Rising Drug Costs: Specialty & Orphan medications Drive Healthcare Spending Concerns
Orlando, FL – A surge in high-cost specialty and orphan drugs is poised to dominate new pharmaceutical approvals, prompting employers to seek innovative strategies for managing healthcare expenses. This was the key takeaway from a panel discussion at the Pharmacy Benefit Management Institute’s (PBMI) annual meeting this week.
Experts predict healthcare costs will climb approximately 9% by 2026, fueled largely by cancer care and the increasing prevalence of thes specialized medications. A recent report from Business Group on Health’s Employer Health Care Strategy Survey highlights this trend,with employers bracing for continued increases.
The Rise of specialty & Orphan drugs
Specialty drugs are already a major driver of spending, and their influence is only expected to grow. According to IQVIA’s Global Use of Medicines report, these medications will represent roughly 46% of global drug spending by 2029, rising to 54% in developed markets. Over the past two decades, more than 1,000 novel drugs have been launched globally, with nearly 400 arriving in the last five years alone. The US saw 48 novel drug launches in 2024, a 22% increase compared to the 2015-2019 timeframe.Adding to the financial pressure is the growing market for orphan drugs – medications designed to treat rare conditions affecting fewer than 200,000 people in the US. Evaluate Pharma projects that these drugs will account for a fifth of all forecasted drug sales by 2030, doubling their share over the last decade.
“orphan drugs are becoming the norm, and they’re not getting any less expensive,” noted Michael Agostino, RPh, of Network of Advanced Specialty Healthcare, during the PBMI panel.”What are the strategies going to be put in place to cover these high-cost claims? How are you preparing for them, othre than just filling up a bucket full of money to get ready for the unknown?”
stop-Loss Insurance & Emerging Solutions
Pharmacy Benefit Managers (PBMs) are being called upon to work with stop-loss carriers to help self-insured employers navigate these escalating costs. Stop-loss insurance traditionally provides a safety net against catastrophic claims, reimbursing employers for expenses exceeding pre-defined limits.
However,panelists emphasized that the emergence of groundbreaking,yet incredibly expensive,treatments like cell and gene therapies are reshaping the financial landscape.Customary stop-loss coverage may prove insufficient, necessitating the advancement of new, innovative solutions to manage these unprecedented costs.
A recent survey by the International Foundation of Employee Benefit Plans confirms that catastrophic claims are increasingly cited as a major contributor to rising benefit costs.
Looking Ahead
The pharmaceutical market is undergoing a significant conversion, with high-cost specialty and orphan drugs leading the charge. Employers, PBMs, and insurers are now focused on developing proactive strategies to mitigate the financial impact
