While less than 5% of the population requires treatment with specialty medications, specialty drugs account for at least half of pharmaceutical spending in recent years.1
This comes as no surprise to those who understand that specialty drugs are difficult and costly to manufacture. Additionally, many specialty drugs are used for a small subset of patients for complex, rare diseases. There is less competition to bring these drugs to market because of the small patient populations who will typically use them.
The growing impact of specialty medications
When considering how specialty drug spend impacts a business’s bottom line, plan sponsors should be aware of projections for specialty drug costs. Monitoring the specialty pipeline allows stakeholders to anticipate impacts on cost and patient care, facilitate more proactive management, and prepare for new treatments to optimize patient outcomes and access to care.
- The specialty pharmaceuticals market grew from $92.50 billion in 2023 to $129.23 billion in 2024. It is expected to continue growing at a Compound Annual Growth Rate (CAGR) of 39.80%, reaching $965.54 billion by 2030.2
- Specialty medicines will represent 43% of global spending by 2028 and more than 55% of total spending in leading developed markets like the United States.2
- In mid-1990s, fewer than 30 specialty drugs were available. By mid-2024, specialty drugs pipeline grew represented about 75% of the approximate 7000 new drugs under development.3
With the anticipated pipeline growth, utilization will continue to climb as more members will use these drugs for additional indications, as well as the new agents that will come to market.
This doesn’t necessarily mean the population is getting sicker, but that members with specialty disease states who did not have any treatment options before now have access to these new agents. This also means providers are getting more familiar with prescribing these medications and members are more acceptable to trying various dosage forms, including injectables, which may offer additional treatment benefits.
Specialty drug growth and outlook
Breakthrough therapies launched over the past decade for multiple diseases are re-shaping patient care in many areas. The outlook for medicine use – and the related spending – through 2028 is higher than prior forecasts as more novel drugs become available.2
Thus, according to market predictions, it appears growing specialty costs are here to stay.
- In 2024, FDA’s Center for Drug Evaluation and Research (CDER) approved 50 new drugs never before approved or marketed in the U.S., known as “novel” drugs, which contributes to the specialty pipeline.4
- As of today, 68 biosimilar products have been approved by the U.S. Food and Drug Administration (FDA). In 2024, the FDA approved 18 new biosimilars, a record high.5
- The two leading global therapy areas — oncology and immunology — are forecast to grow 14–17% and 2–5% Compound Annual Growth Rate (CAGR), respectively, through 2028.6
- Oncology alone is projected to add 100 new treatments over five years, contributing to an increase in spending of $224 billion to a total of more than $440 billion in 2028.2
Planning for rising specialty drug costs
Given these trends, it’s essential for employers and plan sponsors to take a strategic approach to managing these rising costs, but understanding and navigating the complexities of specialty pharmacy is no easy task. To help you mitigate spend and improve the member experience, consider the following strategies:
- Evaluate plan design. Regularly review and update plan structures to ensure they are aligned with current specialty pharmacy trends and member needs.
- Leverage data analytics. Use advanced analytics to identify cost drivers and predict future spending. This insight can help tailor benefits to maximize efficiency.
- Promote member engagement. Educate members about their benefits, encouraging them to take advantage of available resources, such as patient assistance programs.
It’s clear. Now more than ever, it’s important for plan sponsors to stay informed about their specialty drug spend. The specialty landscape is dynamic and ever-changing. Anticipating future trends can help your organization manage costs while supporting the needs of employees. CarelonRx offers deep insights and specialty pharmacy solutions to help you do just that.
1. CarelonRx: Specialty Conditions Value of Integration Study.
2. Iqvia Institute: Global Use of Medicines 2024, Outlook to 2028: iqvia-institute-global-use-of-medicines-2024-forweb.pdf.
3. Pharmacy Times: Navigating the Rapid Growth of Specialty Drugs: Opportunities, Challenges, and the Path Ahead: https://www.pharmacytimes.com/view/navigating-the-rapid-growth-of-specialty-drugs-opportunities-challenges-and-the-path-ahead.
4. FDA: Novel Drug Approvals 2024: https://www.fda.gov/drugs/novel-drug-approvals-fda/novel-drug-approvals-2024.
5. FDA: CEDR New Drug Therapy Approvals 2024: https://www.fda.gov/media/184967/download?attachment .
6. Research and Markets: Specialty Pharmaceuticals Market by Type, Product, Distribution Channel - Global Forecast 2025-2030.
