This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2019.
It’s time for our annual Drug Channels’ examination of drug spending reports. For 2018, we again aim our magnifying glass at the annual trend reports from four large pharmacy benefit managers (PBMs): CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.) The other large PBMs—Humana and OptumRx (UnitedHealth)—provide no public transparency into their performance.
Using these data, which account for most of the commercial market, we detect the following key trends for 2018:
- Once again, we find that drug spending is not skyrocketing—contrary to what you often hear from journalists and politicians. Spending grew by about 2% in 2018, continuing a multiyear decline in the growth rate. Total drug spending at some plan sponsors even declined.
- Spending on traditional drugs dropped by mid-single digits, continuing a multi-year trend driven by generic drug deflation.
- For specialty drugs, higher utilization—not drug costs—was the biggest factor driving specialty spending growth. This wasn’t true for all specialty categories, however.
Patients—in the aggregate—gain from the slower growth in drug spending. What’s missing from the PBM reports is a transparent accounting of how much patients pay out of pocket for highly rebated drugs that are sold to insurers and PBMs at deep discounts. The hidden subsidies of the gross-to-net bubble remain—for now.
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