the rise of specialty drugs and how to best control their associated costs, watch the Truveris Webinar: Managing Specialty Costs: Strategies for Optimizing Your Self-Funded Pharmacy Benefits Program. 

Truveris is a leading digital health company focused on delivering truth and clarity in pharmacy. Truveris’ proprietary technology, coupled with deep pharmacy expertise, helps to build a more efficient market that maximizes choice, accessibility and prescription drug affordability. Our solutions provide the insight and knowledge to help people lead healthier and more productive lives.

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