Drug trends report shows disparity between price of brand name, generics

The price differences between brand-name and generic drugs is more than 35 percent, according to a new report. In fact, it is "the largest widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index in 2008."

The pharmacy benefit management company released a report showing changes in utilization, unit costs, and overall prescription drug spending across the first three quarters of 2012 based on Express Scripts claims data for commercially insured members. While the company's spending is not primarily on workers' comp, the report offers insight into the latest overall trends in drug prices and utilization.

It shows prices for brand-name drugs rose 13.3 percent while generic drug prices decreased by 21.9 percent. Price inflation for the most highly used brand drugs increased more than six times the overall economic price inflation for consumer goods between September 2011 and September 2012.

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"The patent cliff has fueled a growing price disparity between brand-name and generic medications," said Dr. Steve Miller, chief medical officer at Express Scripts. The report explains that 2012 is commonly referred to as the patent cliff since many "blockbuster drugs" are losing their patent protection.

"However, savings generated will depend on whether or not the first-time generic has marketing exclusivity, what the market share of the drug is prior to the patent expiration, and whether additional generics are available for similar drugs in a therapy class," according to the report. As an example, sales of the brand drug Singulair fell by 87 percent in the first month a generic was available. The drug did not have an exclusivity arrangement, meaning multiple drug manufacturers could sell the drug once the patent expired. "Increased competition and decreased cost resulted."

A change in drug mix to more generics is credited for the year-to-date trend decrease for traditional medications of negative 0.6 percent. A combination of improved discounts and relatively flat utilization explains the overall quarterly trend of 0.1 percent. "This is primarily a reflection of recent patent expirations and the loss of generic exclusivity for several highly utilized blockbuster brand drugs, including Lipitor (atorvastatin calcium), Plavix (clopidogrel), and Singulair (montelukast)," it says.

An increase of more than 117 percent was reported for medications commonly used to treat hepatitis C, driven by increased utilization from new patients beginning and continuing to use one of two new medications, the report says. They are among the so-called specialty medications of which the largest amount of spending were on rheumatoid arthritis/autoimmune conditions, multiple sclerosis, and cancer. Spending on specialty medications increased 22.6 percent due mainly to unit cost increases, the report says.

"The continued rise in spend on specialty medications underscores the nation's need to accelerate the pathway for biosimilars," Miller said. "Additional competition within these therapy classes would provide a necessary market control against price inflation."

Read more at the WorkersComp Forum homepage.

January 3, 2013

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