Hepatitis C therapies, compounded meds drive increase in US drug spending

New hepatitis C therapies with high price tags and the exploitation of loopholes for compounded medications drove a 13.1% increase in US drug spending in 2014 – a rate not seen in more than a decade, according to Express Scripts 2014 Drug Trend Report.

Hepatitis C and compounded medications are responsible for more than half of the increase in overall spending. Excluding those two therapy classes, 2014 drug trend (the year-over-year increase in per capita drug spending) was 6.4%.

Related:2014 drug costs soar, no end in sight

Specialty medications – biologic and other high cost treatments for complex conditions, such as multiple sclerosis and cancer – accounted for more than 31% of total drug spending in 2014. As Express Scripts forecasted last year, specialty drug trend more than doubled in 2014, to 30.9%.

Additional key findings:

• Drug maker consolidation and drug shortages also led to increases in traditional drug trend, which rose to 6.4% in 2014.

• Diabetes remains the leading traditional therapy class for a fourth straight year based on total costs; Express Scripts expects double-digit increases in spend in this class over the next 3 years due to once-weekly oral and injectable drugs in the pipeline.

• Cost for medications to treat pain increased 15.7% in 2014, due in part to new tamper-resistant formulations for opiates.

• Inflammatory conditions, which include treatments for rheumatoid arthritis and psoriasis, maintained their position as the costliest specialty drug class due to expanded indications and increased prevalence of treatment.

Stettin“Based on these findings, we believe that now, more than ever, plans need to tightly manage the pharmacy benefit, implement smarter formularies, control compounded medication use and offer the right clinical support to ensure all patients are able to achieve the best possible health outcomes at a price our country can afford,” said Glen Stettin, MD, senior vice president of research and new solutions at Express Scripts.

“Payers who tightly manage their plans are seeing the financial benefits,” Dr Stettin said. “More than 15% of Express Scripts’ clients spent less, per capita, on prescription drugs in 2014 than in 2013. Closely managed pharmacy plans achieved nearly zero traditional drug trend and spent nearly 30% less per member on traditional medications compared to less managed plans. Employers with a tightly managed specialty pharmacy benefit reduced annual specialty drug spend increases by 32% and saw higher average medication adherence rates compared to unmanaged plans.”

Related: [BLOG]: Hepatitis C market competition arrives for 2015

Compounded medications emerged in the top 10 traditional therapy classes for the first time ever, according to the report.

“Despite having the lowest prescription volume among traditional therapy classes, compounded medications accounted for 35% of total traditional trend ― the most of any traditional therapy class,” Dr Stettin said.

The reason for this sudden increase in compounded medication spending is not due to patient demand, according to Dr Stettin. “Some compounding pharmacies, drug manufacturers and physicians have driven up the cost of compounds significantly by taking advantage of a loophole to pad their pockets while offering little to no benefit to patients. By charging hundreds or thousands of dollars per gram of bulk powder or cream, certain compounding pharmacies have needlessly driven up the cost of care. As a result, some elements that are used to make compounded medications have been exorbitantly overpriced. Our clients and their members have been paying the price.”

Brand-drug price inflation remains a significant driver of trend, according to Dr Stettin. "We are pleased that biosimilars are moving forward in the United States, and we are hopeful that their adoption will not be limited by a confusing naming structure or unnecessary state substitution laws."

Although the manufacturer hasn’t announced US pricing yet, Express Scripts anticipates that Zarxio, the first biosimilar approved in the United States will save the US healthcare system $5.7 billion over the next decade. The approval also opens the door for a wave of other biosimilars that will save more than $250 billion for the nation over that same 10-year span, according to Dr Stettin.

Related:FDA approves first biosimiar Zarxio

As it has for the past 2 decades, the Express Scripts Drug Trend Report examines annual changes in utilization, unit costs and overall prescription drug spending, based on the pharmacy claims data from Express Scripts.