2014 Drug Trend via Express Scripts

The 19th edition of the Express Scripts Drug Trend Report shows that in 2014 the prescription medication spending pendulum began to swing upward.  (ESI Report)   The overall drug trend was a 13.1% increase over 2013, with specialty drugs showing a rise of 30.9% while traditional medications rose 6.4%.  Although specialty drugs were only 1% of prescriptions they accounted for 31.8% of spending, up from 27.7% in 2013.  Even more alarming, in Medicare Part D, specialty drugs had a 46% increase in spending.  Hepatitis C and compounded medications accounted for half of the overall 13.1% trend increase.  In that overall trend, traditional drugs averaged $669 per person per year spending and specialty drugs $311.  The traditional category had a one-tenth of a percent decrease in utilization, and a 6.5% increase in unit cost.  In the specialty category, utilization rose 5.8% and unit cost 25%.  The traditional drug unit cost rise is somewhat surprising, given that it is largely generics but 2014 saw some generic drugs show substantial price increases, in part due to manufacturer consolidation and also to shortages.  Generic drugs had been the brake on higher drug spending, as generics have come to dominate prescription volume, particularly for the most common diseases, but that trend seems to be reversing.

The top ten drug categories included diabetes, with almost twice the spend of the next highest category, cholesterol drugs, compounded medications, pain and hypertension.  Among these categories, diabetes also showed the highest rate of growth, due to some new medications being introduced.  And there are more new diabetes compounds coming, which could lead to continued growth in this category.  Cholesterol control medications also have some potential big buck drugs in the pipeline, so that category may see rises in spending in the next couple of years.  The highest utilization growth was seen in attention disorder drugs, at 3.4%, while asthma had a decrease of 3.2%.  The largest unit cost rise was for compounded medications at 128%, while unit cost for depression drugs dropped 20%.  The top individual drugs in spending were Nexium, for heartburn, Crestor, cholesterol-lowering, Lantus, diabetes, and Ability, serious mental illness.  The top specialty drugs were Humira and Enbrel, both for arthritis, and Solvadi, the hepatitis C drug.

And the really bad news is trend projections.  In 2015, ESI believes traditional drug trend will be 9%, followed by 10.3% in 2016 and 10.9% in 2017.  And for specialty trend expectations are 22.6% in 2015, 22.3% in 2016, and 21.3% in 2017.  Doesn’t take a math genius to see that we are in for several years of mid-teens overall drug spending rises.  Of course, like any PBM, Express Scripts uses the report for a little marketing.  It has developed a National Preferred Formulary, which excludes 48 products and which the company says resulted in a 3.9% decrease in spending among the affected categories.  It also has developed a management protocol for compounding, which it claims reins in cost growth in that category.   Given the trajectory that drug spending is on, and the fact that the pipeline is heavily weighted toward specialty compounds, payers are going to need a lot of help in the management of medication utilization and cost.