Drug Week–Reports Part III

Medco has focused on therapeutic centers and on genomic medicine in attempting to distinguish its PBM services.  Its 2011 Drug Trend Report is titled HealthCare 2020.  The data presented in the report is based on Medco’s clients’ experience, which overall was a 3.7% drug spending rise in 2010, with unit cost contributing 1.6% and utilization 2.1%.  Specialty drugs, however, while accounting for only 16% of spending, were responsible for 70% of the trend and Medco expects that these drugs will continue to be the dominant driver of costs.  Generic utilization rose to 71% from 67.5% in 2009, helping moderate both the specialty increase and the unit price inflation of over 9% on branded drugs.  Because specialty drugs are used so often for it, cancer costs were projected to rise from $125 billion in 2010 to $207 billion by 2020.  CNS and cardiovascular were by far the two categories contributing most to overall costs, but endocrine and diabetes were the most significant contributors to trend.  Medicare plans saw basically flat spending trends.  As does everyone else, Medco believes specialty drug management is the key to keeping trend low.  The report includes a fantastic section with a category by category review of trends and trend drivers, including pipeline activity and has a special section on the future of cancer care. (Medco Report)

Since being acquired by CVS, Caremark has had a controversial time, both in the market and due to policies relating to use of CVS pharmacies.  But under the leadership of Per Lofberg the company has made a market turnaround.  Its 2011 Insights report is titled Changing Rules Changing Roles, and focuses on how the PPACA and other developments will affect consumers, providers and payers.  For the Caremark client base, generic use helped keep non-specialty trend to less than 1%.  Generic utilization reached 71.5% in 2010 and continued to rise through the year.  Specialty trend was up 13.7%, however, giving an overall trend of 2.4%.  Trend was driven more by unit cost than utilization.  Caremark is projecting trend of 4-7% in 2011, 1-4% in 2012 (when there are significant brands coming off patent) and 4-7% in 2013.   The company believes the generic dispensing rate could reach 80% as soon as next year.  The report also has a section describing the company’s adherence efforts, which it says show overall medical cost savings.   (CVS Caremark Report)