Top Drugs of 2014

This analysis of the top drugs by prescriptions dispensed and total sales reveals key trends in today’s pharmaceutical market.

Spending on medications in 2014 grew at the highest rate seen in more than a decade. Innovations in new medications, list price increases, and the impact of several patent expirations combined to increase nominal spending by more than 13%. Implementation of the Affordable Care Act (ACA) and integrated health care networks shifted the demand and payments for medications, while FDA incentives and research and development efforts refocused on specialty medications led to the introduction of many new drug therapies.

Medication Spending and Health Care Costs

Medicine spending rose by 13.1% and per capita spending increased by 10.3%, which was the largest increase seen since 2001. Nominal spending totaled $373.9 billion in 2014 compared with $329.2 billion in 2013. Spending on pharmaceuticals grew between 1997 and 2003 due to the launch and increased use of a large number of blockbuster drugs, but declined over the past decade due to slower volume growth, high levels of expired patents, increased use of generic drugs, and lesser spending on new drugs.

In 2014, spending growth was driven by price increases, new brand medications, and the diminished impact of patent expiries. Patent expirations were at their lowest level in 5 years. This resulted in an $11.9 billion reduction in total spending in 2014, which was $8 billion less than the spending decline seen in 2013 and $17 billion less than in 2012. A large portion of these declines in spending resulted from the loss of exclusivity for Cymbalta in 2013 and Celebrex in 2014. In addition, Nexium has been off patent since May 2014, but the FDA revoked Ranbaxy’s exclusive right to market a generic alternative due to safety concerns and granted approval to Teva’s version instead.

Despite the reduced patent expiry impact, generics account for 88% of dispensed prescriptions, having increased by 2% in 2014. The following also occurred: Diovan sales totaled $3.8 billion in the 21 months following patent expiry in September of 2012, but faced generic competition in June of 2014, and Neupogen lost 11% in sales volume in 2014 due to the launch of Granix in late 2013.

Spending on new brand medications more than tripled from 2013 to 2014, increasing from $6.5 billion to $20.2 billion, while spending on protected brands increased by $25.6 billion, driven by invoice price increases and offset slightly by the decline in the volume of protected brand products. Brand invoice price changes accounted for $26.3 billion in spending, contributing 8.2% to overall growth in 2014. Invoice price increases on protected brands averaged about 13.5%, but after adjusting for rebates and discounts, the net price increase is estimated to have been $10.3 billion, or 3.1% of total spending growth.

Spending on specialty medications increased by $54 billion over the past 5 years and now accounts for one-third of total medication spending. In 2014, specialty medication spending alone increased 26.5% to total $124.1 billion and the medications accounted for 78% of total new brand spending as research and development continued to shift focus toward specialty disease states. Hepatitis C treatments were the largest driver of this specialty spending growth, garnering $12.3 billion. Meanwhile, spending on multiple sclerosis rose by 24.4%, oncology by 16.8%, and autoimmune by 24%.

Demands for Health Care and Changes in Payment

The ACA expanded Medicaid and established health insurance exchanges to extend health insurance coverage to previously uninsured individuals. Enrollment began in late 2013, and the peak impact of new enrollees became most evident in the second quarter of 2014. The uninsured rate decreased by 5.1% while 15.7 million individuals gained coverage either through employment, Medicare, or the Medicaid expansion and health exchanges. Outpatient visits and inpatient hospital stays declined by 3% and 6.2%, respectively. Emergency department visits increased by 1.4%, driven by the increased number of Medicaid patients, but at a slower rate than new enrollment in the expansion programs. Dispensed prescriptions increased by 2.1%.

Integrated health networks have grown substantially in recent years and are now affiliated with 80% of hospitals and 70% of doctors nationwide. These networks help to standardize protocols and reduce treatment variables. Despite their growth, however, the overall US health care system remains highly fragmented and almost 75% of prescriptions are written by providers outside of the integrated networks.

Retail prescription volume increased by 2.4%, with 70% of the growth driven by Medicaid recipients. Medicaid prescriptions increased by 16.8% overall, with 25.4% growth in states that had expanded Medicaid coverage, but only 2.8% in states that did not expand Medicaid. Prescriptions filled at retail pharmacies by commercially insured patients, including those who purchased coverage on health exchanges, fell by 8.4 million, while cash prescriptions declined by 5.5%. Medicare Part D patients filled nearly 1 billion prescriptions in retail pharmacies.

Insurance coverage has trended toward higher deductibles and capped out-of pocket expenses. High deductibles create cost sensitivity among patients and often influence adherence to treatment. Adherence has been shown to worsen once costs exceed $30, and patients with a deductible averaged 25 fewer days of therapy compared with patients on a standard insurance plan.

Treatment Transformations

The number of new medications launched in 2014 was at its highest level since 2001. There were 42 new active substances launched, 7 of which had new mechanisms and 18 with orphan indications (9 of these treatments target diseases afflicting fewer than 10,000 patients). The 18 orphan drugs was the highest number on record. There have been 61 orphan drugs launched in the past 5 years—more than any other 5-year period since the Orphan Drug Act was passed in 1983. A variety of new drug launches for larger disease states was introduced to improve efficacy and dosing, and 29 new brands were based on existing medications.

FDA incentive programs encouraged treatment development for high-need populations. More than 40 breakthrough therapy designations were approved in 2014, and 10 medications were launched. Drugs designated as “breakthroughs” can be launched within a month and quickly made available to vulnerable patient populations. The increasing number of designation requests will likely continue the growth of breakthrough therapies for years to come.

FDA incentives have also fostered a substantial pipeline of new medicines in late-stage development. Over 532 distinct research programs are in late stages of development for the US market, and 60% or more are expected to get to market. The launch trajectory is expected to peak over the next 2 years and will remain elevated over the next 5 years.

The pathway for FDA approval of biosimilar agents was established by the 2009 Biologics Price Competition and Innovation Act, and the first approvals through that pathway were seen in 2014. There are several agents currently in late-stage trials or pending biosimilar approval with the FDA, and a slow and steady increase of the number of agents coming to market is expected.

The Generating Antibiotic Incentives Now Act of 2012 incentivized the development of treatments targeting antimicrobial-resistance. Five new agents were launched in 2014, 4 of which received a Qualified Infection Disease Program designation.

Dr. Bartholow is a clinical pharmacist in the VA Southern Nevada Healthcare System in Las Vegas, Nevada.

References

• Medicine Use and Spending Shifts. IMS Institute for Healthcare Informatics website. http://www.imshealth.com/portal/site/imshealth/menuitem.762a961826aad98f53c753c71ad8c22a/?vgnextoid=3f140a4331e8c410VgnVCM1000000e2e2ca2RCRD&vgnextchannel=736de5fda6370410VgnVCM10000076192ca2RCRD&vgnextfmt=default. Accessed June 2015.
• Medicine use and shifting costs of healthcare. IMS Institute for Healthcare Informatics website. www.imshealth.com/deployedfiles/imshealth/Global/Content/Corporate/IMS%20Health%20Institute/Reports/Secure/IIHI_US_Use_of_Meds_for_2013.pdf. Accessed June 2014.