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Cancer And Arthritis Drugs Drive Up Spending On Medicines

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Cancer And Arthritis Drugs Drive Up Spending On Medicines

Health Inc.

Cancer And Arthritis Drugs Drive Up Spending On Medicines

Cancer And Arthritis Drugs Drive Up Spending On Medicines

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  • <iframe src="https://www.npr.org/player/embed/470417680/470486343" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Spending on prescription drugs in the U.S. rose 5.2 percent in 2015, driven mostly by increased costs of expensive specialty medications to treat conditions such as rheumatoid arthritis, according to data from the largest manager of employers' drug benefits.

Spending on specialty medications rose 18 percent, while spending on standard prescription drugs rose less than one percent, according to a new report by Express Scripts. The report is based on the prescription drug spending for the company's 80 million covered patients.

The measure — called "drug trend" in pharmaceutical industry parlance — includes increases in the use of medications and price hikes.

Still, in the health care industry, an increase that's more than quadruple the rate of inflation — 0.7 percent in 2015 — still counts as a bit of good news. Why? In 2014, drug spending increased more than 14 percent.

"In a year when all the headlines were about the escalating price of drugs, overall costs rose only 5.2 percent," says Glen Stettin, Express Scripts' chief innovation officer.

The overall boost in drug spending was moderated by patients switching to generic drugs from brand names, whose prices rose 16.2 percent.

Stettin attributed that shift to pharmacy benefit managers and insurers exerting more control over the drugs their customers can get. Express Scripts and other companies have been more willing to refuse coverage of expensive medications than in the past.

The company pointed to its initial refusal to pay for Gilead Sciences' hepatitis C drugs, which were listed at more than $90,000 for a course of treatment. Instead, Express Scripts opted to cover an alternative treatment, Viekira Pak made by AbbVie, for which it negotiated a 50 percent discount. Express Scripts has said it saved as much as $1 billion with the deal.

Brand name drug prices are more than 2 1/2 times as high as they were in 2008, while generic prices have declined by about two-thirds.

For traditional pills, "total costs are flat as result of generic and effective price negotiation by payors," says Ronny Gal, a pharmaceutial industry analyst at the investment firm Alliance Bernstein. "For specialty drugs, there are more drug introductions, at very high price per patient per year, and we still don't have effective alternatives on the market."

The report says the surge in spending on specialty drugs was caused in part by the 29 new medications that were approved by the Food and Drug Administration last year, including 19 cancer drugs that are being used on a large number of patients. The prices of older cancer drugs also rose, including for example, the price of Gleevec, which is used to treat adults with leukemia. It went up 19.3 percent last year, the report says.

But drugs for rheumatoid arthritis, psoriasis and other inflammatory illnesses sucked up the largest share of cash. Express Scripts says treatments for such conditions cost every person with insurance about $89 last year. Insurers use a measure known as "per member per year" to show how spending is spread across population of insured people.

Diabetes treatments dominated the spending on nonspecialty medications, the report shows, with spending rising 14 percent last year. Three of the top five traditional prescription drugs were diabetes medications — Lantus and Humalog, which are both forms of insulin, and Januvia, a pill that helps control blood sugar.

People who bought insurance through the exchanges created by the Affordable Care Act spent an average of $777 on medications last year, about 15 percent higher than the year before.

The big increase "may be due to patients in this population filling a previously unmet need," according to the report.

Since the exchanges have only been in place for two full years, Stettin says this is the first time there was good information available about people covered by those policies.

The spending increase "is consistent with the belief that people in the exchange plans, people with chronic conditions, are getting medications for the first time," he says.

The Express Scripts report takes into account the effect of rebates that the company negotiates with drugmakers without disclosing the details of the arrangements. Rebates are considered trade secrets.

Bruce Stuart, executive director of the Peter Lamy Center for Drug Therapy and Aging at the University of Maryland School of Pharmacy, says the data are different from what he would have expected based on trends in retail prices.

"I have no reason to doubt their numbers," he tells Shots. "If they say that they are getting better deals, there's no way to validate that. "