Catamaran Report Finds Drug Inflation and Increased Specialty Utilization Drives Increase in Drug Trend

Increased specialty utilization and drug inflation were the driving factors for overall drug trend more than doubling in 2014, according to a new report.

Pharmacy Benefit Manager (PBM) Catamaran Corp. today released its annual Informed Trends report for 2014. Overall commercial drug trend was 5.7 percent in 2014, more than double 2013’s 2.4 percent overall drug trend. The report attributes this primarily to the increases in drug costs and new drugs entering the specialty market. While specialty drugs represented only one percent of claims in 2014, the category accounted for more than 28 percent of total drug costs.

According to the report, in 2014 there was a higher specialty trend compared to 2013, with 20 percent compared to 14.3 percent, respectively. The higher specialty trend was primarily driven by drug mix, where expensive, highly anticipated new hepatitis C drugs with claims costing between $22,000-32,000 considerably impacted overall specialty spend.  Additionally, unit cost continued to significantly contribute to the increased specialty spend. Some highly used drugs, such as some used in the autoimmune disorder and multiple sclerosis (MS) categories, experienced double-digit inflation. According to the report, overall, there was a decrease in utilization, with fewer claims in 2014, however that only slightly mitigated the overall expenditure increases associated with specialty.

In 2014, specialty utilization had a net trend decrease of 1.7 percent, with the most notable decreases in use of HIV/AIDS (13.8 percent) and cancer drugs (0.2 percent). On the other hand, autoimmune disorders experienced a significant increase in utilization, with a 5.4 percent increase. The report says that this increase was impacted by expansion of indications and increased direct-to-consumer advertising. This growth was led by an increase in claims for Humira, which was mainly prescribed for rheumatoid arthritis (RA), plaque psoriasis, Crohn’s disease and ankylosing spondylitis. Stelara also contributed to this class’ higher expenditure, followed by other agents such as Cimzia and Xeljanz.

Following a substantial decrease in early 2013, due to patient warehousing, utilization of hepatitis C drugs increased by 26.5 percent in 2014. In 2013, many physicians delayed patient therapy in anticipation of new hepatitis C drugs including Sovaldi and Olysio.

Nearly half of the overall specialty PMPM increase was caused by unit cost, and was primarily due to AWP inflation associated with high volume categories. Agents within highly utilized categories, including autoimmune, cancer and MS had the highest unit cost increase, with 16.2 percent, 10 percent and 9.9 percent, respectively, accounting for approximately 40 percent of the overall specialty trend. Since specialty drugs are high in cost, small to moderate AWP increases may significantly impact unit cost.

Autoimmune disorder drugs were responsible for a significant percentage (44.6 percent) of the specialty unit cost increase, with Humira and Enbrel accounting for 85 percent of this increase. Unit cost was the most significant driver for cancer, accounting for 90 percent of the total trend for this call. Gleevec led the unit cost increase for this category. This was slightly mitigated since some pricing improvements were made for new generics and more are expected in 2015. Copaxone and Tecfidera drove unit cost increase for the MS class. Copaxone experienced a significant unit cost increase of 20.8 percent in anticipation of the launch of biosimilar versions of the drug.

For the increase in traditional drug spend, diabetes had the highest trend of any top traditional therapeutic class at 21.1 percent. This increase was mainly driven by increases in medication costs, with insulin alone accounting for 30 percent of the unit cost increase for traditional trend. Novel diabetes drugs, such as Invokana and Farxiga, which are more costly than mature oral diabetic therapies, had a six-fold increase in claims, increasing their market share to 1.7 percent of diabetes medications.

“As new drugs with greater promise for managing and curing serious chronic diseases emerge – including diabetes – double-digit drug trend will become a real possibility in the coming years,” said Sumit Dutta, MD, MBA, Senior Vice President and Chief Medical Officer, Catamaran. “Medicine will play an increasingly more important role in healthcare, and driving adherence to those therapies will help reduce hospitalizations, emergency room visits and other costly expenditures – and ultimately, improve quality of life.”

“As a PBM, our job has always been to ensure our members are utilizing the most clinically-sound and cost-effective course of treatment,” said Dutta. “Managing utilization, dosing and adherence while also leveraging our scale in the supply chain to control costs is a critical element of our strategy in helping clients navigate through today’s fast-moving drug innovation pipeline.”

Catamaran’s report can be downloaded at CatamaranRx.com. The company, which was recently acquired by UnitedHealth Group, will be hosting a complimentary webinar for an in-depth look at the key takeaways on Tuesday April 7 at 12:30pm ET.

Source: Catamaran

Last updated: 4/1/15; 11:50am EST

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