The coming year could very well see the biggest cumulative drop in prescription drug spending in history. Contributing to that drop: the patent expirations of best-selling drugs Plavix and Lipitor, among dozens of others (PwC pegs the drop in sales in 2012 at $28.1 billion).
Excluding specialty drugs, employers could see negative cost growth for prescription drugs in 2012, in the range of 1 percent to 3 percent, according to CVS Caremark, a presenter at the recent Academy of Managed Care Pharmacy conference This, combined with an overall decrease in medical utilization amid the recession, runs the risk of lulling plan sponsors into relative complacency about future drug costs.
Yet, looking toward the end of this decade, the confluence of specialty drug costs and the continued onslaught of chronic illness including a rise in the prevalence of multiple chronic disease sets the stage for skyrocketing healthcare expenses. More than likely this will occur sometime after 2014, when the dust settles from enacting major provisions of federal healthcare reform.
According to Medco's 2011 drug trend report, the specialty drug trend was 17.4 percent in 2010 (compared with 1.1 percent for non-specialty drugs). Medco also points out that specialty drugs could account for 40 percent of plan drug spending by 2020, and that eight of the top 10 drugs by spend will be specialty/biologic agents by 2016. The top three areas for specialty drug spend are rheumatoid arthritis, multiple sclerosis, and cancer. Considering the relative prevalence of these conditions (most people probably know someone affected by at least one of these), as well as the complexity of distribution techniques required with biologics, the time to start planning for these treatments is now.
The Midwest Business Group on Health is already thinking in these terms, although its findings in a survey released in September 2011 paint a dismal picture of employer awareness. Twenty-five percent of employers had little or no understanding of specialty pharma in the survey, and the vast majority said they did not know how much their company spent on specialty drugs. The Midwest Business Group is in the vanguard of piloting educational programs, with testing set to take place in Chicago and Baltimore.
Clearly, employers understanding of biologics must grow amid the pervasiveness of chronic illness and alongside the strides made in developing and implementing wellness programs. Payers and businesses have introduced a wide array of wellness and preventive programs to promote health and reduce costs. It's time to add specialty drug management to the mix.