Industry estimates suggest that, when totaled across the medical and pharmacy benefits, specialty drugs currently represent more than 30 percent of total drug expenditures, a proportion that is expected to exceed 50 percent beginning in 2018. Given the growing market, spoke with members of the NACDS Government Affairs and Public Policy team to take a closer look at the current issues related to specialty drugs, and what they mean for NACDS member companies.


Q: What is the definition of a specialty drug? 

A: Some industry participants would define a specialty drug as a prescription drug that has physical or administrative requirements that can limit preparation and/or delivery in the retail community pharmacy environment. This may include drugs that require physical facilities not typically found in a retail community pharmacy environment, such as a ventilation hood for preparation.

These drugs may be used to treat complex, chronic or rare medical conditions that can be progressive, debilitating or fatal if left untreated or undertreated; or for which there is no known cure. They may require special handling, storage, and can have distribution and inventory limitations; a complex dosing regimen; or require specialized administration, and may include any drug that is subject to limited distribution by the Food and Drug Administration (FDA). They can require complex and extended patient education or counseling, intensive monitoring, or clinical oversight, and can have a significant side effects risk profile.


Q: How is having a definition for specialty drugs important in terms of Medicaid programs?

A: Currently, there is only one federal definition for specialty drugs; it is specific to the Medicare Part D program and is largely based on the cost of the drug. However, developing a definition that is cost driven is not recommended because it allows states and Medicaid managed care organizations to place drugs on a specialty list that are not typically specialty drugs and should not be classified that way.

It is important to accurately define specialty drugs for the Medicaid program, as well as any other state program, so that specialty drug lists contain only those drugs that are truly specialty drugs, and focus primarily on the clinical aspect of the drugs, not cost. To accurately define specialty drugs, it is imperative that the established definition ensures that the specialty drug list cannot be used as a tool for improperly limiting the network of pharmacies that are able to dispense medications commonly available through community pharmacies.


Q: What specific outcomes does NACDS want to achieve with its recommendations on specialty pharmacy to the FDA?

A: Within the Biologics Price Competition and Innovation Act that established the regulatory approval pathway for biosimilar drugs, Congress made clear that FDA approval standards for biosimilars should ensure that any product deemed interchangeable by FDA would be suitable for substitution without the prescriber’s intervention.

Along these lines, NACDS advocates in support of policies that accommodate the substitution of interchangeable biosimilars consistent with generic substitution practices for small molecule drugs. NACDS engages with policymakers both at the state level, where state boards of pharmacy ultimately have authority over pharmacists’ ability to substitute drugs, and at FDA level, where the agency continues work related to approval and interchangeability determinations for biosimilar products.

On the naming issue in particular, NACDS continues to advocate for FDA to adopt naming policies for biosimilar drugs that are consistent with the naming policies for small molecule drugs—that is to apply the same individual nonproprietary name to a biosimilar product that is applied to the reference innovator biologic product.

To further facilitate substitution practices for interchangeable biosimilars, we also continue to encourage FDA to produce a publication (similar to FDA’s Orange Book) delineating the substitutability of approved biosimilars. A publication such as that would serve as an authoritative reference for pharmacists and, given pharmacists and state policymakers familiarity with the Orange Book format, it would be easy to incorporate into current practices.


Q: How is the growing specialty pharmacy market significant for NACDS member companies?

A: Specialty drugs are a growing category of product and account for many of the new drugs currently under development. It is important that state and federal policies are in place that enable retail pharmacies to serve their patients who take specialty medications, including both policies that allow any willing pharmacy provider to dispense products at retail, as well as state substitution laws that facilitate pharmacist interchanging and dispensing of less expensive biosimilars, unless prohibited by the prescriber.


Q: NACDS consistently works on issues that improve patient outcomes and reduce overall costs. How does NACDS’ work on the specialty drug issue contribute to those goals?

A: Specialty drugs account for about 30 percent of the approximately $300 billion spent on prescriptions annually. By 2018, this growing category of products is expected to account for almost 50 percent of the drug spend.

Just as retail pharmacy has been instrumental in helping to save patients and the U.S. healthcare system billions of dollars by promoting the use of traditional generic medications, retail pharmacy will have a similarly significant role to play in making these groundbreaking therapies more accessible to more Americans by promoting the use of less expensive biosimilar drugs. NACDS works both at the federal and state level to support policies that facilitate policies that allow pharmacists to dispense the most cost-effective medications for their patients.