Spending on Specialty Medications Likely to Increase 67% through 2015

U.S. spending on specialty prescription drugs will increase 67% by the end of 2015, according to a forecast by Express Scripts. Specialty medicines are prescription drugs that require special handling, distribution, and administration. Many are biologics that are delivered via an injection or an infusion to treat chronic, complex diseases.

“The very high cost of these drugs creates difficult decisions for plan sponsors on which medicines to cover,” said Glen Stettin, M.D., of Express Scripts. By the end of 2015, drugs for cancer, multiple sclerosis, and inflammatory conditions, such as rheumatoid arthritis, will command higher drug spending than any other therapy class except diabetes .

Hepatitis C drug spending is expected to quadruple over the next three years, which is, by far, the largest percentage increase among therapy classes. The reason is that interferon-free medications are expected to gain FDA-approval in 2014. Also, new screening guidelines are expected to increase the number of people diagnosed with Hepatitis C.

Dr. Stettin said, “Plan sponsors can greatly improve the utilization trend and spending…by taking control of the pharmacy benefit.” A recent study demonstrated that payers who implemented Express Scripts’ cost management and patient care programs achieved 50% lower increases in specialty drug spending. Plan sponsors also saw higher medication adherence rates, which equates to better health outcomes and cost savings. Hepatitis C patients who received specialized clinical care from Express Scripts’ specialty pharmacy were 60% more likely to achieve an optimal adherence level, which leads to medical savings by curing the patient and avoiding further disease progression.

Also, safe, effective, and less-costly alternatives could become available once patents expire on marketed biologics. The country would save $250 billion from 2014 to 2024 if the 11 most likely biosimilar candidates were launched, according to Express Scripts.

Spending on traditional prescription drugs to treat common conditions will decline 4% by the end of 2015, largely because of the availability of generic medications. Only two of the top 10 traditional therapy classes, diabetes and attention disorders, are likely to see spending increases over the next three years, but those increases will be significant. Despite the availability of generic equivalents for many attention disorder therapies, spending is expected to increase 25% over the next three years due to higher utilization among middle-aged adults as well as wide geographic variation in diagnosis. Also, diabetes-medication spending is expected to rise 24% because of high prevalence and new therapies. For more information, visit www.express-scripts.com.

The Keys to Controlling Specialty Drug Costs

Employers that use multiple cost management programs have a 50% lower specialty drug cost trend, according to a study by Express Scripts. “Specialty drug costs and use have escalated without sufficient oversight to manage waste or misuse of these expensive medications. Add in the impact of bad health decisions and you get poor financial and clinical outcomes, said Glen Stettin, MD, of Express Scripts.” Specialty medications are expected to account for $1 out of every $4 spent on prescription medications by 2014.

The following are some major factors that contribute to the rising costs of specialty medications for complex diseases such as cancer, hepatitis C and multiple sclerosis:
• Price inflation
• Increased utilization
• The introduction of new drugs

Employers that did not manage prescription costs saw a 28% annual average increase in specialty drug spending per member. In contrast, employers that had tight management of prescription drug costs only saw a 14% an annual increase. Tightly managed programs also saw higher adherence rates in top therapy classes, such as multiple sclerosis and oncology.

There was an 18% increase in spending on specialty drugs in 2012 compared to 17% in 2011. Unit costs are driving the specialty medication trend in the top 10 therapy classes. Specialty medications for inflammatory conditions, multiple sclerosis, cancer and HIV accounted for nearly 70% of annual spending on specialty drugs. The hepatitis C virus has a relatively low per-member-per-year cost of $7.82, but it’s the highest trending therapeutic category at 29%. It is expected to increase rapidly with the advent of new therapy regimens and screening guidelines.

Nearly 50% of specialty drug costs are billed on the medical side of the plan benefit, where it is difficult to apply the various pharmacy benefit solutions that can drive down costs. Spending on traditional medications decreased 1.5%, predominantly due to generics. For more information, visithttps://www.express-scripts.com.

Traditional Prescription Drug Spending Drops

In 2012, U.S. spending on traditional prescription drugs fell for the first time in more than 20 years, according to data by Express Scripts. Traditional prescription drug spending fell 1.5% in 2012 among the country’s commercially insured population. However, this decline was offset by an 18.4% increase in spending on specialty medications to treat more complex diseases, such as rheumatoid arthritis, cancer, and hepatitis C.

Glen Stettin, MD of Express Scripts said that the drop in traditional drug spending is due to the success of utilization management programs and a growing interest in generic medications, home delivery pharmacies, and more focused retail pharmacy networks. Stettin added, “Effective management solutions and increased drug competition are necessary…to rein in specialty drug costs…and increased drug competition, in the form of biosimilars, is necessary to offer more affordable medication.” Last year’s patent cliff ushered in lower-cost generic alternatives for many blockbuster medications and utilization increased for eight of the top 10 traditional therapy classes, while unit costs decreased in seven.

For the second consecutive year, the country spent more on prescription drugs for diabetes than for any other therapy class. Diabetes drug spending increased 11% in 2012, driven, in part, by unit cost increases for popular insulins. Spending on medications to treat attention disorders increased 14.2% in 2012. Utilization increased 8.8%, due largely to an increased number of adult patients. Unit costs increased 5.4% as a result of a 2012 shortage of active ingredients contained in many of the medications in this class.

While affecting fewer than 2% of the general population, specialty conditions in 2012 accounted for 24.5% of pharmacy benefit drug spending  — the highest percentage on record. Specialty medications often require specialized handling, frequent dosing adjustments, and intensive clinical monitoring and patient assistance. The costliest specialty category was for inflammatory conditions such as rheumatoid arthritis; drug spending increased 23%. This increase was driven by a 9% increase in utilization and a 14% increase in unit costs.

There was a 33.7% increase in hepatitis C spending, which is a bigger increase than any other major traditional or specialty therapy class. The increase is due almost entirely to two new drugs being introduced in May 2011. Express Scripts expects total spending on hepatitis C medications to increase 32.3% in 2013 and another 56.3% in 2014.

For cancer medications, utilization increased 3.4% and costs increased 22.3%. Driving much of the cost increases are new drugs that treat unique genetic profiles — a trend that increased in recent years.

In 2012, the Food and Drug Administration approved 22 new specialty drugs, many of which will cost more than $10,000 per month of treatment.

Doctors who are more likely to prescribe generic medications to Medicare patients are younger, see a large number of Medicare patients, and practice in Midwestern states such as Ohio, Illinois, and Michigan.

As more Americans seek treatment for drug and alcohol abuse, chemical dependence is now among the top 10 traditional therapy classes when it comes to Medicaid drug spending. At 24.3% in 2012, chemical dependence drugs account for the largest percentage increase in Medicaid drug spending.

Utilization of cancer medications increased 11.8% for Medicare patients in 2012, contributing to a 32.8% spending increase for this population. Medicare patients increased utilization of hepatitis C medications by 63.5% in 2012. Infection rates for the virus are more prevalent among patients born 1945 to 1965.

Medicaid spends more on asthma medication than on any other single condition. Total asthma spending increased 6.2%, driven largely by increased utilization.

Prices for the most highly utilized brand-name medications increased 12.5% in 2012, far outpacing the general inflation rate of 1.7%. During the same period, generic medication prices declined 24%. This 36.5 percentage point net inflationary effect is the largest single-year widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index in 2008. The full report is available atwww.DrugTrendReport.com.

Medication for Normal Aging Overtakes Costs of Treating Most Chronic Diseases

A study by Express Scripts reveals that spending on medications for normal aging conditions in 2011 ranked third in annual prescription-drug costs of the commercially insured. These conditions involve mental alertness, sexual dysfunction, menopause, aging skin, and hair loss. This spending was surpassed only by the cost of treating diabetes and high cholesterol.

There was an 18.5% increase in the use of drugs to treat normal aging. Costs increased nearly 46% from 2006 to 2011. Increased use of these drugs was even more pronounced for the Medicare population (age 65+), up 32% from 2007 to 2011. The largest utilization jump among Medicare beneficiaries was from 2010 to 2011, up more than 13% and outpacing increases in the use of drugs for diabetes, high cholesterol and high blood pressure combined.

In 2011, more than $73.3 million was spent for every 1 million commercially insured people, and the cost was nearly $90 million per 1 million Medicare members on these aging-related medications. The United States is in the midst of a profound demographic change, with the number of elderly people projected to reach nearly 20% of the entire population by 2030, up from less than 13% in 2009. This increase will continue to drive use and costs of medications to treat the natural conditions of aging.

While utilization and drug costs were highest among older commercially insured people, the greatest growth in cost per insured was seen among the 45 to 54 age group — up almost 21% over the five-year period.  Rules for the new program have been under review by the White House for three months, and officials said they would be issued soon.

Last Updated 09/22/2021

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