What Are the Biologics & Specialty Drugs?

What Are the Biologics & Specialty Drugs? 

Derived from a biotechnology process, biologic and specialty drugs can change the course of a disease instead of just treating the symptoms. Other key factors include: 

  • Research and development is long, complex and expensive, with average costs for each new drug at approximately $1.2 billion.
  • Dosing regimens are often complicated and serious adverse events can occur that require monitoring and administration procedures to assure safe and effective clinical outcomes.
  • Often requires special handling, storage and patient administration in a clinical setting.
  • Usually requires significant patient education, monitoring and follow-up are usually required.
  • Side effects can be more frequent and serious than with traditional drugs.
  • Therapies often target smaller populations and involve more individualized use based on patient-specific genetic-level differences (e.g. Personalized Medicine).
  • Approximately one-third are or will be delivered in oral tablet form (versus injected or infused) which may actually cost more as this is considered “new technology.”
  • Future manufacturing will use high technology formulation and delivery systems such as nanotechnology, with nanoparticles or implantable devices used to treat specific types of cancers.

The Centers for Medicare & Medicaid Services define specialty drugs as those that cost $670/month or more.  Meanwhile, the Food & Drug Administration (FDA), employers, and other health care stakeholders have their own ways of defining this fast-growing drug category.  

While specialty drugs are very effective in decreasing the debilitating effects of certain diseases, their costs are significantly higher than traditional drugs and some are effective only for individuals with specific genetic markers, which make it possible to distinguish a cell that has been transformed from those that have not. The field of genetic markers, also known as biomarkers, continues to expand and increase in numbers recognized by the FDA as well as drug manufacturers. Such technologic advances covered under the medical benefit underscores the need for a holistic strategy across medical and pharmacy benefits.

As purchasers of the majority of medical and pharmacy costs in the U.S. today it is important for employers to gain an understanding of the growing trend around specialty drugs, devices and diagnostics.  Self-insured employers are eager to find effective ways to address and appropriately manage these rising costs.  Their ability to continue to offer and fund drug-related benefits will depend on the right benefit strategies being in place to ensure proper use of specialty drugs in a transparent system and to prevent inappropriate drug use or waste.