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Boomers, other seniors drive record spending for drugs

Drugs for hepatitis C, compounded medications push prices  higher

Pharmacist explains drug to older female patientMarch 10, 2015 – The money spent on drugs in the U.S. increased at a faster rate in 2014 – 13.1 percent – than in any year for the last decade. The culprits, according a report by Express Scripts, were new high priced medicines for hepatitis C and the “exploitation of loopholes for compounded medications.” Most hepatitis C patients are senior citizens.

The vast majority of persons living with hepatitis C are baby boomers (individuals born from 1945 through 1965) – now senior citizens, according to the Centers for Disease Control and Prevention. The CDC has determined, “Testing all baby boomers properly is critical to stem the increasing toll of death and disease from hepatitis C in this nation.”

The burden of chronic hepatitis C virus infection in elderly persons is expected to increase significantly in the United States during the next 2 decades.

Hepatitis C and compounded medications are responsible for more than half of the increase in overall spending. Excluding those two therapy classes, 2014 drug trend (the year-over-year increase in per capita drug spending) was 6.4 percent.

Specialty medications – biologic and other high cost treatments for complex conditions, such as multiple sclerosis and cancer – accounted for more than 31 percent of total drug spending in 2014.

As Express Scripts forecasted last year, specialty drug trend more than doubled in 2014, to 30.9 percent. Hepatitis C medications accounted for 45 percent of the total increase in specialty spend despite having the second lowest prescription volume among the top 10 specialty conditions. Medicare plans – required to follow Medicare Part D formulary guidelines – were the hardest hit, as their annual specialty drug spend increased 45.9 percent.

"For the past several years, annual drug spending increases have been below the annual rate of overall healthcare inflation in the U.S., but that paradigm is shifting dramatically as prices for medications increase at an unprecedented and unsustainable rate," said Glen Stettin, M.D., Senior Vice President, Clinical, Research and New Solutions at Express Scripts.


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"Now, more than ever, plans need to tightly manage the pharmacy benefit, implement smarter formularies, control compounded medication use and offer the right clinical support to ensure all patients are able to achieve the best possible health outcomes at a price our country can afford."

The U.S. spent nearly 743 percent more on hepatitis C meds in 2014 than it did in 2013. Express Scripts' hepatitis C solution, which makes Viekira Pak™ (ombitasvir/paritaprevir/ritonavir packaged with dasabuvir) available to all hepatitis C patients and guarantees successful completion of therapy through Accredo, is expected to save our clients $1 billion in 2015.

New treatments for hepatitis C are just one example of non-orphan drugs with orphan-drug price tags. Future pharmaceutical innovations, such as new cancer drugs and PCSK9 inhibitors for high blood cholesterol, will continue to challenge payers. Projected to command an annual cost as high as $10,000 per patient, and potentially reaching a patient population eventually as large as 10 million Americans, PCSK9 inhibitors alone could one day cost the U.S. healthcare system an estimated $100 billion per year.

Closely Managed Plans Mitigate Spend Increases

Express Scripts' solutions, including formulary and utilization management programs, and use of Express Scripts' home delivery pharmacy, help payers improve patient care and benefit affordability. More than 15 percent of Express Scripts' clients spent less, per capita, on prescription drugs in 2014 than in 2013.

A sub analysis of the Drug Trend Report found that, compared to payers with less managed pharmacy plans, payers that implemented four or more cost-management programs achieved nearly zero drug trend and spent nearly 30 percent less per member on traditional (non-specialty) medications, those which treat common chronic conditions, such as diabetes.

A similar analysis shows that the annual increase in specialty spending is 32 percent less for employers with a tightly managed specialty pharmacy benefit compared to employers with an unmanaged benefit. The study – which examined 851 clients, 20 percent of which employed no utilization management programs for specialty – also revealed that tightly managed programs saw higher average medication adherence rates in top specialty therapy classes, such as multiple sclerosis and pulmonary conditions.

Formulary Design Delivers Cost Savings with Low Member Impact

Many plan sponsors countered brand-drug price inflation by implementing the 2014 Express Scripts National Preferred Formulary, which excluded 48 products from coverage, achieved a 3.9 percent decrease in drug spending among the affected therapy classes, more than $750 million in savings. The excluded products represented only about 1 percent of all the products on the market, and in all cases, patients had safe and effective alternatives covered by their plan. Drug costs in those same therapy classes increased 7.2 percent among plan sponsors who did not adopt the new formulary.

Plans participating in the National Preferred Formulary in 2014, and continuing in 2015, have seen the number of patients impacted by formulary exclusions decline significantly, while realizing cumulative savings of more than $2.2 billion.

Compounded Medications Drive Increased Spending on Traditional Medications

Spending on traditional classes of medications continues to rise as a result of compounded drugs, which emerged in the top 10 traditional therapy classes for the first time. Despite having the least number of prescriptions among the top 10 classes, compounded medications accounted for 35 percent of the increase in spending, the most of any traditional therapy class of drugs.

However, Express Scripts expects spend on compounded medications to decline sharply in 2015 due to widespread adoption of our compound utilization management solution. Implemented in mid-2014, this program will save clients more than $1.9 billion in 2015 that would have otherwise been wasted on compounded medications that do not provide a proven clinical benefit.

"Express Scripts' actions to close the compound loophole provided our clients with a swift and effective solution to this costly concern," said Dr. Stettin. "There is no charge to clients for this new solution, only the benefit of a 95 percent reduction in waste associated with this category of medications. We ensure that patients who need compounds can access them; and where clinically appropriate, we ensure that patients who do not need these compounds can receive effective, more affordable alternatives."

Additional Key Findings

  ● Drugmaker consolidation and drug shortages also led to increases in traditional drug trend, which rose to 6.4 percent in 2014.

  ● Diabetes remains the leading traditional therapy class for a fourth straight year based on total costs; Express Scripts expects double-digit increases in spend in this class over the next three years due to once-weekly oral and injectable drugs in the pipeline.

  ● Cost for medications to treat pain increased 15.7 percent in 2014, due in part to new tamper-resistant formulations for opiates.

  ● Inflammatory conditions, which include treatments for rheumatoid arthritis and psoriasis, maintained their position as the costliest specialty drug class due to expanded indications and increased prevalence of treatment.

The full report is available online at

About Express Scripts
Express Scripts manages more than a billion prescriptions each year for tens of millions of patients. Headquartered in St. Louis, Express Scripts provides integrated pharmacy-benefit management services, including network-pharmacy claims processing, home delivery, specialty benefit management, benefit-design consultation, drug-utilization review, formulary management, and medical and drug data analysis services. The company also distributes a full range of biopharmaceutical products and provides extensive cost-management and patient-care services.

For more information, see 2014 Express Scripts (NASDAQ: ESRX) Drug Trend Report at or follow @ExpressScripts on Twitter.


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