Life Science Compliance Update

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March 07, 2018

New ESI Data Shows Medicine Spending Grew Just 1.5% in 2017


In early February 2018, Express Scripts Institute (ESI) released the 2017 Drug Report, which included new data that showed spending on medicines by ESI’s commercial plan sponsors grew just 1.5 percent in 2017, which is the smallest increase since they started tracking this data. Additionally, drug spending declined for almost half of commercial payers and Medicare, Medicaid, and exchange plans all saw very modest increases.

As you can see in this chart by the Drug Channels Institute, costs for traditional drugs declined, largely due to generic substitutions available in the blood cholesterol class and pricing pressures for insulins, while costs for specialty drugs only increased modestly.


According to the report, spending on traditional drugs, which accounted for 59.2% of total spending, decreased 4.3%, due primarily to a 4.9% drop in unit costs. Generic fill rates increased from 85.1% in 2016 to 86.2% in 2017. Additionally, spending on specialty drugs, which accounted for 40.8% of total spending, was up 11.3% in 2017 – the lowest increase ESI has seen to date.

ESI addressed the opioid epidemic in the annual report, noting that an estimated 2 million Americans or either dependent on prescription narcotics or abuse them, and America loses more than 115 lives every day due to opioid overdose. ESI launched an Advanced Opioid Management solution in September 2017, and since that time, among plans that are participating, a 60% reduction in the average days’ supply per initial fill was observed – from 18.6 days to just 7.5 days.

Looking forward, Express Scripts projects a one percent to three percent annual increase in total medicine spending in the commercial market over each of the next three years (2018 – 2020).

ESI also predicts that inflation for brand drugs to treat inflammatory conditions will continue through 2020, since biosimilar savings for that class are next expected until after 2020. Further, it is likely that higher introductory prices for drugs for oncology will drive unit costs as longer treatment duration and more oral therapies shifting to the pharmacy benefit will increase utilization.

Additionally, it is predicted that spending for anticoagulants will rise due to brand inflation and additional indications for newer drugs, along with increased utilization as prescribers gain experience with newer drugs.

With the release of the report, ESI also released a 2017 Public Policy Analysis, which discusses the national debate on prescription drug prices that happened throughout 2017, which notes three areas of policy focus that ESI believes to be ripe for legislative and/or regulatory attention.

The report notes that proponents of these policy recommendations are making progress and passage of some policies appears certain in 2018:

  • Lawmakers are seriously considering reforms to prevent abuse of Risk Evaluation and Mitigation Strategy (REMS) to delay generic and biosimilar drug launches.
  • Food and Drug Administration (FDA) Commissioner Gottlieb has begun to implement a new agenda for the agency that will hasten the launch of brand, generic and biosimilar drugs.
  • Expedited generic drug reviews for single-source drugs were already enacted as part of FDARA, the Food and Drug Administration Reauthorization Act of 2017.
  • The Centers for Medicare & Medicaid Services (CMS) has proposed allowing Medicare plans to make mid-year formulary changes when new generic drugs launch.

The three areas of policy focus ESI believes are ripe for 2018 legislative and/or regulatory attention are:

  1. Pay-for-delay patent settlements between biologic and biosimilar manufacturers;
  2. New safe harbors to encourage value-based reimbursement; and
  3. Addressing the nation’s opioid crisis via e-prescribing, controlled substance limits and monitoring programs

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