Founded with a firm belief in the value of research and providing evidence-based information to plan sponsors, Express Scripts began measuring drug trend in 1993, just as major changes were altering the pharmacy landscape.
From an unprecedented number of patent expirations and a subsequent increase in generic use to a potential new wave of clinical trials on the horizon, the drug industry is an ever-changing landscape filled with twists and turns. Each year, Express Scripts takes a long-term look at traditional and specialty trend to make sense of leading indicators and a host of other factors so you can take action to ensure positive outcomes for your organization and its constituents.
Traditional drug trend was negative in 2012 for the first time since the Express Scripts Drug Trend Report began reporting changes in year-over-year drug spend in 1997. The primary driver of negative trend was the decrease in medication costs resulting from the “patent cliff,” the wave of patent expirations for tens of billions of dollars in blockbuster drugs. With the patent cliff, which surged at the end of 2011 when the original patent for the best-selling prescription drug of all time, Lipitor® (atorvastatin calcium), expired, we witnessed a significant volume of patent expirations for many highly utilized traditional drugs, such as Lexapro® (escitalopram), Plavix® (clopidogrel), the second best-selling prescription drug ever marketed, and Singulair® (montelukast).
We anticipate that spend for traditional drugs will continue to decline year over year through at least 2015, primarily as a result of declines in drug costs. Trend is expected to be -1.0% in 2013, -1.7% in 2014 and -1.4% in 2015. Utilization is expected to remain relatively stable, but additional savings opportunities still loom on the horizon. For example, in 2013, drugs whose annual sales total $14 billion will lose patent protection, including some frequently utilized medications such as Lidoderm® (lidocaine) and Cymbalta® (duloxetine). These and other patent expirations in 2013 and 2014 will drive down drug costs by increasing the availability of more generic medications.
For the second year in a row, medications used to treat diabetes composed the most expensive per-member-per-year (PMPY) therapy class. Spend is expected to continue to increase over the next few years; however, the magnitude of change is expected to slow. The increases in spend will likely be driven by the approval of several new dipeptidyl peptidase-4 (DPP-4) inhibitors and glucagon-like peptide-1 (GLP1) competitors, and new insulins, including dulaglutide, an experimental insulin with once-weekly dosing that has shown promise in clinical trials. Biosimilar versions of insulin glargine are expected in 2014 or 2015. In the meantime, sodium-dependent glucose cotransporter 2 (SGLT-2) inhibitors, a relatively new type of diabetes medication, are expected to gain market share, although there are cardiovascular and skeletal safety risks associated with their use. The increase in spend for diabetes drugs is expected to slow from 11.0% in 2012 to 8.9% in 2013, and again to 6.8% in 2014, but year-over-year increases will continue at a steady pace between 2014 and 2015 as more of the new drugs in this therapy class are launched.
In contrast to diabetes medications, the forecast for depression drugs is for year-over-year costs to continue to decline in the coming years. Trend for depression drugs is expected to be -4.7% in 2013 as the market stabilizes after Lexapro’s patent expires, and as new brand serotonin-norepinephrine reuptake inhibitors (SNRIs) capture some of the market share from existing drugs of this type. In addition, there are several new drugs in the pipeline, including levomilnacipran and edivoxetine. However, the new drugs are expected to compete with existing drugs of the same type rather than to dramatically change utilization of existing drugs. Trend therefore is expected to be -8.7% in 2014 and -6.5% in 2015.
The attention disorders therapy class also merits watching. In 2012, trend for the class was 14.2%, driven by increased utilization among adults and an increase in costs related to drug shortages. Trend is expected to be 4.4% in 2013 as the market stabilizes after the 2012 drug shortage, and as generic competition increases among formulations of many highly utilized medications. However, trend is expected to increase 10.0% in 2014 and 8.6% in 2015, driven by continued increases in utilization among young and middle-age adults, and Drug Enforcement Administration-mandated limitations in the available supply of key ingredients.
In contrast to the negative trend projected for traditional drugs, the year-over-year change in spend for specialty medications is expected to remain strongly positive. Trend is expected to be slightly lower for 2013 compared to 2012, at 17.8%, but is expected to reach 19.6% in 2014 and then drop slightly to 18.4% in 2015. By 2019 or 2020, specialty drugs are expected to represent 50% of plan sponsors’ overall drug-related expenditures. The top three therapy classes ― inflammatory conditions, multiple sclerosis and cancer ― are expected to account for more than 50% of that overall spend.
The primary driver of specialty drug spend — in the therapy classes used to treat relatively common conditions as well as in the classes used to treat less prevalent conditions such as pulmonary hypertension and respiratory conditions like cystic fibrosis — will be a continuing increase in drug costs. Costs will rise as newer, more-sophisticated therapies with price tags worth tens and hundreds of thousands of dollars are brought to market.
At least 60% of the new drugs expected to gain approval from the Food and Drug Administration (FDA) in 2013 alone will be specialty drugs. These include new oral cancer treatments and another oral treatment for multiple sclerosis. In addition, the first new pulmonary hypertension treatments in five years are expected to gain approval in 2013.
The introduction of biosimilars in key therapy classes with high-cost, highly utilized drugs has the potential to alter the trajectory of specialty drug spend. Although the biosimilar may not always be interchangeable with the innovator brand drug, and will not offer the magnitude of savings that the traditional counterpart offers, the implementation of formulary and utilization management tools will generate substantial savings for plan sponsors whose members utilize high-cost specialty medications.
Spend for cancer medications in the pharmacy benefit is expected to display a relatively steady year-over-year increase of 21.3% in 2013, 20.9% in 2014 and 21.0% in 2015. New, high-cost therapies being developed in this class, such as dabrafenib and trametinib, will contribute to the increase, along with high inflation rates for older medications whose makers may be trying to protect profit margins. Further, the stacking of therapies — using multiple, expensive oncology agents in succession in a single patient — has become more common as cancer survivorship increases and physicians treat cancer as a chronic condition requiring maintenance medication rather than a terminal illness.
Hepatitis C has the most volatile forecasted trend of any of the top 10 specialty therapy classes for the next three years. In 2011, after the introduction of the first novel hepatitis C treatments to be approved in decades, utilization and costs in the class skyrocketed. However, by 2012, the increase in utilization had waned, leading to an overall trend of 33.7%. As this pattern continues, the increase in spend is expected to continue at a relatively stable rate for 2013. However, new interferon-free medications anticipated to gain Food and Drug Administration (FDA) approval beginning in late 2013 and an increase in diagnoses related to new screening guidelines together are expected to result in a steadily rising rate of increase in drug spend for this class, for a trend of 58.5% in 2014 and a dramatic jump to a 168.4% trend in 2015.
From 2011 to 2012, the increase in per-member-per-year (PMPY) spend for medications used to treat inflammatory conditions such as rheumatoid arthritis and Crohn’s disease was 23.0%. PMPY spend is expected to increase at a similar pace in each of the next three years: 25.1% in 2013, 17.2% in 2014 and 17.4% in 2015. The market is currently dominated by injectable medications, but a new oral medication to treat rheumatoid arthritis, Xeljanz® (tofacitinib), was launched in late 2012 and is expected to capture market share from the older disease-modifying drugs. The lack of biosimilars on the horizon in this therapy class is also expected to keep costs high.
The industry has enjoyed offsetting trend, with very low traditional trend and specialty trend expected to continue running in the high teens into 2015. From the current vantage point, this picture is not expected to change dramatically in the next few years. We will keep a sharp eye on legislation around biosimilars, closely track FDA approval of new drugs and continue to follow dozens of other factors to keep you as prepared as possible for any changes that could impact you.
the Future of Pharmacy Benefit Management+–
- The Early Years
The Early Years
The rising cost of prescription medication - from generic pills that lower cholesterol to injections that treat cancer - is a major concern for healthcare benefit plan sponsors and payers. Express Scripts researchers began tracking prescription drug trend 20 years ago to help stakeholders better manage drug spend.
- Generics were becoming more prevalent and affecting the market as a result of the Drug Price Competition and Patent Term Restoration Act of 1984 (commonly known as the Hatch-Waxman Act).1
- Advances in the understanding of disease mechanisms and pharmacokinetics increased the speed of development of medications, which in turn led to increases in pharmacy costs for plan sponsors and patients.
> Tagamet® (cimetidine), the first H2 receptor antagonist, was among the first successful medications based on this methodology; it was approved in the U.S. in 1979.
> Prozac® (fluoxetine), which launched in 1987, was the first selective serotonin reuptake inhibitor (SSRI) to target a specific receptor in treating depression. It was among the top prescribed medications in the category. By 1993, the average cost per 30-day prescription for Prozac was $94.64.
> Mevacor® (lovastatin), also launched in 1987, was the first HMG-CoA reductase inhibitor (statin) to target a specific enzyme in treating high cholesterol. The average cost per 30-day prescription for it was $79.86 in 1993.
1. Mossinghoff, Gerald. Overview of the Hatch-Waxman Act and its impact on the drug development process. Food Drug Law J. 54. 1999; 54(2): 187-194.
1993 – Reflux Medications Lead the Pack
PMPY Spend: $180.25
Total Trend: 9.8%
GFR: (not available)
Top Therapy Classes
- Spend by plan sponsors was the greatest for gastrointestinal medications, including H2 antagonists such as Tagamet® (cimetidine) and proton pump inhibitors (PPIs) such as Prilosec® (omeprazole). Other top classes were calcium channel blockers such as Procardia XL® (nifedipine) and non-steroidal anti-inflammatory drugs (NSAIDs) such as ibuprofen.
- The most expensive of the reported drugs billed under the pharmacy benefit were cancer medications, with an average cost per prescription of $116.02.
- The MedWatch program - which the Food and Drug Administration (FDA) launched to increase the discovery of adverse events and other errors associated with prescription drugs - resulted in greater consumer awareness and empowerment.
- MedWatch reporting helped the FDA discover evidence of heart valve dysfunctions associated with the appetite suppressant Redux® (dexfenfluramine),2 which led to its withdrawal from the market along with a similar drug, fenfluramine, in 1997.
2. U.S. Food and Drug Administration. FDA announces withdrawal fenfluramine and dexfenfluramine. September 15, 1997. Available at: http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm179871.htm. Accessed February 15, 2013.
1997 – The Mainstreaming of Medication
PMPY Spend: $282.48
Total Trend: 16.1%
Top Therapy Classes
- Gastrointestinal medications continued to represent the greatest spend for plan sponsors. Antidepressants and cholesterol-lowering drugs ranked second and third, surpassing spend for calcium channel blockers, other hypertension treatments and NSAIDs.
- Cancer drugs remained the most expensive in terms of the cost per prescription, with the average cost increasing 55.7% between 1993 and 1997, to $180.67.
- Some new drugs offered more effective treatment whereas others were vastly more expensive without providing distinct therapeutic advantages.
- New non-sedating antihistamines such as Claritin® (loratadine) and Zyrtec® (cetirizine) became blockbusters, driven largely by direct-to-consumer (DTC) advertising on network television. Though already legal, television ads were low key and less frequently aired until Schering-Plough launched its “Blue Skies” campaign for Claritin in August 1997.3
- The best-selling drug of all time, Pfizer’s Lipitor® (atorvastatin), became available in 1997.
3. Reeves KN. Direct-to-consumer broadcast advertising: empowering the consumer or manipulating a vulnerable population? Food Drug Law J. 1998; 53(4): 661-679.
1998 – Lifesaving Drugs vs. Lifestyle Drugs
PMPY Spend: $329.83
Total Trend: 16.8%
Top Therapy Classes Patterns from 1997 carried to 1998 …
- The use of non-sedating antihistamines increased 17.5% from 1997 to 1998, which combined with cost increases, led to a 25.3% PMPY trend.
- PMPY costs for gastrointestinal drugs, antidepressants and medications used to treat high cholesterol were in the first, second and third spots, respectively.
- Cancer drugs had the highest average cost per prescription, at $186.28.
- Increases in prescription drug costs forced more plan sponsors to ask their employees and dependents to pay for a larger share of drug costs.
- Genentech’s Herceptin® (trastuzumab) radically altered the treatment of breast cancer. Approved to treat metastatic breast cancer, it works by shrinking or eradicating distant tumor cells in women with certain genetic profiles. This specific targeting of proteomic and genetic abnormalities was a dramatic departure from traditional chemotherapy.4
- Pfizer launched Viagra® (sildenafil), the most ubiquitous of the so-called lifestyle drugs – drugs that increase the quality of life for patients but with limited clinical relevance in terms of improving health or saving lives. The costs of drugs like Viagra, Ambien® (zolpidem) and Propecia® (finasteride) often are as expensive as life-saving cancer drugs, and some are associated with severe side effects.
4. Goldhirsch A, Coates AS, Castiglione-Gertsch M, Gelber RD. New treatments for breast cancer: breakthroughs for patient care or just steps in the right direction? Ann Oncol. 1998; 9(9): 973-976.
2001 – Scaling the Patent Cliff
PMPY Spend: $592.05
Total Trend: 16.9%
Top Therapy Classes
- PMPY costs for gastrointestinal drugs, antidepressants and medications used to treat high cholesterol remained the top three, although the PMPY costs for high cholesterol medications were quickly rising; in fact, they were projected to outpace the top two in the coming years. Costs and utilization of medications used to treat diabetes and cancer continued to rise, as well.
- The patent for blockbuster SSRI Prozac® (fluoxetine) expired, opening the market to generic competition that led to one of the most severe erosions of prescription drug profits the market had yet seen.
- The patents for brand Pepcid® (famotidine), with estimated annual sales of $350 million, Adderall® (amphetamine salts mixture), with estimated annual sales of $400 million, and Mevacor® (lovastatin), with estimated annual sales of $195 million, also expired.
- The FDA approved Nexium® (esomeprazole) to treat GERD. This was an example of an important trend in drug development and marketing: the granting of patent protection to drugs with minor molecular differences from their predecessors, so-called “me-too” drugs. Me-too drugs helped pave the way for therapeutic substitution, a powerful tool in managing drug costs.
- Benefit managers were taking advantage of the flood of generics onto the market by increasingly adopting three-tier formulary cost-management strategies. More than 50% of employers had implemented three-tier formularies by the end of 2001, compared to only 10% in 1998.5
5. Pharmacy Benefit Management Institute. Research confirms growing popularity of three-tier formularies. PBM News. 2002; 7(3). Available at: www.pbmi.com/pbmnews/V7N3.html. Accessed December 30, 2012.
2003 – An Eye Toward Regulation
PMPY Spend: $676.50
Total Trend: 15.5%
Top Therapy Classes
- Spend was the highest for medications that lower cholesterol, followed by gastrointestinal drugs and antidepressants.
- New studies showed the value of statins in conditions other than heart disease, leading to increased utilization.6,7
- Claritin® (loratadine), a very popular non-sedating antihistamine, went over-the-counter from prescription status, and several major prescription drugs, including Paxil® (paroxetine), an antidepressant, and Ortho Novum® 7/7/7 (norethindrone and ethinyl estradiol), an oral contraceptive, went generic.
- New study findings that uncovered additional adverse effects associated with taking estrogens caused a large drop in estrogen usage.8
- Overall drug trend had peaked and started to decline. However, many of the new drugs being approved by the Food and Drug Administration (FDA) were specialty medications, and spend for these drugs was up 38.7% over specialty spend in 2002. Specialty medications included the miscellaneous central nervous system (CNS) class of drugs (including those used to treat multiple sclerosis), whose average cost per prescription was $377.25.
- Research suggested that in clinical practice, expensive COX-2 inhibitors, which were promoted as having gastro-protective benefits, weren’t actually being prescribed to patients with gastrointestinal problems.9 This called into question the cost-effectiveness of these drugs and underscored the importance of utilization management programs.
- The U.S. Congress approved the Medicare Prescription Drug Improvement and Modernization Act (known as Medicare Part D), which, when fully implemented, would provide drug benefits for millions of Medicare beneficiaries with little or no previous drug coverage.
6. Khurana V, Bejjanki HR, Caldito G, Owens MW. Statins reduce the risk of lung cancer in humans: a large case-control study of US veterans. Chest. 2007; 131(5): 1282-1288.
7. Stuve O, Sawsan Y, Steinman L, Zamvil SS. Statins as potential therapeutic agents in neuroinflammatory disorders. Curr Opin Neurol. 2003; 16(3): 393-401.
8. Wassertheil-Smoller S, Hendrix S, Limacher M, et al. Effect of estrogen plus progestin on stroke in postmenopausal women: the Women’s Health Initiative: a randomized trial. JAMA. 2003; 289(20): 2673-2684.
9. Cox ER, Motheral B, Frisse M, et al. Prescribing COX-2s for patients new to cyclo-oxegenase inhibition therapy. Am J Manag Care. 2003; 9(11): 735-742.
2006 – Retail Wars: Generic Edition
PMPY Spend: $788.84
Total Trend: 7.2%
Top Therapy Classes
- Drugs to treat high cholesterol, gastrointestinal medications and antidepressants still held the rank of top three therapy classes with the highest spend. However, the average cost per prescription for medications used to treat growth deficiencies, a specialty class, was $2,552.01, making them the most expensive drugs.
- Medicare Part D was fully enacted, giving beneficiaries the option of choosing prescription drug coverage from a variety of benefit designs with varying levels of coverage. However, the process of selecting a Part D plan was daunting to seniors, many of whom had to rely on others, including their adult children, to help them sort through the options to make coverage decisions.
- Patents expired for major brand drugs in seven therapy classes with the highest PMPY spend, contributing to a 59.2% increase in the generic fill rate.
- Wal-Mart and some other retail pharmacies launched low-cost generic prescription drug programs, which covered a variety of older, often-used generic drugs at very low out-of-pocket costs generally ranging from $4 to under $10. Although this practice made medications less expensive for some, it created some concerns around drug safety as the standard PBM utilization review processes that identified duplicate therapy, gaps in therapy and dangerous drug-drug combinations were typically bypassed when prescriptions were not processed through patients’ pharmacy benefits.
- By 2006, two of the COX-2 inhibitors – Bextra® (valdecoxib) and Vioxx® (rofecoxib) – had been removed from the market due to cardiovascular risks, and Pfizer – the manufacturer of the only remaining drug in the class, Celebrex® (celecoxib) – was required to include a boxed warning in that drug’s packaging.
2010 – Politicizing Affordable Care
PMPY Spend $952.62
Total Trend: 3.6%
Top Therapy Classes
- The top three classes grew as the obesity epidemic in the U.S. continued, with plan sponsors spending the most per member per year on drugs used to lower cholesterol, treat diabetes and reduce high blood pressure – all conditions more prevalent in overweight and obese populations.
- Trend for specialty medications continued to skyrocket at 19.4%, driven primarily by increased costs. The most expensive single drugs – with an average cost per prescription of $3,590.94 – were those used to treat pulmonary hypertension. Specialty drugs were still largely branded, complex biologic agents with few generic alternatives. The most important change was the increasing proportion of total drug trend attributable to specialty drugs, which reached 13.6% in 2010, up from 8.1% in 2006.
- After heated national debate, the Patient Protection and Affordable Care Act was passed. When fully implemented in 2014, the legislation would dramatically alter the way that healthcare and prescription drugs are delivered and used. Two features of the legislation are expected to have the greatest impact: the provision for coverage of the uninsured or underinsured, and the proposed pathway for biosimilars. However, the legislation was not passed with full support.
2012 – Over the Patent Cliff
PMPY Spend: $ 846.85
Total Trend: 2.7%
Top Therapy Classes
- Diabetes moved to the top of the list of the therapy classes with the greatest PMPY spend, followed by medications used to treat high cholesterol and high blood pressure/heart disease.
- The year 2012 saw the smallest change in drug costs since Express Scripts began monitoring trend in 1993.
- The generic fill rate was at an all-time high, due in part to the wave of patent expirations for blockbuster drugs that became known as the patent cliff.
- Specialty drug costs continued to increase at a double-digit pace. Medications used to treat hepatitis C had the largest total trend at 33.7%, as two novel medications are released in May 2011 – Incivek® (telaprevir) and Victrelis® (boceprevir) continued to drive utilization. Used in conjunction with existing therapy, these new medications have evidence of improved clinical efficacy. Widely used Plavix® (clopidogrel) went generic in May; the Food and Drug Administration (FDA) did not grant generic exclusivity to any manufacturers.
- Express Scripts met Walgreens’ pricing challenge by removing the retail chain from its network. The chain has since returned to the broadest network, but many plan sponsors use narrower networks to save money while preserving member choice.
- The re-election of President Barack Obama solidified the pending implementation of the Patient Protection and Affordable Care Act, encouraging plans and plan sponsors to fast-track the rollout of solutions that address new mandates.
- Looking Forward
Looking Forward: Maximizing the Power of Us
When we consider the rising cost of specialty medications, our growing national nonadherence problem and the millions who continue to fill maintenance medications at retail or select higher-priced brand drugs over generics, the issues surrounding the pharmacy benefit seem insurmountable. But what would happen if we took a stand, together?
Our clients are truly a different breed, and they’ve seen the power that comes when we all take on a common challenge. Time and again we have stood together to address some of the most pressing issues of the last 20 years. When we took firm positions on Lipitor®, COX-2s and Walgreens, the message was loud and clear: we would settle for nothing less than higher quality and lower costs. And our clients supported our position. Each of those milestones was a breakthrough event in the history of the pharmacy benefit. And together they set the stage for how to tackle even greater challenges that lie ahead.
As we look 20 years into the future, we envision a very different healthcare system. We see a healthcare system that recognizes that better decisions are the keys to healthier outcomes – better choices about which drugs people take, where they get them and taking them as prescribed. It’s a bold vision that will only come to pass when we all maximize the unique power we have – as a group, as a movement, as people interested in a better healthcare system. By taking action together, we can lay the groundwork for a more effective, efficient healthcare system that provides high-quality healthcare to more people, more economically.
Join us on our quest to not just change, but to change forever, the healthcare experience for ourselves and for generations yet to come.
Patient Engagement vs. Activating Good Intentions
Our Point of View:
Patient engagement increasingly is promoted as an effective way to improve quality and lower cost in health care. However, after delving into the science of patient engagement, skepticism is warranted. Patient engagement is in many ways contrary to basic human nature and in many instances may not be realistic or even necessary. In the future, we see a world where choice architecture and associated strategies hold significant potential for improving outcomes without relying on ongoing engagement by activating the good intentions in us all.
1. Tools for Better Behaviors - Using Choice Architecture and Message Framing
A More Efficient, Effective Healthcare System
Our Point of View:
Applying PBM-based tools such as formulary management and step therapy to the broader healthcare space could cut costs out of the health care system and continue to ensure quality care. Active management will identify therapeutically similar devices, tools and processes and prefer the most effective and least costly option. The competitive sales-oriented nature of medical devices and tools will evolve as it becomes clearer that some widely-used tools COST more but don’t DO more to improve health outcomes. In this future state, purchasing decisions will be less based-on provider preference and custom and more based on proven effectiveness.
Back to the Future: Biosimilars and the New Patent Cliff
Our Point of View:
Newer, more targeted medications are rapidly entering the system and will, in the near future, have the ability to improve treatment of a broader range of rare diseases. As those initial medications are tested and proven effective (without deleterious effects) they will be released as brand, patent-protected medications, which should be followed by a wave of generic alternatives, a situation not dissimilar from the one we experienced in 2012. For some specialty medications, the development and launch of generic biosimilars represents a more convoluted process. The Patient Protection and Affordable Care Act created a pathway to encourage development of interchangeable generic biological products, which should encourage competition and lower drug costs as it did with many small molecule, synthetic drugs. However, the current licensed pathway makes it difficult for manufacturers to invest in the development of biosimilars without handing over intellectual property. In addition, critics of biosimilars are raising the same safety concerns that critics of generic synthetic drugs raised before generic availability was prevalent. If the pathway is accelerated, the cycle of high-cost brands going off patent will repeat itself in perpetuity as innovators, clinicians and drug manufacturers work together to address more illnesses.
The Rise of the Machines
Our Point of View:
Emerging personal electronic devices are poised to provide individualized diagnostic opportunities that could speed diagnosis and enable proper treatment sooner. Continuous connectivity with a health provider network or database of information will not only empower individuals, but provide proof to health plans and plan sponsors that their constituents are taking personal responsibility for their own health. The role of the provider could change into one more based on data analysis than individualized, hands-on care. Given the ability to more carefully monitor a patient’s health status, treatment plans and even insurance coverage could be modified in real-time.