Drug Spending Highest Since 2003, Says Report

Prescription drug spending increased 13.1% in 2014, producing the highest national spend increase over the past decade, according to a new report from pharmacy benefit manager Express Scripts. The 2014 Drug Trend Report report indicated that the increase was primarily driven by hepatitis C medications and compounded prescriptions. Specialty drugs, including biologics, accounted for more than 31% of total drug spending in 2014, up from 27.7% in 2013. This trend exceeded the company’s expectations for specialty drugs; Express Scripts’ 2011 Drug Trend Report predicted the specialty drug trend would only rise 22% in 2014.

When compounded drugs and hepatitis C medications were excluded from the spend statistics, drug spending still increased 6.4% in 2014, slightly more than the overall drug spend increase of 5.4% in 2013. The company said that consolidation among drug manufacturers and drug shortages also contributed to the overall drug spend increase. In an analyst note, Mark Schoenebaum, MD, Evercore ISI points out from a graph in the Express Scripts report that in the past year alone, branded drug pricing has risen 15.4%.

Hepatitis C costs accounted for a whopping 45% of the total increase in specialty spending in 2014, with the United States spending 742.6% more on these medications in 2014 than in 2013 as a result of the release of effective new products to treat the disease. These data, along with cost concerns, were likely the catalyst to prompt Express Scripts to forge an agreement with AbbVie to exclusively offer Viekira Pak (ombitasvir/paritaprevir/ritonavir) packaged with dasabuvir. In response, Gilead, the maker of Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir), signed its own exclusive agreements with other benefit managers and insurance companies. Express Scripts says its choice to go with AbbVie will save clients more than $1 billion in 2015, and drug exclusions via the 2014 Express Scripts National Preferred Formulary reportedly saved plan sponsors $750 million.

Inflammatory conditions-including psoriasis, rheumatoid arthritis, ulcerative colitis, and Crohn’s disease-is still the costliest specialty drug class, as it was in 2013. The good news is that although specialty trend is still expected to experience fairly stable double-digit growth in 2015, 2016, and 2017 (22.6%, 22.3%, and 21.3% respectively), it is expected to slow to more sustainable levels in the next three years. Biosimilars for the inflammatory class, including those on the horizon from Celltrion and Hospira, will certainly help decrease spend in this category. Even so, the scheduled Dec. 31, 2016, patent expiration for Humira (adalimumab) is not expected to influence trend growth by 2017, notes the report.

Pricing for new biologic products targeting PCSK9 (proprotein convertase subtilisin/kexin type 9) for the treatment of hypercholesterolemia is thought to be a future area of concern, notes the report, as they are projected to cost $10,000 or more per patient. The authors write, “Although PCSK9 inhibitors may initially be used in patients with familial hypercholesterolemia and in those who cannot tolerate statins, their potential for expanded uses as adjunct therapies to lower LDL in general could impact drug spend significantly.” Sanofi and Regeneron’s investigational monoclonal antibody targeting PCSK9 was granted Priority Review by FDA on Jan. 26, 2015 and is thought to beat out other potential first entrants in the PCSK9 space, such as Amgen’s evolocumab. The target action date for the medication is July 24, 2015.

Express Scripts is the largest pharmacy benefits manager in the United States, covering 85 million Americans. Unlike IMS Data, Express Scripts’ statistics don’t include rebates that Express Scripts receives from drug manufacturers.

Source: Express Scripts