Champions for Better Medicare Rx Drug Spending

Apr 11, 2019
  • Medicare
  • Diabetes
  • Inflammatory Conditions
  • Cancer
  • Seniors

Express Scripts Medicare plans experienced an unprecedented 0.3% decline in prescription drug spending in 2018, the first negative drug trend since we began tracking Medicare drug spending in 2012. This decrease highlights the value Express Scripts and its clients bring to Medicare and its beneficiaries.

Choice, Affordability, Quality and Predictability

Seniors – who may be on fixed incomes and often have complex medical conditions – require choice, affordability, quality and predictability from their Medicare plan. The Medicare individual Part D Prescription Drug Plan (PDP) and Medicare Advantage (MAPD) market is competitive, as plans try to offer these virtues to beneficiaries while keeping prices as low as possible.

Our innovative solutions helped our plans stay competitive in this environment. Decreases in annual spend for our plans help keep monthly premiums low for beneficiaries, which is the primary factor in a beneficiary’s choice of plan.

Express Scripts’ innovative solutions also delivered quality: Medicare plans managed by Express Scripts have CMS star ratings that are higher than industry averages: 3.95 for PDP vs. 3.62 for the industry, and 4.32 for MAPD vs. 4.29 for the industry. Star ratings signify better care, quality and service for seniors, and plans are rewarded financially when they earn star ratings of 4 or higher.

Increased Utilization, Decreased Spending

Across all Express Scripts Medicare plans, trend was -0.3% in 2018. While some plans had flat or low trend in 2018, the proportion of plans that experienced negative trend in was 36%, up from 33% in 2017.

Decreased spending on prescriptions in 2018 did not come at the expense of decreased use of medicines. In fact, our Medicare plans saw a 1.1% increase in utilization for 2018. This increased utilization and a 1.4% drop in unit costs were additional signs that our solutions that foster the use of lower-net-cost treatments are making medication more accessible and affordable for beneficiaries.

This is further supported by the 1.1% decrease in out-of-pocket costs per member per year (PMPY), which translates into $5.14 for each member. For insulin, the average patient’s out-of-pocket costs per year declined by 2.2%. There is still room to better manage the costs of insulin – and other medications – and we are working on that.

Overall, the majority of Medicare beneficiaries are still in traditional Medicare, which means they are enrolled in a PDP. In 2018, PDP plans saw a slight increase in utilization of 0.9% but a significant drop in unit cost of -4.4%. In the category of traditional, non-specialty drug spend, we saw a significant 7.6% decline in annual spending.

Therapy Class Overview

Spending for the top five therapy classes contributed to more than 41% of total 2018 drug spending for Medicare. Spending declined for eight of the top 15 therapy classes, primarily due to lower unit costs, which are impacted by lower prices and greater use of lower-net-cost medications.

Traditional, non-specialty medication represents 65% of total Medicare drug spend; therefore, decreases in unit cost can have a significant impact on overall drug spend for a plan. The most costly traditional therapy classes -- diabetes, chronic obstructive pulmonary disease and asthma -- had very low or negative trend. Interestingly, heartburn/ulcer and high blood cholesterol classes saw double-digit drops in spend. This was also seen with classes where quite a few generic medications are available. One notable exception were anticoagulants, which landed in the top five for the first time, reflecting the increased displacement of warfarin and other traditional anticoagulants by newer branded oral products.

Specialty products, which treat complex, chronic conditions such as multiple sclerosis and cancer, remain a challenge. Unit costs for specialty medications increased by 8.8% in 2018, which is lower than in prior years but still a significant increase.

For the first time, oncology treatments replaced diabetes as the therapy class with the highest spend. This was driven primarily by a unit cost increase of 13.3% and assisted by a 3% rise in utilization. Inflammatory drugs also are represented in specialty spend. In 2018, this class saw a 14.4% increase in trend, driven primarily by unit costs (10.5%) and slightly by utilization (3.9%).

Looking Ahead

Working with our clients, we are creating a sustainable future for Medicare and its beneficiaries. However, we know some beneficiaries are struggling with high out-of-pocket costs, and there is more opportunity to improve choice, affordability, quality and predictability – virtues that beneficiaries value.

We believe more opportunity to leverage our successful programs could help us continue the downward trends we experienced last year. For example, the ability to support indication-based formularies and indication-based utilization management programs will help assure patients are getting the most clinically appropriate and cost-effective medications. Second, we anticipate some changes to the protected class categories, which may give Medicare plans the ability to drive down costs; in the past, those opportunities have been limited.

Working with our plans, we delivered a successful year for Medicare drug spending, and we remained focused on continuing that success.

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