Glossary Term

Specialty Drug

A medication is designated as a specialty drug typically due to its large expense, though other frequent traits include the treatment of a small incidence disease, treatment of a disease with large existing treatment costs, or utilization that requires special administration and monitoring by a health care provider. Specialty drugs are often complex biologics that involve more expensive manufacturing methods than traditional chemical drugs. Because of their high cost, specialty drugs are often placed in the top tier of a health plan formulary where the consumer pays the largest out-of-pocket costs in copayments or coinsurance.

While specialty drugs represent a minority of prescriptions in the United States, expenditures for specialty drugs accounted for $301 billion in 2021, which was approximately 50 percent of the nation’s total spending on drugs. Between 2016 and 2021, specialty drug spending has increased 43 percent.

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