Hepatitis C Drugs Drive Increase in Average Cost of Specialty Prescription

Specialty drugs comprise 28% of total drug costs from just 1% of claims.

The average cost of a specialty drug prescription rose by 22% in 2014 as a result of unit cost and drug mix increases, according to the Catamaran Corporation in its annual Informed Trends report.

Catamaran, which provides pharmacy benefit management services and technology, noted that the impact of new hepatitis C drugs Sovaldi, Olysio, and Harvoni accounted for 9.1% of the increase in the average cost of a specialty prescription. The average cost of a prescription overall jumped by nearly 8%.

The average cost for a specialty prescription was approximately $3200 last year, as specialty drug spending continues to skyrocket.

"As new drugs with greater promise for managing and curing serious chronic diseases emerge — including diabetes – double-digit drug trend will become a real possibility in the coming years," said Sumit Dutta, MD, MBA, senior vice president and chief medical officer at Catamaran. "Medicine will play an increasingly more important role in healthcare, and driving adherence to those therapies will help reduce hospitalizations, emergency room visits and other costly expenditures – and ultimately, improve quality of life."

As expected, the flood of highly effective new hepatitis C medications played a significant part in drug spending in 2014.

The average cost per claim jumped more than 300% last year, from $3,400 in 2013 to $14,000 in 2014. The average cost per claim of Sovaldi, Olysio and Harvoni were $28,000, $22,000, and $32,000 respectively.

The utilization of hepatitis C drugs increased overall by 26.5%, after patient warehousing caused a 42.5% decrease in utilization early last year. In December 2014, the 51% market share of Harvoni eclipsed the 27% share held by Sovaldi.

Catamaran calculates drug trend utilizing 4 factors:

• Utilization measures the change in prescription volume defined as a percent change in the number of prescriptions per-member-per-month
• Drug mix measures the impact of drug choice on trend by identifying changes in the mixture of the types of drugs dispensed, such as less costly alternatives from generic launches or higher cost drugs due to the introduction of new molecular entities
• Quantity measures the intensity of utilization evaluated by changes in units dispensed per prescription. The quantity driver provides insights regarding the dosing impact of certain drugs as a result of increased or decreased intensity to obtain the same therapeutic effect
• Unit cost measures drug cost variations by changes in cost per unit of a drug to determine the impact

The overall drug trend in 2014 was 5.7%, up from 2013 when the trend was 2.4%. The increase was primarily attributed to increased specialty expenditures.

The specialty drug trend jumped from 14.3% in 2013 to 20% in 2014.

The trend increase was primarily a result of drug mix, as new high cost hepatitis C drugs had a considerable impact on overall specialty spend. The unit cost also played a significant role in the increased specialty spend, as treatments for autoimmune disorders and multiple sclerosis saw double-digit inflation.

Highly utilized drugs for autoimmune disorder, cancer, and multiple sclerosis had the highest unit cost increases at 16.2%, 10% and 9.9%, respectively, which comprised approximately 40% of the overall specialty trend.

Catamaran reported an overall decrease in utilization, as fewer claims last year only slightly mitigated overall expenditure increases in specialty drugs.