San Francisco—Less than 1% of Americans use specialty drugs, yet the medications now account for 38% of the nation’s pharmacy drug spending. The figure is expected to rise further as more orphan and other specialty drugs pass through the regulatory pipeline, according to speakers at the Academy of Managed Care Pharmacy’s AMCP 2016 meeting.
“By 2018, we could see half of all pharmaceutical drug spending on specialty medications,” said Aimee Tharaldson, PharmD, the senior clinical consultant for emerging therapeutics at Express Scripts, and a conference presenter. “Over the last six years, the FDA has approved more specialty than traditional drugs, and that trend is expected to continue.”
The FDA approved a record number of 56 drugs last year, of which 33 were specialty medications. Most were orphan drugs and almost half were oral medications. So far this year, the FDA has approved 10 additional specialty drugs.
More specialty drugs means more medications for conditions previously difficult to treat or incurable, such as hepatitis C (HCV). It also means a whole lot of money exchanging hands. HCV treatment would cost the health care system $160 billion if all 3.2 million infected individuals in the United States were treated, noted Doug Long, BS, MBA, the vice president of industry relations at IMS Health, and another conference speaker.
Overall, on an invoice price basis, specialty pharmaceuticals accounted for about $151 billion of the nearly $425 billion spent on prescription drugs in the United States in 2015, an increase of 21.5% over 2014, according to an April report from IMS Health. Still, although specialty medicine spending continues to grow, the rate of that growth appears to be declining from its 2014 peak, Mr. Long noted. He further predicted that 44% of pharmaceutical spending will be on specialty drugs through 2020.
“We live in interesting times,” he said. “The dialogue at this meeting five years ago was around primary care blockbusters. Now we’re talking about specialty. In five years, we’ll be talking about specialty entering the primary care space.”
Tracking Trends
Dr. Tharaldson advised keeping an eye on three specialty market trends in the years ahead: increased competition, orphan and cancer drug development and breakthrough therapies.
Increased competition is already helping to fill niche markets. While there were no specialty FDA-approved targeted pharmaceuticals for idiopathic pulmonary fibrosis (IPF), hereditary angioedema (HAE) or melanoma as of 2005, for example, there are now two therapies for IPF, five for HAE and eight for melanoma.
Meanwhile, orphan drugs are not so orphaned anymore. Twenty-nine percent of specialty pipeline drugs will have that indication, Dr. Tharaldson noted. Of those, about one-fourth are orphan cancer medications. This is no coincidence. “Thirty percent of orphan medicines become blockbusters,” she added. “It’s lucrative for manufacturers to develop orphan medicines.”
What’s more, according to Mr. Long, the drugs require less time maneuvering through the FDA regulatory system. “We’ve barely scratched the surface in orphan drugs,” he said. “This is not your father’s R&D.”
By 2020, more than 470 drugs will be available to treat some of the 7,000 conditions that each afflict fewer than 200,000 people. Approximately 25 million patients in this country have an orphan disease for which no or limited treatments are available, according to Mr. Long. While global medicine spending on orphan drugs is expected to be less than 2%, he added, it could grow to as much as 10% in developed markets such as the United States.
Breakthrough therapies are also reaching the market faster. Established as a therapy designation in 2012 by the FDA, by definition they target serious or life-threatening conditions with evidence indicating a substantial improvement over existing therapies. So far, the FDA has granted 100 such designations, including drugs for HCV, cystic fibrosis and meningitis B. (Not all have yet been approved by the agency.)
“This is the most innovative period in the history of the pharmaceutical marketplace because of specialty drugs,” Mr. Long said.
Products in the Pipeline
Continuing to top the specialty market are drugs for inflammatory conditions, multiple sclerosis (MS), cancer, HCV and HIV. Inflammatory conditions remain the leading specialty therapy class, with infliximab-dyyb (Inflectra, Celltrion-Pfizer) receiving the latest FDA approval on April 5; the drug is a biosimilar to Janssen’s Remicade and is indicated for multiple inflammatory conditions. Dr. Tharaldson noted Inflectra could launch in early October, although litigation may delay the date. She also anticipates more biosimilars, as well as injectable biologics and expanded indications for the class in the coming months and years. Notable products in the pipeline include a biosimilar of adalimumab (Humira, Abbvie) from Amgen and an expanded indication for ustekinumab (Stelara, Amgen) for the treatment of Crohn’s disease. Both drugs might be approved as early as September. Meanwhile, Valeant Pharmaceuticals’ brodalumab and Janssen’s guselkumab could change the psoriasis treatment landscape with approvals potentially coming in 2017.
Trends for MS include new injectable biologics and drugs for progressive cases of the disease. Dr. Tharaldson highlighted a 40-mg glatiramer acetate generic of Teva’s Copaxone in development by Mylan/Sandoz/Synthon, which could be approved by the FDA in February 2017. Genentech’s ocrelizumab is expected to be approved in December 2016, a drug that targets both relapsing forms and primary progressive MS via CD20+ B cells.
In oncology, Dr. Tharaldson noted that trends will include breakthrough and targeted therapies, immunotherapy development and competing oral drugs. There will likely be a host of new additions. Cancer drugs comprised one-third of drugs launched in 2015, according to Mr. Long. In the next five years, he suggested, cancer treatment will represent the largest category of the 225 new medications expected to be introduced.
The FDA’s most recent specialty drug approval came on April 11 for a cancer therapy: venetoclax (Venclexta, AbbVie/Roche), a new oral treatment for chronic lymphocytic leukemia that works as a B-cell lymphoma-2 inhibitor. Among drugs next in line are rociletinib (Xegafri, Clovis Oncology), a twice-daily oral epidermal growth factor receptor inhibitor for non-small cell lung cancer (NSCLC) set for FDA approval in June, and atezolizumab (Genentech), an infusion that targets PD-L1+ urothelial carcinoma and NSCLC that could win approval in September.
Mr. Long also recommended paying attention to PD-1 pathway inhibitors, not only to treat cancer but also for Alzheimer’s disease. “That could be huge,” he said.
Meanwhile, the standard of care for HCV is rapidly evolving. Pangenotypic regimens and shorter treatment duration are the latest trends, Dr. Tharaldson noted. Four HCV drugs are now in the pipeline, with the next likely approval coming in June for Gilead’s sofosbuvir/velpatasvir combination.
Currently, about 1 million people in the United States are living with HIV, and that population is expected to grow, Dr. Tharaldson pointed out. Trends in HIV treatment include a therapeutic vaccine and injectable therapies. All six drugs in the HIV pipeline could receive FDA approval in 2017, including Gilead’s oral integrase inhibitor, GS-9883; Immune Response BioPharma’s vaccine, Remune; and Bristol-Myers Squibb/ViiV Healthcare’s oral attachment inhibitor, fostemsavir.
Dr. Tharaldson also highlighted four drugs in development for asthma and allergy, as well as three for Duchenne muscular dystrophy, nine for non-alcoholic steatohepatitis (NASH) and three for primary immunodeficiency.
Cutting Costs With Biosimilars
Given the rising prices associated with many of these drugs, experts emphasized a need to embrace biosimilars in the specialty pharmaceutical market.
“We had a generic wave, now we need biosimilars,” Mr. Long said. “The market will need biosimilars to offset costs.” The less money spent on pharmaceuticals, the more money is available for other needs in the health care system, he added, noting that appropriate use of pharmaceuticals is part of that equation. A treatment-compliant patient is less prone to end up in the hospital, where additional dollars would be spent.
Biosimilars act like competing brands, at a discount of 15% to 30%, Dr. Tharaldson pointed out. “But there are a lot of legal hurdles to get these products to market,” she said. Patent litigation will delay the availability of biosimilars as reference biologic manufacturers defend existing patents for as long as possible, she explained. Even after FDA approval, biosimilar products will not be available on the market for at least 180 days. (Court rulings stipulate that a 180-day notice of launch cannot be given until after FDA approval.)
“For these drugs, it’s hard to say when they will get approved—and for those approved, when they will launch,” she added.
Specialty generics represent about a $16 billion opportunity. Biosimilars may prove even more lucrative at a forecasted $43.8 billion, due in large part to 56 patent expirations through 2020, according to Dr. Tharaldson.
So far, the FDA has approved two biosimilars: filgrastim-sndz (Zarxio, Sandoz) and infliximab-dyyb (Inflectra), which may be launched later this year. “Even though the introduction of biosimilars to the market has been slow, we must use the examples of the products that have been approved to educate ourselves, our fellow clinicians and patients about this new category of drugs and avoid any misperceptions that would inappropriately limit use,” said Steven Lucio, PharmD, a senior director of clinical solutions and pharmacy program development at Vizient, who did not present at the conference.
“If we do not avail ourselves of the value offered by biosimilars,” he added, “we lose the most meaningful opportunity we will have in the near term to slow the rate of pharmaceutical pricing growth.”
—Lynne Peeples
Drs. Tharaldson and Lucio, and Mr. Long reported no relevant financial relationships.
This article is from the June 2016 print issue.