Specialty Drugs Continue to Drive Overall Medication Spending

There have been noticeable improvements in the development of new drugs as the FDA recorded 50 new drug approvals in 2015. However, not all increases in spend can be fully attributed to breakthrough science, according to the annual drug trend report by Express Scripts.

The report found rapid inflation in the cost of medications, as the average price of brand name drugs jumped by 16.2% last year, and has increased 98.2% since 2011.

The high prices for new products is a factor in the 2015 spend. In fact, 37.7% of drug spending is on specialty drugs instead of traditional drugs, as this is expected to increase to 50% of total US drug spending in 2018 and continue to grow thereafter.

In 2015, there were 19 FDA approvals for oncology drugs that help delay the start of chemotherapy for cancer patients.

“In addition to newer products, medications like enzalutamide (Xtandi) are used to help patients delay the need to start chemotherapy,” the report authors wrote. “These therapies have positive impacts on patient care but come with a hefty price tag — averaging more than $8,000 per prescription."

Express Scripts noted that cancer is increasingly becoming a chronic disease that needs complex and costly long-term treatment. Currently, the average cost of a full-treatment regimen is roughly $150,000 per patient, while cost trend for oncology drugs was 23.7% last year as a result of growth in both utilization (9.3%) and cost (14.4%).

“The costs of these medications continue to represent a significant challenge to patients and the overall healthcare system,” the authors wrote. “Some drugs, like imatinib (Gleevec), are approved to treat multiple types of cancer. However, efficacy may vary for these different indications. The annual cost of Gleevec was $92,000 in 2012, and the economic burden is substantial, due to its multiple indications, wide use and effectiveness.”

In the second half of 2015, cholesterol lowering PCSK9 inhibitors evolocumab (Repatha) and alirocumab (Praluent) entered into the market. These drugs only treat a small number of patients with high cholesterol who are unresponsive to available statin therapies.

“The challenge, of course, is that these drugs are priced at more than $14,000 per year, before discounts — far greater than the cost for statin therapies,” the authors wrote. “Although the clinical trials for Praluent and Repatha have been successful in getting these drugs approved for lowering LDL cholesterol, little has been proven about the long-term effects on heart attack and stroke prevention, the main reason people are treated for high cholesterol.”

Although Express Scripts has mitigated the cost impact of these drugs, they still need to prepare for 2017-2018 when the results of outcome trials evaluating the effects of these drugs on myocardial infarction and cerebrovascular incidents are anticipated, because it could lead to wider use.

Price inflation is both persistent and costly, as brand price inflation nearly doubled between 2011 and 2015. The price of brand medications increased by 164% between 2008 and 2015, as one-third of branded medication saw price increases of greater than 20% last year.

“Generic prices continue to decline and deliver significant cost savings to payers and patients,” the study authors wrote. “Of greater concern, however, are the increases seen among prices for specific generic drugs, including drugs for diabetes and skin conditions. Several industry factors are influencing the increase in generic drug pricing. The first is consolidation among pharmaceutical manufacturers that’s driving down marketplace competition.”

The last factor that drove spending in 2015 are captive pharmacies, which are pharmacies that agree to be owned or operated by pharmaceutical manufacturers.

“Captive pharmacies typically promote the manufacturer’s products instead of other lower-cost, equally effective medications” the study authors wrote. “The intent is to circumvent formulary management programs designed to protect the patient and the plan sponsor from unnecessarily filling high-cost medications.”

The most high profile captive pharmacy arrangements were between Horizon Pharma PLC and Linden Care Pharmacy, as well as Valeant Pharmaceuticals International and Philidor Rx Services.

In order to address these issues, Express Scripts has launched SafeGuardRx, a collection of novel solutions to mediate the high cost of new medications through a combination of clinical programs and strategic reimbursement solutions. This will allow Express Scripts clients to eliminate waste and maximize the value of money spent.

In addition to the Hepatitis Cure Value Program (HCV), SafeGuardRx includes the Cholesterol Care Value Program (CCV), Oncology Care Value Program (OCV), and the industry-first Inflation Protection Program.

The CCV program was created to ensure coverage for Praluent and Repatha for patients with rare familial hypercholesterolemia by combining discounts and rigorous utilization management for PCSK9 inhibitors, resulting in additional protection by capping plan cost in 2016. At this time, the CCV program is holding down current spending on the new class of high cholesterol therapy.

The OCV program was introduced in 2016 to ensure that cancer patients are able to receive needed treatment and help to protect payers from the high cost of these medications. The program seeks to address inefficiencies in the market, because cancer treatments have a large range of outcomes across different indications and treatment scenarios but drug prices stay the same, according to Express Scripts.

The OCV program takes a multifaceted approach that helps align outcomes with treatment costs and will focus on lung cancer, prostate cancer, and renal cell carcinoma in 2016.

The Inflation Protection Program allows Express Scripts to deliver more value and budget predictability to both payers and patients. This is made possible by shielding participating plans from the full impact of year over year brand drug price increases by offering inflation guarantees, the company said.