Specialty Drugs Power Growth in Pharmacy Benefit Spend
New treatments for cystic fibrosis, migraines, and multiple sclerosis expected to help push specialty drug costs on the pharmacy benefit to nearly 50% of total drug spending by 2020.
New specialty drugs will continue to power pharmacy benefit spending, but the overall growth of pharmacy benefit costs is expected to slow over the next 2 years, according to a new report by Magellan Rx Management, the pharmacy benefit management (PBM) division of Magellan Health, Inc.
As employers grow increasingly concerned with prescription drug costs, specialty pharmacy remains among the fastest growing drivers of health care costs, according to the PBM. Although careful management of specialty spending on the pharmacy benefit is crucial, the authors note that management of specialty spending on the medical benefit is limited, leaving this category as the largest current cost driver.
“Today’s dynamic and complex health care environment has led to new developments in drug therapies that are both exciting and challenging. This is especially true for employers who are increasingly concerned about rising prescription costs,” Mostafa Kamal, chief executive officer of Magellan Rx Management, said in a press release.
Specialty drugs currently represent 39% of the overall pharmacy benefit spend, but the authors project that specialty drug costs will grow to 48% by 2020. Meanwhile, overall pharmacy benefit cost growth is expected to slow in 2019 and 2020.
Within the next 2 years, the report projects that the specialty cost per claim will reach $6300, approximately 4 times the cost per claim of $1661 in 2008. The report further notes that by 2020, specialty drugs in the pipeline will comprise 25% of projected overall pharmacy benefit growth.
The report found that 56% of employer groups had an official and structured PBM program managing drug costs and 78% had a prior authorization program that managed medical benefit drug use. These programs were found to be primarily managed by PBMs or consultants.
While coinsurance is the most common employee contribution, 26% of employer groups required a co-pay and 28% required both co-pay and coinsurance for employees who utilized medical benefit drugs. Fifty-five percent of employer groups reported employee out-of-pocket co-pays and coinsurance remained stable regardless of benefit. Of the employer groups queried, 71% were interested in a plan that would move high-cost specialty drugs to a lower cost benefit through a PBM vendor, while only 30% were actually approached about such a plan.
From 2016 to 2017, overall costs grew 3.6%, with traditional drug spend dropping by 1.8% while specialty drug costs grew by 13.1%. Of this growth in specialty spend, the report indicated that 9.2% was driven by higher specialty drug use and 3.9% was driven by pricing changes. Magellan projects that double-digit specialty drug cost growth will continue through 2020 but will be slower than the growth seen in 2018 and 2019. The projected slowdown in specialty drug cost growth is attributed to a decrease in the amount and frequency of cost increases for current specialty drugs.
“For example, in 2016, the average wholesale price (AWP) per day for a specialty drug increased 7.6%, while in 2017 AWP increased 5.6%,” the authors wrote. “The contracting hepatitis C market also has put downward pressure on the specialty market.”
The report predicts that few top specialty drugs will face a significant challenge by the loss of patent protection or biosimilars over the next 3 years. By 2020, drugs for anti-inflammatory, oncology, and HIV/AIDS will comprise 65% of specialty cost, according to the report.
In the auto-inflammatory category, Humira will account for 50% condition growth while oral formulations, such as Xeljanz XR will comprise approximately 10% of cost by 2020, according to the report. During the forecast period, the impact of auto-inflammatory biosimilars for this condition will be restrained as a result of continued litigation, the authors noted. Between 6% and 12% of specialty drug cost in this category is projected to be driven by pipeline anti-inflammatory drugs.
In the HIV category, Biktarvy will account for 12% of HIV drug cost powered by promising efficacy results and a reduced adverse effect profile, according to the report. As the only treatment indicated for preexposure prophylaxis, Truvada will still be the top HIV drug by 2019.
The authors wrote that Juluca is expected to provide a fixed-dose combination option for stable patients, thereby bringing a new treatment modality for HIV. The authors predict that Genvoya will lose ground to pipeline drugs starting in 2019.
In the treatment of high cholesterol, PCSK9 inhibitors Repatha and Praluent will increase costs 65% by 2020. A third PCSK9 inhibitor, inclisiran, is expected to join the fray by 2020.
In multiple sclerosis (MS), generic versions of Copaxone and Gilenya are predicted to lower MS treatment costs for the first time beginning in 2019. Tecfidera is expected to remain a market leader in 2018 and will continue to grow through 2020. The authors project Ocrevus to expand the market as the first drug indicated for primary progressive MS.
The report forecasts that Harvoni will remain the top drug for hepatitis C, while the condition continues to contract overall with Mavyret and Vosevi gaining market share due to clinical advantages.
In oncology, approximately 65 drugs currently in the pipeline will comprise 10% of overall condition costs. The authors predict that Revlimid, Ibrance, and Imbruvica will drive 40% to 60% of growth, with Revlimid remaining the top oral oncology drug.
Significant growth is forecast in the treatment of cystic fibrosis, with Symdeko expected to increase condition costs by 50% by 2020, despite Orkambi remaining the projected market leader during this period. The authors predict that current and future drugs will be able to treat 90% of patients with cystic fibrosis by 2019, with triple combination therapies currently in the pipeline leading the market by 2021.
Treatments for migraine headaches are expected to explode over the forecast period, with current pipeline therapies increasing overall condition costs 170% by 2020. Subcutaneous calcitonin gene-related peptide receptor antagonists will make up 50% of the migraine market, according to the report.
Meanwhile, autoimmune, anti-inflammatory, and diabetes treatments are projected to drive overall drug costs, accounting for between 30% and 35% of the total pharmacy benefit cost by 2020.
“As with all segments, employers are focused on cost-saving measures and programs that help contain the high cost of specialty medications,” the authors wrote. “Medical benefit drugs (provider-administered injectable and infusible drugs) present a unique challenge for employer groups. Employees are dealing with cost-prohibitive conditions, such as cancer and autoimmune disorders, that require unique medications with few alternative options.”