September 2, 2015
Specialty Drug Costs Jump Up; Largest Spending
Increase Since 2003

St. Louis—In 2014, U.S. prescription drug spending shot up 13.1%, the largest annual increase since 2003, and was driven primarily by increased costs for specialty drugs, according to Express Scripts, the nation’s largest pharmacy benefit management organization.

Express Scripts notes in its 2014 Drug Trend Report that “the pharmacy landscape underwent a seismic change, and the budgetary impact to healthcare payers was significant.”

During that time period, the use of traditional medications stayed essentially flat, –0.1%, so that the escalation was largely spurred by a 5.8% increase in the use of specialty medications which shot up in cost. That translated into an “unprecedented” 30.9% increase in spending on those products.

While price increases—6.5% for traditional and 25.2% for specialty—were contributors to increased outlays, the latter, although only 1% of all U.S. prescriptions, represented 31.8% of all 2014 drug spending, a 27.7% increase from 2013, the pharmacy benefit manager reported.

Express Scripts blamed increased inflation and utilization of hepatitis C and compounded medications for the increases; excluding those two therapy classes, overall drug spending would have increased only 6.4% in 2014.

In the U.S., 742.6% more drug costs were for hepatitis C medications in 2014 than 2013, when the therapy class was not even among the top 10 in spending, the report notes.

Medicare plans spent an average of $102.83 per-member-per-year (PMPY) on just three hepatitis C medications alone in 2014—more than the PMPY cost of the entire class of inflammatory drugs, which treat common conditions such as rheumatoid arthritis and psoriasis, according to the 2014 review.

Yet, for the fourth year in a row, the most expensive traditional therapy class, ranked by PMPY spending, was diabetes medications. Compounded drugs jumped to third place, largely due to a 128.2% increase in their average price.

Express Scripts points out that PMPY spend for the top three specialty therapy classes—inflammatory conditions, multiple sclerosis and oncology—made up 55.9% of the outlay for all specialty medications billed through the pharmacy benefit in 2014.
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