In both the United States and Canada, prescription drug coverage is extremely expensive, challenging and complicated for plans, leading to many discussions between plan sponsors and their advisors. The International Foundation recently held a webcast titled, “The Next Wave of Specialty Drugs: What Comes After Ozempic?”, where Mike Sullivan, BSP, MBA, chief executive officer at Cubic Health, spoke about the pipeline for new specialty drugs and the approval timelines for both the Federal Drug Administration (FDA) and Health Canada.
Sullivan explained that group plans will have to find creative ways to manage their current plan while making difficult decisions about how to afford covering these drugs in the future.
Trends in the Specialty Drug Market
Specialty drug innovation is happening for many conditions: obesity, oncology, immunology, gene therapy, orphan drugs, diabetes, cardiovascular, neurology, mental health conditions, menopause, etc. Sullivan said that currently, “obesity is in its own universe for growth in new drug therapies”. However, in the next five years, there will also be expansion in oncology and immunology drugs as approximately “1/3 of new medications in the current drug pipeline are for oncology use.”
As drug manufacturers innovate to find larger markets to sell drugs developed for orphan diseases, expectations are that some of these expensive drugs may get FDA/Health Canada approval for multiple uses. Orphan drugs are used for treating diseases that affect a smaller amount of people (in the U.S., this is for treating fewer than 200,000 people with a diagnosis). The market is expected to grow significantly by 2032 as manufacturers continue to expand use of these therapies beyond rare diseases into a broader market with higher profit margins.
In addition, we’re still in the early days of developing therapies for cell and gene therapy. Many of the drugs used for gene therapies are single dose, which influences their pricing models. Progress continues for manufacturers to be able commercialize these therapies for other uses to recover their research and development costs.
GLP-1s
Sullivan explained that GLP-1s are “the biggest category of medications in the world.” The pipeline for these medications is not slowing down and not going to be exhausted due to GLP-1s now being researched for use in combination with other GLP-1s to treat more conditions. Essentially, a new drug is created by using the ingredients in two or three different GLP-1s at once.
Sullivan commented that “some of the pressures” that plans must understand and consider include the new indications for GLP-1 use, such as for the following conditions:
- Heart failure
- Peripheral artery disease
- Sleep apnea
- Chronic kidney disease
- Osteoarthritis.
Takeaways for Plan Sponsors
- Specialty drugs are now “not special”—They are the norm. 80% of the new drugs coming into the market are now what was once considered specialty.
- GLP-1s and cancer medications will continue to dominate the pipeline for new therapies.
- Plan sponsors and their prescription drug service providers should start reviewing the plan language and consider adding greater definition and detail about what is considered in each formulary category, especially related to their specialty formulary tier. They should also explain drug eligibility requirements to be included in the plan, and the prior authorization requirements to use these drugs.
To view the full webcast, see the International Foundation website and click on the link for “The Next Wave of Specialty Drugs: What Comes After Ozempic?”. The Foundation has other resources for prescription drugs, including in our daily Today’s Headlines newsletter, the Word on Benefits® blog and regular pulse surveys found on our Survey Reports webpage.
Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.
