2018 State of Specialty Spend & Trend Report: Managing the High Cost
of Specialty Drugs



By: Zach Fiedler

The high cost of specialty drugs to treat inflammatory disorders, cancer, multiple sclerosis, and other serious illnesses continues to be a critical issue for plan sponsors. To properly control spend, you have to understand its causes—and know how to identify opportunities for reducing cost. Our second annual State of Specialty Spend and Trend Report provides an analysis of the most important trends driving specialty spend, gives you why behind the numbers, and offers data-based strategies for saving money on these high-cost specialty drugs.

The report is based on an analysis of 110 million pharmacy and medical claims across the Artemetrx book of business. Key findings include:

  • In 2017, there was a 14.6% increase in per member specialty drug spending, up from 10.1% the prior year.
  • Claim utilization represented 13.3% of trend increase while cost per claim was 1.4% in 2017. This is a significant shift from 2016, when cost per claim was the primary driver of trend.
  • Spending within the outpatient hospital channel increased by 15.8%, primarily driven by a 32.8% increase in utilization.
  • The top 10 specialty categories represent 87% of total specialty spend. Consequently, these categories have the greatest impact on overall trend and the best opportunities for management and focus.
  • The pharmacy channel experienced the highest average cost per claim. This is driven by high-cost, highly utilized medications in therapeutic categories such as hepatitis C, immunological disorders, and enzyme deficiency.
  • We estimate a 12.04% increase in per member specialty drug spending in 2018, 10.61% in 2019, and 9.28% in 2020.

Data-based strategies for specialty savings

PSG leverages a combination of market and clinical expertise powered by technology through our Artemetrx Specialty Monitor™. This software tool uses over 1,000 unique clinical and financial rules to identify potential waste of specialty drugs and offers insight into the complete specialty spend.

With Specialty Monitor, we identified an average savings potential of $114.01 per member per year (PMPY), or 16.5% of specialty drug costs. The savings opportunities include these four categories:

  1. Site of care management offers the greatest opportunity, with an average savings potential of $39.03 PMPY. It focuses on shifting utilization from high-cost outpatient facilities to lower-cost physician office or home infusion providers.
  2. Reimbursement management. Specialty Monitor helps us identify providers with higher reimbursement rates compared to their peers, which generates an average savings opportunity of $10.09 PMPY.
  3. Clinical management. Specialty Monitor also identifies potential suboptimal specialty claims, offering an average savings potential of $29.37 PMPY.
  4. Plan design offers an average savings potential of $35.52 PMPY, by comparing claim results against best-in-class plan design constructs. Clients can realize these savings by revising their plan design in areas such as quantity limits and adhering to FDA-approved dosing guidelines.

Specialty drug spend is increasing, a trend that must be managed so plan sponsors can offer optimal care to patients at a reasonable cost. To be successful, you must look at the data to identify scenarios that are driving unnecessary dollars. Your pharmaceutical consultant can help. Get a complete analysis of and insights into the specialty market by downloading the 2018 State of Specialty Spend and Trend Report today.

Download the 2018 Report |

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  1. This is the overall per member per year (PMPY) cost, which is the best measurement of historical trend and forecasting future spend.
  2. These dollars represent total opportunity, but outside constraints, such as vendor contract terms and implementation capabilities, impact what percentage of the value each individual plan is able to realize.


Zach Fiedler has over 10 years of experience supporting clients and performing analytics to optimize clients’ pharmacy benefits. Prior to joining PSG, Zach was a Senior Associate, Pharmacy Government Human Services Consulting, for Mercer, where he supervised a team of analysts and managed client relationships dedicated to Actual Acquisition Cost (AAC) and Maximum Allowable Cost (MAC) management for state Medicaid plans.