This morning ended with Medco’s annual Drug trends report, which focused on their top 200 clients that account for the vast majority of Medco’s annual spend. As one of the big three PBMs (along with Caremark/CVS and Express Scripts), their numbers are a good indication of overall industry trends, and provide a benchmark for program evaluation.
(as a cautionary note, be careful with semantics here, as trend, inflation, and increase can mean the same or slightly different things depending on context)
In 2009, overall trend (cost inflation) was 3.7%. This was driven by a utilization increase of 1.3%, cost increase of 2.4%. In turn, the cost inflation was primarily affected by a brand drug price increase of 9.2% compared to a mere 0.3% for generics. Also contributing to the cost inflation result was a positive change in generic mix, where generic usage increased 3.2%.
Here’s an important take away – Medco’s clients where mail order accounted for more than 50% of their spend saw much lower cost increases – 0.1%, versus over 5% for those w less than 50% of spend obtained via mail order..
The most disturbing note regarded children.
20% of kids are on a chronic maintenance drug. Medco is seeing significant growth in Type 2 diabetes among kids – more among adolescent girls v boys. Their sense is this is probably driven mostly by obesity, as they are also seeing kids with lipid reduction and hypertension meds. According to Medco, there’s “Lots of adult drugs popping up in children.”
When asked about the brand drug price increase, CEO Dave Snow credited health care reform as the most likely driver. Specifically, Snow noted the tax on brand pharma contained within the reform bill may well be correlated with the higher brand drug prices, as pharma passes these taxes through to consumers. He believes the price jump is evidence of this ‘pass through’ occurring.
I’m a bit confused about this as the price increases occurred before the passage of reform, and likely some prices on individual drugs were raised while it was unclear whether reform would go thru. When asked about this, Snow noted that pharma had agreed to the $80 billion tax early on in the process, so went ahead under the assumption that this tax would occur. Makes one wonder if prices would have been reduced if reform hadn’t occurred… (he said with tongue firmly in cheek)
Asked about any data on usage or trends of narcotic opioids, Schedule drugs – more to come on that.
May
19
