Express Scripts Drug Trend Report

While drug spending has become a more stable component of overall health care costs, it is a significant category.  Tracking trends overall and within categories is useful and the Express Scripts 2012 Drug Trend Report has much relevant information from one of the largest pharmacy benefit managers.   (ES Report)   Specialty drugs account for about 25% of all spending, although a much small percent of prescriptions, and are driving trend.  Overall trend, or spending increase, was 2.7% for 2012, to $847 per commercial member per year, but for traditional drugs there was actually a 1.5% decrease, which is a combination of a .6% increase in utilization and a 2.2% decrease in unit cost; while for specialty drugs there was an 18.4% increase, a combination of a .4% decrease in utilization but a whopping 18.4% unit cost rise.  It is no wonder that payers are increasingly focused on how to control specialty drug spending.  The decrease in spending on traditional drugs, the first ever reported, largely reflects the continuing growth in generic use.  A very large percent of the drugs being approved by the FDA are specialty medications, 22 in 2012 alone, and they have hefty annual price tags, often tens of thousands of dollars a year.

Among traditional drugs, spending is driven by medications for chronic disease, with diabetes, cholesterol, high blood pressure and asthma leading the way in overall spending.  Among the top categories, attention disorders and diabetes have the highest rate of spending increases, while cholesterol and infections had high rates of spending decreases.  Inflammatory conditions, MS, cancer and HIV were the high spending specialty categories, with high growth rates for each, including over 20% for inflammatory conditions and cancer.  The spending growth is largely driven by unit price increases.  In terms of overall unit prices, those for brand name drugs continued to rise in 2012 at a rate well above that of general inflation, while generic unit prices continue to decline.  Patent expirations continue to help keep costs down, but the big rush of patent expirations is largely behind us.  Overall Medicare trend was also subdued, at 2.5% percent, but within that is a 24% increase in specialty spending.  In the Medicaid market, overall trend was actually higher, at 7.8%, driven by increases in both traditional and specialty spending.