More expensive specialty drugs boost overall prescription drug spending

The largest pharmacy benefits manager in the U.S. recently released its annual 2014 Drug Trend Report, indicating the biggest jump in prescription drug spending since 2003.

According to Express Scripts, prescription drug spending jumped 13.1% from 2013 to 2014. The report analyzes drug prices and utilization among people whose prescription coverage is provided by one of Express Scripts’s plan sponsors. Their analysts conclude that prices of specialty drugs played a significant role in boosting drug spending. Utilization of specialty drugs also increased, but contributed less to cost growth.

According to the report, 2014 saw an “unprecedented” 30.9% increase in spending on specialty medicines, which accounted for nearly a third (31.8%) of total drug spending in 2014. Costly brand name specialty medicines drove up overall costs significantly – notably three Hepatitis C drugs, which have been the highlight of previous projections of increases in health spending.

Of traditional (non-specialty) medications, Express Scripts found that diabetes medications represented the highest per-capita spending. Diabetes, high cholesterol, and compounded drugs were the top three spending areas, and together comprised 28.8% of traditional drug spending in 2014.

Express Scripts suggests growth in spending on specialty medicines will moderate in coming years, with an average of 22.1% growth through 2017, mainly due to brand-name price growth and quickening development of costly specialty treatments.

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“Compared to the prices of generic drugs and brand drugs a year earlier, in December 2014 generic drug prices were 20.0% lower whereas brand prices were 15.4% higher.”

The Express Scripts 2014 Drug Trend Report

The decrease in prices of generics from 2013 to 2014 (20.0% lower) was not as pronounced as the drop after the “patent cliff” in 2012. Prices have actually increased for several commonly used generic drugs, but overall, Express Scripts suggests the use of generics over brand-name drugs is contributing to significant savings.

The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

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