2015 US Drug Spending Up 5 Percent, Half 2014’s Rise

Spending on prescription drugs for insured Americans rose about 5 percent last year, driven by both greater medication use and higher prices, mainly for very expensive drugs termed specialty medicines. Still, the increase was half the rate in 2014, which saw the biggest price jump since 2003.

A report by the largest U.S. prescription benefit manager, Express Scripts Holding Co., also found the average price of brand-name drugs already on the market increased by 16.2 percent in 2015 and has jumped 98.2 percent since 2011. One-third of brand-name prescription drugs had price increases exceeding 20 percent last year.

Those price hikes came despite intense criticism from patients and politicians, as well as congressional probes into the pharmaceutical industry’s pricing policies.

Express Scripts forecasts drug spending will rise 6 to 8 percent annually from 2016 through 2018. The trends don’t bode well for insurers and government health programs trying to hold down medication costs.

The data are based on prescription claims processed by Express Scripts. The St. Louis company handles pharmacy benefits for about 85 million Americans with insurance, provided by employers, local and state governments, unions and Affordable Care Act insurance exchanges.

Dr. Glen Stettin, chief innovation officer at Express Scripts, said its clients were dealing with “significant challenges to affordable care in 2015 — including a record number of newly approved, high-cost therapies.” Last year, the Food and Drug Administration approved 33 specialty drugs, many of them for cancer.

The 20th annual drug-trend report from Express Scripts found that for the first time, the drug category with the most spending was for a class of specialty medicines, specifically drugs for inflammatory conditions such as rheumatoid arthritis and psoriasis.

Specialty drugs are injected, treat complex chronic conditions and usually are very expensive. As a result, insurers and prescription benefit managers have special programs to manage their use through measures such as preauthorization requirements and high copayments.

The jump in specialty drug spending was 17.8 percent. That includes an average price hike of 11 percent and a 6.8 percent rise in the number of prescriptions filled for those drugs, which are only taken by 1 to 2 percent of Americans.

Altogether, specialty drugs accounted for 37.7 percent of medicine costs for Express Scripts clients, and the company expects that to rise to 50 percent of spending in 2018.

By comparison, the drug class with the most spending from 2011 through 2014 was for prescription drugs for diabetes, which are taken by millions of Americans. Before that, the top-selling class was cholesterol drugs such as Lipitor, most of which have seen cheaper generic pills grab most of their sales for at least several years.

For traditional drugs, which include brand-name and generic pills, prices dipped 1.4 percent, while use edged up 1.9 percent.

Despite the higher spending, Express Scripts said average monthly drug copayments for its patients decreased 3.2 percent last year.

This year’s report for the first time included patient copayments as well as manufacturer rebates — big payments that drugmakers give to insurers and prescription benefit managers to be included on their formularies of covered drugs.

Including those factors, U.S. medicine spending rose 5.2 percent in 2015, down from 10.1 percent in 2014, Express Scripts reported. The company noted that among its customers with the most restrictive drug formularies and requirements, spending only increased by 3.3 percent in 2015.

Spending increases in the second year of insurance exchange plans averaged 13.6 percent, much higher than for commercial insurance and Medicare and Medicaid prescription plans handled by Express Scripts. That was mainly driven by an 8.6 percent increase in medicine use, likely due to people newly insured through the exchanges starting to take medicines they couldn’t afford before.

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