Introduction Apr 8, 2014

Year in Review

Welcome to the new home of the Drug Trend Report. This article provides key highlights and links to the main sections of the report.

Navigation Tips:
Click the dark green Table of Contents button above for an interactive site map. Use the Previous Article and Next Article buttons at the end of each article to view the report in sequential order. Open the left navigation menu to change sections or view the Table of Contents.

PDF Downloads:
2013 Drug Trend Report – for the complete 90 pages of charts and analysis.
2013 Drug Trend Report Highlights – for a summary of the key findings.

During the long history of the Drug Trend Report, Express Scripts has combined prescription drug claims data with expert research and analysis in an effort to help payers and patients adjust to the changing landscape and maximize the pharmacy benefit. During the 1990s and early 2000s, when traditional drug spend was increasing 10% to 20% each year, formulary and utilization management techniques helped contain these costs. As long-term chronic conditions – such as heart disease and high blood pressure – became the leading trend drivers, we developed and implemented highly automated home delivery pharmacies to provide 90-day supplies of these medications in a way that was safer, more affordable and more convenient. When a critical mass of specialty medications came on the market and their costs started to increase dramatically, Express Scripts adjusted again to offer payers and patients solutions to effectively manage the distribution and utilization of these medications while also providing patients with clinical support and expertise to help them take their medications safely. On behalf of both payers and patients, we advocated for biosimilars to help make expensive specialty drugs affordable for more Americans.

Each of these steps was rooted in sound clinical evidence, rigorous research and unwavering alignment with the clients and patients we serve.

Adjusting to a Culture of Choice

In 2013, we witnessed the latest change in our industry’s landscape: the dawning of a new era of consumerism. The Patient Protection and Affordable Care Act (PPACA) – its provisions, implementation and promotion – created a national conversation about medical and pharmacy benefits that extended far beyond the needs of the uninsured. Consumers who have employer-sponsored insurance are increasingly exposed to information about public and private exchanges, including the concept of gold, silver and bronze plans, and are being asked to take more personal responsibility for understanding – and accepting – the financial tradeoffs involved in selecting health insurance coverage. 

“Healthcare reform created a national conversation about medical and pharmacy benefits that extended far beyond the needs of the uninsured.”

This increased level of consumerism creates even greater opportunities to lower the country’s overall healthcare spending. Cost-saving solutions such as narrower provider networks and restricted formularies are more likely to be accepted by consumers who now have a better understanding of how these options keep costs in check. When patients can access the care they need when they need it, they are often willing to save money by excluding other options.

Express Scripts is embracing this new culture of choice, bringing to market new solutions that enable patients to make better decisions, contain costs and achieve healthier outcomes.

A Look at Overall Drug Trend for 2013

Overall drug spend increased 5.4% in 2013, following several years of declining rate increases.

Drug Trend 2009 to 2013

Components of Trend 2013

Drug trend is composed of two main components: utilization and unit cost. Utilization of traditional prescription medications grew only slightly (0.5%) from 2012 to 2013, but the use of specialty medications increased 2.5%. Unit costs – the costs of the medications themselves – drove spending higher by 4.9%. Overall trend was driven by a 2.4% increase in spend for traditional (nonspecialty) medications and a 14.1% increase in spend for specialty medications, one of the lowest specialty drug trends ever recorded. However, specialty medications contributed an ever-increasing share (27.7%) of total spend that is expected to continue to grow. (Note: Roughly half of specialty medication drug costs are billed through the medical benefit and are therefore not included in our trend calculation.)

Both market forces and patient behavior impacted drug expenditures in 2013, but brand drug cost was one of the most important factors driving trend, especially for specialty medications. For this group of medications, both expensive new therapies and inflation for existing drugs drove an 11.6% increase in the unit cost. The utilization of specialty medications increased 2.5%, fueled by both novel therapies and expanding indications for existing drugs. During 2013, however, fewer new medications were approved than in 2012, which partly explains the lower specialty trend.

Trend Drivers and Forecast

  • The price gap between brand prices and generic drug prices, as depicted by our Prescription Price Index, continues to fluctuate as prices for brand and generic drugs change.
  • In the U.S., pharmacy-related waste adds up to almost $428 billion – $100 billion more than the amount the country spent for prescription drugs in 2012.
  • The trend forecast for the top traditional therapy classes reveals a stable, 2.0% climb year-over-year for the next three years, whereas specialty medications are expected to climb more than 16% annually in 2014, 2015 and 2016.

Insights into Therapy Classes and Costs

The pattern of reduced per-member-per-year (PMPY) spend in several top traditional therapy classes that had been seen in 2012 continued. However, spend increased for medications to treat diabetes, the most expensive traditional therapy class when ranked by PMPY spend. Utilization across traditional therapy classes was relatively flat, with the largest increases seen in medications used to treat diabetes, attention disorders and depression. Unit cost increased modestly, but the 1.9% increase was still significant considering the substantial market share captured by the generic versions of some of the most popular brand drugs such as Lexapro® (escitalopram), Lipitor® (atorvastatin), Plavix® (clopidogrel) and Singulair® (montelukast), which lost patent protection in the past few years.

Spend for specialty therapy class medications continued to rise in 2013. The top three specialty therapy classes when ranked by PMPY – inflammatory conditions, multiple sclerosis and cancer – accounted for more than 60% of the total spend for all specialty medications billed through the pharmacy benefit. New to the top 10 most expensive therapy classes is a group of drugs used to treat the symptoms of central nervous system (CNS) disorders. Decreased utilization of hepatitis C medications in 2013 dropped the therapy class from the top 10; however, PMPY spend for hepatitis C medications is forecast to rebound in 2014.

View the top 10 drugs for traditional and specialty therapy classes, ranked by PMPY spend.

The member share of drug spend declined in 2013, as evidenced by the $0.64 drop in the average copayment and the 1.4% drop in the member share of total cost. This decline occurred despite the $1.27 increase in copayments for brand drugs. The key is that as patients shift from using brand medications to lower-cost generics, copayments decline, allowing patients to share in the savings that come with utilization of clinically sound, lower-cost generic alternatives.

Member Share of Total Cost 2012 to 2013

Medicare and Medicaid Overviews

The Express Scripts Drug Trend Report also includes sections dedicated to analyzing trend for the populations covered by Medicare plans (EGWP, MAPD and PDP) and by Medicaid plans. Each section looks at the components of trend for both traditional and specialty medications, the relationship between cost and utilization among the top 10 traditional and top 10 specialty therapy classes, and the top 10 drugs ranked by PMPY spend.

Workers’ Compensation Drug Trend Report

The 2013 Express Scripts Workers' Compensation Drug Trend Report is also included. It provides an in-depth discussion of the pressing issues that workers’ compensation payers face today, as well as empirical, data-based analysis and clinical insights to help manage drug trend.