Specialty drug spend made up 41% of all drug spend ($318 billion) for the United States and European countries in 2017(1). New projections show specialty drugs will contribute to ALL of 2018 total drug spend growth due to a combination of explosive pharmacy trend in the specialty drug arena as well as declines in traditional medications(1). With thousands of specialty products in the pipeline expected to drive a significant portion of future medication costs and inflationary trends,(2) specialty growth has exceeded that of traditional drugs for the tenth consecutive year(1). Not only does specialty pharmacy trend continue to soar, these medications are now being created with remarkable biotechnology and gene-altering techniques to treat the most complex, high-cost healthcare conditions such as cancer, rheumatoid arthritis, and unique rare diseases.

Many of these specialty medications are billed under the medical benefit, which makes management even more challenging when considering complex medical benefit structures, numerous places of service, varied payment models, bundled claims, and complicated data.  Payers also cite several management concerns: determining the value of specialty drugs, ensuring clinically appropriate use, and responding to the specialty pipeline(3).

Spend trend and growing payer concerns emphasize the importance of developing strategies to stay ahead of the trend and pipeline. 

The Magellan Rx Management Medical Pharmacy Trend Report , in its ninth edition, includes a comprehensive view of medical pharmacy trends in claims data, including all major lines of business (commercial, Medicare, and Medicaid). According to the report, the 5-year pharmacy trend for specialty drugs on the medical benefit is 68%, 22%, and 17% (4) for Commercial, Medicare, and Medicaid lines of business, respectively. Driven by inflation, utilization, drug mix, and shifts in site of service, medical benefit drug spend has been identified as allowed amounts of $29.97 per-member-per-month (PMPM) for Commercial members, with Medicare PMPM allowed amounts of $52.19 (an increase of 18 and 12 percent, respectively, over the last year)(4). Yet visibility into this spend has been generally limited, given the management challenges addressed above.

It is critical for payers to stay current with evolving management strategies and marketplace conditions impacting medical pharmacy utilization and spend, especially as these specialty drug costs continue to be a leading driver of overall pharmacy trends. At Magellan Rx, we understand medical benefit drug spend, pharmacy trend, pipeline, and impact—all of which is imperative to formulating innovative, effective solutions for managing specialty drug costs. Get a more detailed analysis on the latest in pharmacy trends by signing up for our free webinar on March 14 at 1:00 pm Eastern.

  1. IQVIA Institute 2018 and Beyond: Outlook and Turning Points. March 2018. Available at:
  2. Commercial Specialty Medication Research: 2016 Benchmark Projections, Milliman Research Report. December 2015. Available at:
  3. EMD Serono. Specialty Drug Digest 14th Edition. 2018
  4. Magellan Rx Management. Medical Pharmacy Trend Report. 9th Edition. 2019. Available at: