Blue Cross and Blue Shield (BCBS) companies are committed to ensuring that people have timely access to safe, effective, cutting-edge prescription medicines when they need them, whether the drugs cost pennies or thousands of dollars. In fact, health insurance companies cover more than 98 percent of prescription drug costs for people who need more than $100,000 in medicines per year. The U.S. government estimated that more than $450 billion was spent on prescription drugs in 2015.1 Drug spending has grown rapidly over the past two years, growing 12.6 percent from 2013 to 2014 — the highest annual increase since 2003 — and an additional 7.6 percent from 2014 to 2015.2 However, drug spending grew more rapidly — 15.8 percent — for commercial health plans in 2015.3
Drug spending also is projected to rise more quickly than overall health care spending over the next several years. A leading contributor to the increase in drug spending is the growth of specialty drugs, which are growing in cost faster than traditional pharmaceuticals. Estimates suggest that the $87 billion spent in 2012 on specialty drugs could quadruple by 2020, reaching approximately $350 billion.4
This report analyzes the growth in specialty drug spending from 2013 to 2014 by analyzing the majority of BCBS companies’ commercially-insured and individual members across the country, or a sample size of approximately 70.5 million BCBS members per year in 2013 and 2014 (70 percent of all BCBS membership).
Using claims data for specialty drugs covered by both pharmacy and medical benefits provides a unique and holistic view of specialty drug costs in the U.S. (Specialty drugs may be covered by insurance under either the pharmacy or medical benefit, depending on how they are administered or how the health plan covers them.) Approximately half of specialty drug spending is funded by each benefit. Examining medical benefit data is important in order to analyze changes in cancer drug spending, one of the top contributors to specialty costs, since more than 80 percent of cancer medication costs are billed through the medical benefit.