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 Forecast
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.
Forecast Highlights
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.
Specialty Forecast
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.
Forecast Highlights
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.
In Conclusion
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.
For information on trend forecasts in other therapy classes, please see Traditional Forecast by Therapy Class or Specialty Forecast by Therapy Class.
