U.S. Rx Spending Increased 13.1% in 2014

Mar 10, 2015
Hepatitis C and compounded medications accelerated U.S. drug spending at a rate not seen in more than a decade.
  • Commercial
  • Medicare
  • Attention Disorders
  • Compound Medications
  • Diabetes
  • Hepatitis C
  • Inflammatory Conditions
  • Pain

The 19th edition of the Express Scripts Drug Trend Report reveals new hepatitis C therapies with high price tags and the exploitation of loopholes for compounded medications drove a 13.1% increase in U.S. drug spending in 2014 – a rate not seen in more than a decade.

Hepatitis C and compounded medications are responsible for more than half of the increase in overall spending. Excluding those two therapy classes, 2014 drug trend (the year-over-year increase in per capita drug spending) was 6.4%.

These findings demonstrate the need for plans to take decisive action and more closely manage the pharmacy benefit to ensure all patients are able to achieve the best possible health outcomes at a price our country can afford.

Specialty Drug Spending: The Eye of the Storm

As Express Scripts forecasted last year, specialty drug trend more than doubled in 2014, to 30.9%. Despite accounting for only 1% of all U.S. prescriptions, these medications represented 31.8% of all 2014 drug spend – an increase from 27.7% in 2013. Medicare plans – required to follow Medicare Part D formulary guidelines – were the hardest hit, as their annual specialty drug spend increased 45.9%.

Hepatitis C medications accounted for 45% of the total increase in specialty spend. In fact, the U.S. spent 742.6% more on hepatitis C medications in 2014 than it did in 2013. Express Scripts’ hepatitis C solution, which makes Viekira Pak™ (ombitasvir/paritaprevir/ritonavir packaged with dasabuvir) available to all hepatitis C patients and guarantees successful completion of therapy through Accredo, is expected to save our clients $1 billion in 2015.

Components of Trend for the Top 10 Specialty Therapy Classes

Other major contributors to specialty spend:

  • Inflammatory conditions, multiple sclerosis and cancer remained the top three specialty therapy classes for the fifth consecutive year, collectively contributing to 55.9% of the spend for all specialty medications billed through the pharmacy benefit in 2014.
  • Inflammatory conditions, such as rheumatoid arthritis, continue to rank as the costliest specialty therapy class, driven by increases in price, expanded therapy indications and increased prevalence.
  • Medications for such conditions as Huntington’s disease, narcolepsy and Parkinson’s disease, which had the highest annual increases in spending (35.6%) outside of hepatitis C, are expected to grow at a similar rate through 2017.

Formulary Design Delivers Cost Savings with Low Member Impact

Plan sponsors who implemented the 2014 Express Scripts National Preferred Formulary, which excluded 48 products from coverage, achieved a 3.9% decrease in drug spending among the affected therapy classes, more than $750 million in savings. The excluded products represented only about 1% of all the products on the market, and in all cases, patients had safe and effective alternatives covered by their plan. Drug costs in those same therapy classes increased 7.2% among plan sponsors who did not adopt the new formulary.

Plans participating in the National Preferred Formulary in 2014, and continuing in 2015, have seen the number of patients impacted by formulary exclusions decline significantly, while realizing cumulative savings of more than $2.2 billion.

Plan Cost For Impacted Drugs For Clients Who Adopted The National Preferred Formulary in 2014

Compounded Medications Emerge in Top 10 Traditional Therapy Classes

Spending on traditional medications continues to rise as a result of compounded drugs, which emerged in the top 10 traditional therapy classes for the first time and accounted for 35% of the increase in spending.

However, Express Scripts expects spend on compounded medications to decline sharply in 2015 due to widespread adoption of our compound utilization management solution. Express Scripts’ compound management solution, implemented in mid-2014, will save its clients more than $1.9 billion in 2015 that would have otherwise been wasted on compounded medications that do not provide a proven clinical benefit.

Drugmaker consolidation and drug shortages also led to increases in traditional drug trend, which rose to 6.4% in 2014. Half of the top 10 therapy classes experienced negative trend in 2014 due to generics. While we expect that trend to persist for the next two years, some categories will face challenges from continued drugmaker consolidation, which can lead to price increases from drug shortages and decreased competition.

Components of Trend for the Top 10 Traditional Therapy Classes 

  • Diabetes remains the leading traditional therapy class for a fourth straight year based on total costs; Express Scripts expects double-digit increases in spend in this class over the next three years due to once-weekly oral and injectable drugs in the pipeline.
  • Cost per prescription for medications to treat pain increased 15.7% in 2014, due in part to new tamper-resistant formulations for opiates.
  • Spending on therapies for attention disorders continues to increase, driven by price and increased use among adults. This trend will continue over the next three years due to increased use, a new indication for Vyvanse® (lisdexamfetamine), and continued patent protections for once-daily formulations.

Author Bio

Lab Staff
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