Top Drugs of 2015

Medication spending grew by 12.2% in 2015, totaling approximately $425 billion. After adjusting for manufacturer rebates and price concessions, net spending totaled $309.5 billion, which was an increase of 8.5% over the previous year. This is a continuation of the historically high growth seen in 2014, although growth did slow by about 2%. Factors driving growth included new branded products, the increase in price and volume growth of brand products, and the lack of major patent expiries. Discounts and price concessions accounted for a 27.1% decrease in overall spending.

The top therapeutic classes, by volume, were antihypertensives, mental health medications, pain medications, antibacterials, and lipid regulators. Diabetes medications was the top class by nondiscounted spending, followed by oncology and autoimmune disorders medications. Levothyroxine, lisinopril, acetaminophen/ hydrocodone, atorvastatin, and metoprolol were the most commonly prescribed medications, and the top earning agents were Harvoni, Humira, Enbrel, Crestor, and Lantus SoloStar. Over 80% of prescriptions dispensed were written for unbranded generics, but branded medications accounted for over 70% of nondiscounted spending.

DRIVERS OF GROWTH

Five majors factors drove spending growth in 2015: new brand spending, brand price increases, brand volume growth, generic spending, and patent expiries. Spending on new brand products rose by $24.2 billion, accounting for over half of the total spending growth in 2015. This marks the second straight year of record growth for new brand products. Specialty medications accounted for 67% of the new brand spending growth. These include new treatments for hepatitis C, HIV, multiple sclerosis, autoimmune disorders, and cancer. Traditional medicines, such as agents targeting diabetes and human papillomavirus infection, contributed 33% to new brand spending growth.

Prices for protected brands increased by 12.4%, which is down from 14.3% in 2014. Major net price decreases were seen in the areas of diabetes, hepatitis, and pain, whereas prices rose for therapies for autoimmune disorders, multiple sclerosis, and oncology. After price concessions from manufacturers, the net price increase was 2.8%, marking a significant slowing of growth. It is estimated that manufacturer price concessions offset price growth of branded products by up to 81%.

Volume growth of protected brands added to spending growth for the first time since 2007, contributing $2.7 billion in total spending. Areas of positive growth included autoimmune diseases, cancer, blood clots, and mental health disorders. Lower utilization of other agents, including antibacterials, lipid regulators, and pain medications, offset spending growth of protected brands by $3.8 billion. These volume declines may have resulted from shifts to newer brands, generic alternatives, and policy changes targeting more responsible utilization of antibiotics and prescription painkillers.

Generic spending grew by 7.4% in 2015, totaling $114.1 billion. Branded generics contributed 45% ($3.5 billion) of generic spending growth and accounted for 40% of overall generic spending. Older generics added $0.5 billion to spending growth. Major contributors to generic spending in 2015 included aripiprazole, esomeprazole, and celecoxib.

Patent expiries in 2015 accounted for a $14.2- billion reduction in spending in 2015. By comparison, the decline in spending due to patent expiries was about $2 billion less in 2014, but far greater in 2012 and 2013, when patent expiries accounted for declines of $32.6 billion and $20.5 billion, respectively. Major patent expiries in 2015 were Abilify, Nexium, Namenda, and Copaxone. Patent expiries in 2014 also contributed to lower spending in 2015.

MARKET SEGMENT CONTRIBUTIONS

Specialty medications have contributed 70% to the overall spending growth of the past 5 years and have accounted for 36% of all nondiscounted spending. In 2015, spending on specialty medications rose by 21.5%, reaching $150.8 billion. Spending on treatments for hepatitis, oncology, and autoimmune diseases added $19.3 billion in growth. The number of new patients seeking hepatitis C treatments has grown 5-fold in the past 2 years, and nearly 250,000 new patients received therapy in 2015. Multiple sclerosis and HIV spending increased by 17.6% and 15.7%, respectively.

Multiple sclerosis medications added $17.7 billion in spending and were more heavily utilized in female patients and in patients 40 years and older. About half of multiple sclerosis new treatment starts were prescribed oral medications instead of injectable medications.

Spending on diabetes medications grew by $10.1 billion, but $8.6 billion was offset by rebates and discounts. Insulin price and volume growth added $4.8 billion, whereas dipeptidyl peptidase- 4 inhibitors added $1.4 billion, sodium-glucose cotransporter-2 inhibitors added $2 billion, and glucagon-like peptide-1 agonists added $1.2 billion. Spending for glitazones has diminished significantly due to safety concerns, dropping from $4.4 billion in 2011 to $166 million in 2015.

NEW MEDICINE LAUNCHES

Seventy-three new brands were released in 2015, 43 of which were new active substances (NASs). Fifteen orphan drugs were introduced, most of which have oncology indications; the remainder target rare diseases. Other innovative products included treatments for heart failure, cholesterol, and hypoactive sexual desire disorder in women. Thirty new non-NAS agents also were launched, including therapies for pancreatic cancer and hepatitis C.

Over the past 10 years, the top 3 areas for NAS launches have been oncology, infectious diseases, and neurologic disorders. Oncologics accounted for over one-third of NAS launches in 2015, and the majority of recently released agents have been targeted therapies designed to be more precise in targeting gene mutations in cancer cells while being less toxic to surrounding healthy tissue. More than 40 targeted oncologic drugs have been launched within the past 5 years, 14 of which were introduced in 2015 alone. Also, 10 additional indications were approved by the FDA in 2015 for targeted oncology drugs that had gained first approval within the past 5 years. The number of indications granted by the FDA, both first approvals and subsequent approvals, for targeted oncology medicines was higher in 2015 than in any previous year.

The first immune-oncology programmed death-1 inhibitors, pembrolizumab and nivolumab, were introduced in late 2014. Since then, volume of use has grown rapidly. There have been over 135 clinical trials for additional indications for the 2 currently approved agents; additional agents are in late-stage development. The first biosimilar, Zarxio, was approved in March 2015; the first nonoriginal biologics, Granix and Omnitrope, were approved previously. By the end of 2015, 7 biosimilar applications were pending.

PATIENT DEMAND AND COST EXPOSURE

Total prescription volume increased by 1% in 2015. Demand increased for antidepressants, diabetes agents, respiratory agents, and antiepileptics. Demand for lipid regulators declined overall, with demand for branded statins shifting in favor of generic atorvastatin. Demand for narcotic pain medications fell by over 16 million prescriptions. Prescription volume growth has been driven by the expansion of insurance coverage through Medicaid and health exchange plans, although that growth has been offset by fewer prescriptions being filled by patients with commercial insurance coverage.

Patient cost exposure for branded medicines has steadily risen since 2011 and reached an average of $44 per prescription in 2015; the average patient cost exposure of generic drugs has been around $8 since 2010. About 17% of brand prescriptions have a patient cost exposure of more than $50, whereas about 24% of brands have a $0 patient cost exposure. Manufacturers have offset the rise in patient cost exposure through coupons and other patient savings programs, keeping final patient costs fairly stable. Patient savings programs are often highest during the first quarter of the year, helping to offset insurance deductibles. Patients with pharmacy deductibles have a high cost exposure even after patient savings programs, with over 10% of total claims and 40% of claims for brand prescriptions having cost exposures above $50.

HEALTH CARE DELIVERY CHANGES

Health care professional affiliation with integrated delivery networks (IDNs) has increased in most states since 2010, helping IDNs to increase their negotiating power and drive pay-for-performance initiatives. Over 54% of all health care providers are affiliated with IDNs, although there is still significant variation from state to state.

Access to lower-cost nonemergency care has increased over the past 5 years, as the number of urgent care centers has grown by 150% and pharmacy in-store clinics has increased by 50%. About 70% of urgent care centers are run independently, whereas over 80% of acute care hospitals are affiliated with IDNs.

FORECAST TO 2020

US spending is projected to increase by 46% over the next 5 years, reaching $610 billion to $640 billion by 2020. Adjusted net growth is expected to be 4% to 7% in 2020, reaching $370 billion to $400 billion. Growth will continue to be driven by the utilization and continued price increases of protected brands, as well as the introduction of new brands and the relatively low impact of patent expiries. The Affordable Care Act will impact spending through expanded insurance coverage, coordination of services, and value- based payment contracting.

Net brand spending growth is expected to drop by $115 billion, totaling $167 billion. As a result, absolute growth will be reduced by 41%. Between $65 billion and $70 billion of net brand growth is expected to result from new medication launches, whereas existing brands will contribute $36 billion through increased use. Price increases of existing brands will be largely offset by discounts and rebates through 2020.

New brand launches will continue to increase spending, as the late-phase research and development pipeline includes over 2300 novel products focused in areas such as oncology, pain, Alzheimer’s disease, epilepsy, dermatology, and vaccines.

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

References

• Medicines use and spending in the US: a review of 2015 and outlook to 2020. IMS Institute for Healthcare Informatics website. imshealth.com/en/thought-leadership/ims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020. Accessed June 2016.