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Specialty Medications Drive Increased US Prescription Drug Spending

The number of people who had annual prescription medication costs of $50,000 or more in 2016 was 35% higher than it was in 2014, according to pharmacy benefit manager (PBM) Express Scripts.

The company’s new report, Super Spending: US Trends in High-Cost Medication Use, indicates that nearly 0.3% of Express Scripts members had annual medication costs at or greater than $50,000 in 2016. While 0.3% seems like a very small population, the company notes, it accounted for 21.3% of total pharmacy costs. “Extrapolating these data to the US population, an estimated 870,000 Americans accounted for $80 billion of the 2016 US pharmacy spend.”

Among those with $50,000 or more in prescription drug costs in 2016, more than 25% of costs were for oncology drugs, followed by drugs to treat multiple sclerosis (MS), inflammatory conditions, and hepatitis C. The report notes that all of the top therapy classes are for specialty medications, except for pain and inflammation. Specialty drugs include injectables (such as biologics and biosimilars) and non-injectable drugs typically used to treat chronic, complex conditions. Specialty drugs usually require 1 or more of the following:

  • Frequent dosing adjustments or clinical monitoring

  • Intensive patient training and compliance assistance

  • Limited distribution

  • Specialized handling or administration

The report reveals a significant shift in what drives spending among Americans with high annual pharmacy costs. Whereas in 2014, compounded medications and new hepatitis C therapies drove much of the spending among patients with $50,000 or more in annual pharmacy costs, in 2016, treatments for cancer, MS, inflammatory cystic fibrosis (CF), and other complex and rare diseases were the prominent drugs used in the high-cost population. The hepatitis C therapies and compounded medications that drove high costs in 2014 “virtually disappeared” from use in the 2016 report, replaced by safer and lower-cost alternatives, the company said.

The Express Scripts report was based on data gathered from anonymized prescription claims from 134,000 patients with high annual pharmacy costs among a group of 26 million Americans covered by commercial insurance, Medicare, Medicaid, or health exchanges. The analysis accounted for drug manufacturer rebates and foundation grants.
Among the group of patients whose costs met or exceeded $50,000 annually, the percentage of costs were for treatments for the following: 

  • Cancer, 25.6%

  • MS, 18.3%

  • Inflammatory conditions, 11.6%

  • Hepatitis C, 10.6%

  • Pulmonary hypertension, 3.0%

  • CF, 2.9%

  • Hereditary angioedema, HIV, sleep disorders, and pain/inflammation, 28%

The report broke down data by plan, age, region, and out of pocket (OOP) costs for patients who had $50,000 or more per year in drug costs:

  • 8 of every 1000 Medicare beneficiaries, compared with 2 of every 1000 members in commercial, health exchange, and Medicaid plans, met this threshold

  • The percentage of total prescription drug costs paid by the health plan in this population increased in each of the last 3 years in all plan types

  • In 2016, the age- and gender-adjusted population for these patients averaged a high of 33 per 10,000 in the Northeast compared with a low of 24 per 10,000 in the West (Washington, DC, New Jersey, and Pennsylvania had the highest totals; Hawaii had the lowest)

  • Baby Boomers accounted for nearly half of all members who met this threshold in 2016

  • Health insurance plans covered nearly 98% of the costs of drugs for patients in this category in 2016, paying an average of $89,308 per person; nearly all (99.9%) costs were covered for those insured by Medicaid

  • In 2016, plan members in this group were responsible for 2.4% of their total 2016 pharmacy costs; annual OOP costs for this population averaged $2156

The report also examined trends among patients with annual drug costs that exceeded $50,000. For those with prescription drug costs from $50,000 to $99,999, the percentage of costs were for treatments for the following:

  • MS, 31.2%

  • Inflammatory conditions, 18.8%

  • Cancer, 14.9%

  • Hepatitis C, 11.3$

  • HIV, 2.5%

  • Diabetes, 1.9%

Similarly, for patients with drug costs from $100,000 to $199,999 conditions treated were the following:

  • Cancer, 52.7%

  • Hepatitis C, 11.5%

  • Pulmonary hypertension, 4.7%

Patients with drug costs from $200,000 to $499,999 were treated for severe conditions, including pulmonary hypertension, CF, hemophilia, and hereditary angioedema. Those whose costs ranged from $500,000 to $999,999 were treated for severe congenital conditions including hemophilia, hereditary angioedema (HAE), central nervous system/autonomic disorders, and enzyme deficiencies. The number of patients whose drug costs reached $1 million went from 1 member per million members in 2014 to 2 members per million members in 2016. Half are being treated for HAE; others are treated for enzyme deficiencies and hemophilia.

Glen Stettin, MD, senior vice president of clinical, research and new solutions at Express Scripts, noted that medicine is entering an era where customized gene therapies offer hope for a cure for serious cancers and other rare, fatal diseases, necessitating the development of innovations to allow plan sponsors to have resources available to pay for new medications. “There’s no limit on innovation in medicine, and that’s a good thing for patients, physicians, and payers,” said Stettin. “Yet, there is a limit on the financial resources available to pay for medicine.”

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