As reported yesterday, drug expenditures have been relatively stable for HMOs and PPOs. Average copayments on tier one formulary drugs (generics usually) have fallen slightly as percent of prescription cost, as did tier two drug copayments but not tier 3. Over a ten year period, average dollar copays per prescription rose 46.5% for tier 3 drugs, but only 6.5% for tier 2 and dropped 47.3% for tier 1 drugs. This reflects a desire to encourage members to use more generics. Surprisingly, over 25% of HMO members still have only one copay tier. Medicare drug use was basically stable. Average ingredient cost per prescription rose slightly, but this average masks complex dynamics related to the rise of generics, especially for expiring blockbusters, coupled with more use of very expensive specialty drugs. Almost all HMOs use prior authorization and step therapy to help control utilization and spending on drugs. Use of PBMs increased as did use of mail-order pharmacies. Most HMOs use their own proprietary formularies.
Over 60% of PPOs use a managed pharmacy program and only about 22% of those carve-out pharmacy programs as opposed to managing them with the medical benefits. Almost every PPO uses a PBM to administer drug claims and over 75% use them for drug utilization review. Prescriptions per PPO member were stable year over year, but average prescription cost per member per month grew by almost 16%, but large PPOs avoided this problem. PPOs have a higher share of generic usage than do HMOs. At retail pharmacies, prescriptions increased modestly in eight out of 12 major drug classes, although in two–allergies and osteoporosis–they dropped fairly dramatically. These 12 classes accounted for almost half of all prescriptions. Medicare continues to show the strongest growth. The filling of specialty drug prescriptions fell sharply at retail pharmacies, likely reflecting a shift to specialty pharmacies. Asthma, cholesterol, diabetes and hypertension account for a very large percent of all drug spending by payers.