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Of the world’s top 20 pharmaceutical companies by revenue in 2021, 19 generate most of their sales from specialty drugs. Overall, 55 percent of pharmaceutical revenues are driven by specialty drugs. This basic fact about how prescription drug companies make money is lost on the public, but it’s instructive to understand how the industry as a whole works and why it’s relatively failure-proof.
Take Johnson & Johnson. In February of last year, the US Food and Drug Administration approved the Covid-19 vaccine for emergency use. This vaccine It has projected sales of $2.4 billion by 2021, the highest in any year. However, vaccines were not J&J’s main driver in 2021. Its specialty cancer drug, Darzalex, has generated $6 billion in sales. All of J&J’s oncology offerings reported sales of more than $14.5 billion. Stelara, which treats the symptoms of two incurable diseases (psoriasis and Crohn’s disease, which can sometimes cause life-threatening complications), reported sales of $9.1 billion on its own. In general, Johnson and Johnson They report global revenue of $93.77 billion in 2021, an increase of over $10 billion compared to 2020. The pharmaceutical division led the way ($52 billion) but not for the reason many might have guessed.
In the year Specialty drugs are reported to account for 50 percent of total drug spending by 2020, a figure that has increased significantly over the past decade. However, it is estimated that only 2 percent of the population uses these drugs each year. The gap between consumption and income is only growing. The increase in the price of specialty drugs is on this trend, but it is not the only driver.
The role it plays in pharmaceutical innovation is huge. In the year In 2020, the Food and Drug Administration approved the second highest annual total of new molecular entities. The 53 drugs include an investigational agent for patients with lung cancer, Ebola, HIV and Alzheimer’s disease. A 2021 study in the American Journal of Health System-Pharmacy shows that as the FDA continues to approve many new novel specialty drug therapies, we can expect continued tangible clinical and financial impact. Innovation is constant in medicine, but its impact is felt in the specialty drug market.
The result is an incentive for the pharmaceutical industry to allow patients access to the drugs they have invested so much time and money into. During a recession, this can be easier said than done. Patients’ dollars are limited. Prescription drug manufacturers simply recall availability issues. One recently filed a $100 million lawsuit against a pharmacy benefit manager for allegedly abusing the Patient Drug Financial Assistance Program. By investing more in patient assistance programs and in patient access technologies to ensure that no covered patient gets lost in the shuffle, manufacturers hope to remove financial barriers to more expensive drugs.
However, just getting to the point of receiving therapy can be a long and painful journey for patients, with many opportunities to drop out along the way. Finding and affording life-saving and life-enhancing drugs is a complex challenge that patients are willing to endure, but it is also a challenge. A recent study found that 84 percent of specialty pharmacists experience some difficulty getting patients started on their complex medications. It is estimated that pharmaceutical companies have gained $76 billion in lost revenue opportunities due to accessibility issues. The specialty medicine ecosystem involves a costly, complex and fragmented journey for patients through their providers.
These factors remain independent of the economic climate. Specialty drugs are effective bankruptcy-proof. That’s why the flood of venture capital into pharma is no surprise. Entrepreneur Mark Cuban created Cost Plus Drugs to “do everything we can to disrupt the pharmaceutical industry and stop ridiculous drug prices.” GoodRx, which operates under a similar mission, went public in 2020 and is said to be valued at around $15.7 billion. Startups that have partnered with providers to improve patient compliance have also won venture capital funding in recent years. In theory, such businesses could help bridge the gap between patients and the specific drugs they need.
As the cost of generic drugs plummets, the pharmaceutical industry is experiencing a billion-dollar windfall thanks to innovative specialty drug offerings. Drug availability is still a major issue. It’s a problem the pharmaceutical technology industry is setting out to solve.
Photo: Eightshot Studio, Getty Images
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