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Report: Slowdown in Prescription Drug Spending
Greater generics use and lower utilization drove negative cost trend in 2008

By Stephen Miller  8/24/2009
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Although total health care spending in the U.S. is growing at about 6.9 percent annually—nearly twice the rate of inflation—spending on prescription drugs is increasing at a lower rate, according to the 2009 Drug Trend Insights report by Prime Therapeutics, a pharmacy benefit manager (PBM).

Prime’s clients spent 0.5 percent less on traditional drugs in 2008, while overall spending, which includes higher-cost "specialty" or biotech drugs, increased by 0.9 percent.

Drug Trend Insights is Prime's annual report on the factors that influence prescription drug spending, along with a review of its efforts to control cost increases while improving health care quality. Other recent large U.S. PMB drug cost analyses have reported 2008 prescription spending increases ranging from 3.0 percent to 3.9 percent.

"In these tough economic times, managing health care costs is more important than ever," says Kim Mageau, interim president and CEO of Prime, in a statement commenting on the report. "Pharmacy accounts for 10 to 20 percent of health care spending, and it plays a vital role in prevention and health maintenance. In 2008, greater use of generics, increased adherence to prescribed medications and a focus on providing the right treatments for those at high risk helped our patients and plan sponsors achieve greater health benefit for their pharmacy dollar."

In the report, Prime indicates:

A 4.7 point rise in generic use throughout 2008, increasing the generic fill rate—the percentage of generic drugs dispensed compared to brand name drugs—to 63.7 percent.

A roughly 0.1 percent decline in utilization rates as surveyed members used slightly fewer drugs than in 2007.

Unfilled Prescriptions?

"For the first time in more than a decade overall drug utilization declined slightly. In this challenging economy some patients may not be filling prescriptions because of cost," says Mageau. "In the short term, this reduces costs, but we know that in the long term, greater adherence will help prevent hospitalizations and reduce total health care costs.”

On a positive note, Prime’s clients experienced utilization improvements in several important categories that have been proven to yield positive medical and cost outcomes, including:

1.7 percent higher use of diabetes medications.

1.2 percent higher use of cholesterol medications.

1.0 percent higher use of blood pressure medications.

0.1 percent higher use of depression medications.

High-End Drugs

Specialty drugs comprised less than 1.1 percent of Prime’s prescriptions in 2008, although they accounted for 15.4 percent of overall spending.

Eight of the top 10 fastest-growing spending categories were specialty drugs. These higher-priced products—referred to in many cases as biotechnology drugs—often require special handling. Examples include blood thinners, multiple sclerosis treatments and arthritis medications. The overall specialty cost trend was an increase of 9.1 percent in 2008.

“Health care costs are rising at astonishing rates, but we have the opportunity to reduce costs and improve health through wise pharmacy choices,” says Mageau. “In addition to maximizing savings through generics, we can help patients and plan sponsors make the best use of their health care dollars by focusing on the total health picture." This includes structuring drug plans to encourage adherence to prescription regimens and "synchronizing data to better ensure patients are taking the medications they need to improve and maintain their health,” Mageau recommends.

Stephen Miller is an online editor/manager for SHRM.

Related Article:

Employee Cost-Sharing Up in Prescription Drug Plans, SHRM Online Benefits Discipline, August 2009

High Rx Co-Pays Discourage Newly Diagnosed from Treatment, SHRM Online Benefits Discipline, May 2009

Brand-Name Drug Costs Soar, Generics Hold the Line, SHRM Online Benefits Discipline, April 2009

Value-Based Insurance Design Sparks Increased Interest, SHRM Online Benefits Discipline, February 2009

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