The 2009 Drug Trend Report from Express Scripts (NASDAQ:ESRX) is now available. Drug trend reports such as this one provide a unique window into the interactions of patient behavior, pricing, utilization, and competition. I strongly recommend you download this free resource.This report provides lots of data-based insight about drug spending by Express Script’s clients, a.k.a. "drug trend":
- Specialty trend was 19.5%—more than 4X the 4.8% trend of traditional drugs. By comparison, the non-specialty trend in 2008 was 1.5% while 2008 specialty trend was 15.4%. See Specialty Spending Soars (for now) for the 2008 numbers.
- Express Scripts forecasts that trend for traditional drugs will grow between 2% to 5% over the next three years (page 89), while specialty trend is forecast to grow an eye-popping 20% to 23.5% (page 95).
Drug trend reports are essential for understanding the dynamics within the pharmaceutical market. Reports from CVS Caremark (NYSE:CVS), Medco Health Solutions (NYSE:MHS), Walgreen (NYSE:WAG), and Prime Therapeutics should be released over the next two months.
2009 TREND
“Trend” takes into account both utilization and costs, so the information provides a much more realistic picture of the market than simplistic “list price” summaries like the misleading AARP/University of Minnesota reports. You even get market share by product for all major therapy classes. (See the therapy class reviews on pages 23-87.)
Here's a summary of the underlying components behind trend. The terms are defined at the bottom of page 10.
Thus, the overall trend for traditional (non-specialty) drugs was 4.8%. Cost/unit drove spending higher by 5.3% while the introduction of new generic drugs (“patent expirations”) reduced trend by -2.4%.The contribution to trend varied significantly between different therapy classes (page 11). For example, the trend for high blood cholesterol drugs was only 0.8%, while the diabetes drug trend was 9.8%. Diabetes is now the second-most costly therapeutic category for Express Scripts’ clients.
The top three specialty therapy classes—inflammatory conditions, multiple sclerosis, and cancer—represented 67% of specialty drug spending. Drug trend in these three categories was 17.7%, 34.4%, and 23.1%, respectively (page 12).
THE MEDICAL VS. PHARMACY MUDDLE
There is a fascinating discussion buried at the back of the report (pages 106-107) about the Medical benefit vs. Pharmacy benefit challenge. Express Scripts claims to be “the first PBM to provide strategic solutions for complete Specialty drug management across both pharmacy and medical benefits.”They estimate that specialty costs were split 55% Medical/45% Pharmacy in 2008. For more on this topic, see last month’s post The Medical vs. Pharmacy Benefit Muddle.
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Other bloggers have also written about this report. I recommend George Antwerp’s Enabling Healthy Decisions blog. George helped put together this report from 2001-2006 when he worked at Express Scripts, so he’s got an (ex)insider’s perspective on the data.
