Spending On Specialty

Specialty drugs are often many times more expensive than traditional drugs, which raises questions of affordability and value. We compared the value of specialty and traditional drugs approved by the Food and Drug Administration (FDA) in the period 1999–2011. To do this, we identified published estimates of additional health gains (measured in quality-adjusted life-years, or QALYs) and increased costs of drug and health care resource use that were associated with fifty-eight specialty drugs and forty-four traditional drugs, compared to preexisting care. We found that specialty drugs offered greater QALY gains (0.183 versus 0.002 QALYs) but were associated with greater additional costs ($12,238 versus $784), compared to traditional drugs. The two types of drugs had comparable cost-effectiveness. However, the distributions across the two types differed, with 26 percent of specialty drugs—but only 9 percent of traditional drugs—associated with incremental cost-effectiveness ratios of greater than $150,000 per QALY. Our study suggests that although specialty drugs often have higher costs than traditional drugs, they also tend to confer greater benefits and hence may still offer reasonable value