Last year, U.S. spending on prescription drugs totaled $263.3 billion—25% of which was spent on specialty drugs. Specialty drugs account for a disproportionate share

of overall drug spending because of their extremely high cost.

According to the American Pharmacists Association, specialty pharmacy focuses on high cost, high touch medication therapy for patients with complex disease states. Medications in specialty pharmacy range from oral to cutting edge injectable and

biologic products. The disease states treated range from cancer, multiple sclerosis, and rheumatoid arthritis to rare genetic conditions.

Our analysis revealed that the average medical costs per member per month for

patients with rheumatoid arthritis dropped by 31% when specialty drugs were prescribed. However, pharmacy costs

increased by 608% in this population. What this means: the reduction in medical costs of $1.1 million was offset by the total Rx increase of $4.9 million.

While these drugs offer tremendous promise in improved longevity and quality of life, their high costs and extended use has put a strain on our healthcare system. Health

plans, employers, and other stakeholders are searching for new ways to maintain access to innovative breakthrough therapies for patients while simultaneously

ensuring that costs are sustainable.

Specialty Pharmacy

Traditional vs. Specialty

© 2014 Veri sk HealthSources: 2013 Express Scripts Drug Trend Report, CNN Money, Verisk Health, Verisk Health Client Data

Healthcare’s Expensive Conundrum

Spend for SpecialtyMedications

+14.1% Overall Medical

Cost Growth

+5.4%Spend for Traditional

Medications

+2.4%

Learn more about how we’rehelping clients leverage data at:

www.veriskhealth.com/dxcg

The Rising Costof Healthcare

Cost of Multiple Sclerosis

Spotlight on Rheumatoid Arthritis

Tweet your answers@veriskhealth #SpecialtyPharmacy

In 2013, 60% of new drugs approved by the

FDA were expected to be specialty

1Year of tuition at an Ivy

League school~$60,000

11Car payments on 11 vehicles for one year.

The average cost per prescription of Copaxone, a specialty drug to treat Multiple Sclerosis, is around $4,000 per month. That could fund:

4Mortgage payments on

four houses for one year.

Specialty drugs represent only 1% of total prescriptions written in 2013, but constitute 25% of the total pharmacy cost.

Spend onSpecialty Drugs

25%Prescriptions forSpecialty Drugs

1%

Average List CostPer 30-Day Supply

Trad

ition

alSp

ecia

lty

Diabetes (metformin)$94

High Blood Cholesterol (atorvastatin)$43

Inflammatory Conditions (Humira®)$2,550

Hepatitis C (Solvaldi®)$30,000

Multiple Sclerosis (Copaxone®)$4,137

How would you balance innovation and quality of life with rising costs in specialty drugs?

$107,625Average cost ofCNS classtherapy

and workers in

9 of 10

For the first time, a group of medications used to treat miscellaneous central nervous system (CNS) disorders is ranked in the top 10 most expensive specialty

therapy classes, including Xyrem® (sodium oxybate) for narcolepsy with an average cost per prescription of $8,278.92.

Pharmacy Costs

+608%

$51,017

Medical Costs

-31%

Because specialty drugs are so expensive, in many cases, they increase the total cost of treating a patient, despite the reduction in medical cost for some conditions.

peryear:

The median annual household income in the United States is

Source: 2013 Express Scripts Drug Trend Report

largest occupations earnless than that each year.

*Based on average monthly mortgage and car payments.

Source: Verisk Health