With CVS Caremark’s release of its trend report for 2016, most of the major PBMs have given us an idea of trend. (CVS Report) According to the report, for CVS’ commercial clients, trend dropped from 5% in 2015 to 3.2% in 2016; both substantially lower than 2014’s 11.8%. CVS also said that 38% of its clients had a negative trend and the per member per month out-of-pocket costs dropped 3%. Contributors to what CVS calls “unmanaged” trend were brand inflation at 8%, generic inflation at .4% and utilization at 2%. PBM management drops that combination to the 3.2%. Generic dispensing rates continue to increase, now to 85%. While non-specialty brand drug price growth has decelerated, specialty brand prices are still rising rapidly. Both categories, however, had low double-digit price increases in 2016. In a nice double whammy, specialty utilization is also growing faster than non-specialty, at 7%. Some big contributors to brand inflation included anti-inflammatory agents, mostly specialty like Humira and Enbrel, with 21.6% average wholesale price inflation; antidiabetics at 11.1%, psychotherapeutics at 11.1% and ulcer drugs at 7.6%. As have others, CVS notes that brand manufacturers often are raising prices multiple times in a year and that they continue to buy existing drugs and raise prices.
Tooting its own horn a bit, CVS notes that clients who use its Value Formulary had a generic dispensing rate of 88.2% and a per member per month cost of $81.86 for drugs. A more standard formulary resulted in $89.23 pmpm spending and a custom formulary, with fewer drug dropouts, led to $113.62 pmpm costs. The power of generic substitution is shown in a couple of examples. For a lipid lowering drug, a brand is $214.38 for a 30 day supply, with a member copay of $30.15, while a generic is $16.16 with a copay of $4.42. In fact, CVS says using generics instead of brands results in a $400 average annual saving on member copays. And the report again highlights the chronic issue of greater specialty drug use, with concomitant much higher costs. Taken together, the large PBM trend reports suggest more muted overall drug trend, but continuing concern over brand and specialty pricing. Another trend I noted this year was that the trend reports have shrunk dramatically, as the PBMs are apparently less willing to share detailed information or are managing costs more closely.