Expensive new cancer drugs, treating increasing numbers of patients, could drive cancer drug spending by as much as 15% a year through 2013, according to the 2011 Medco Drug Trend Report, which tracks drug utilization and spending.
At this accelerated rate, oncology drugs will likely rise to the second- or third-largest trend-driving category by 2015, following diabetes and central nervous system treatments.
Although the incidence of some types of cancers may be decreasing with better detection, the overall numbers of cancers reported in an aging population has increased significantly. Due to advanced treatment, the number of U.S. cancer survivors is expected to increase by more than 30% by 2020.
Spending on oncology drugs is increasing for a number of reasons, says Dr. Glen Stettin, senior vice president and chief medical officer with Medco. In addition to the aging population, many cancer drugs are specialty and biologic medications "so they tend to be very, very expensive. Many of them are infusible, given in the doctor's office under the medical benefit, rather than the pharmacy benefit, where there is less utilization management and cost-containment strategy that can be applied."
Not all cancer drugs require infusion under medical supervision, however, and Stettin says that many of Medco's plans cover the drugs under the medical benefit that can be self-administered at home. "It's a more competitive environment when medications are dispensed under the pharmacy benefit," he says. "I think most plan sponsors are probably not aware they have coverage of these types of medications under both their medical and pharmacy benefit. The plans that move the coverage of the drugs that can be moved [to the pharmacy benefit] typically see a 15% to 20% decrease in costs."
Stettin emphasizes that not all cancer drugs can be moved to the pharmacy benefit but for those that are, costs to plan sponsors go down for two reasons: "One, a lower unit cost, so they're getting better discounts on the very same drugs. And second, we're able to apply utilization management controls that are both good for the patient and good for the plan."
He cites the drug erythropoietin, which is used to treat anemia due to chemotherapy. It increases hemoglobin, a protein in red blood cells, and is the main ingredient in the drugs Epogen and Procrit.
"If your hemoglobin is above a certain level, you don't need to have every dose of this drug. You can skip doses or use less," says Stettin. "And when you're talking about a drug that has a very high unit cost to begin with, if you can safely avoid doses, that's a good thing for the patient and it saves the plan money."
Generic savings offset by biotech drugs
This year's top cost drivers by therapeutic class include diabetes (No. 1), respiratory drugs (No. 2), rheumatological drugs (No. 3) and neuroscience drugs (No. 4).
An increase in small-molecule branded drugs, coupled with many generics coming out, has the potential to "create negative drug trend for our customers," says David Snow, chairman and CEO of Medco Health Solutions. However, he adds, new innovation in and inflation of biotech drugs could likely overcome any savings realized from the small molecule and generic side.
Higher generic drug dispensing helped limit prescription drug spending growth to 3.7% in 2010. More than 71% of prescription drugs dispensed in 2010 were for generics.
Generic drugs typically cost patients and drug plans up to 80% less than brand-name drugs. Over the next 10 years, almost $100 billion in prescription drugs are going off patent. Over the next several years, big brand-name drugs going off patent include Lipitor (for high cholesterol) toward the end of this year, Plavix (used to prevent heart attack and stroke) in 2012, Singulair (for asthma and allergies) in 2012 and Viagra (for erectile dysfunction) in 2012. Nexium (for acid reflux) is coming off patent in 2014.
Generic versions of "widely used medications for common conditions like heartburn, high cholesterol, high blood pressure and depression [offer] very meaningful savings for employers who pay for prescription drugs," says Stettin.
Diabetes drugs drive spending
For the fourth consecutive year, diabetes medications were the largest therapeutic category of drugs for driving overall spending growth. The large number of patients with diabetes led this category to contribute nearly 17% of the overall growth in drug spending last year. Unit costs for these drugs increased 5%, while utilization increased 2.5%.
"As much as we highlight cancer, I think we'd be remiss if we didn't also acknowledge small growth in very common conditions - like diabetes, pulmonary conditions, blood pressure and high cholesterol - are also significant cost drivers in a plan's drug trend," says Stettin. "And it really depends on where the plan is in its age curve and who it's responsible for."
Diabetes, emphysema and high blood pressure, for example, are diseases of lifestyle and aging. "The curve starts to bend around age 45," says Stettin. "Plans that have lots of actives in the older age range need to continue to be concerned about the chronic common conditions that drive a lot of the burden of illness and plan costs."
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