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Higher generics use curbs drug spending growth
May 13th, 2009
FRANKLIN LAKES, N.J. – Generic drugs accounted for nearly two-thirds of all prescriptions dispensed last year, diluting the impact of escalating branded drug prices and specialty drugs as health plan clients and their members seek lower-cost options, according to a report released by Medco Health Solutions Inc.
Brand-name drug price inflation hit its highest level in five years, topping 8% in 2008, the company said in its 2009 Medco Drug Trend Report. The study, a comprehensive analysis of prescription drug spending and utilization, is statistically representative of the pharmacy benefit manager's more than 60 million covered members.
Increased use of generics, which represented over 64% of all prescriptions dispensed in 2008, limited prescription drug spending growth to 3.3%, the report said. Specialty drugs — including brand-name, high-cost biologics — accounted for 60% of that growth.
Last year Medco's overall prescription volume rose to 586 million from 560 million in the previous year. Of that, mail order prescription volume climbed 11.6% to 106 million.
Prescription drug utilization, which is the numbers of days of therapy per member, fell 1.1% in 2008. The company said the drop stemmed mainly from over-the-counter availability of widely used allergy and gastrointestinal medications, such as Zyrtec and Miralax, and safety concerns for certain medication classes.
For the second year in a row, diabetes medications were the leading spending driver, according to the report. Other key drivers of prescription growth were rheumatological, seizure, antiviral and cancer drugs.
Specialty drugs were a big driver of growth, with that group of drugs seeing a 15.8% gain in spending. If specialty drugs were excluded, the overall drug spending increase would have been 1.3%, the report noted.
Among drug categories seeing lower drug trend, the report listed lipid lowering drugs, allergy treatments and specialty drugs used to treat anemia.
Over the next five years, brand-name drugs with more than $66 billion in annualized sales are scheduled to lose patent protection and face competition from generic introductions. The report projects spending growth of 4% to 7% annually through 2011, or an aggregate of 14.7% to 18% percent over the three-year period.
"Under even greater pressure due to the unstable economy, plans are more aggressively pursuing tighter prescription drug management techniques, such as generics and mail order, to both reduce costs and preserve a comprehensive, high-quality benefit for their members," Medco chairman and chief executive officer David Snow said in a statement.
Prescription demand fell 1.1% in 2008, largely due to safety concerns for certain medication classes, O-T-C availability of blockbuster medications and a relatively low number of new drug introductions, the report said.