Prescription Drug Trends, Issues and Possible Strategies

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Prescription Drug Trends, Issues and Possible
Strategies

• King County Healthcare Advisory Task Force.
  March 8, 2004

Andy Stergachis, Ph.D., R.Ph. Northwest Center
for Public Health Practice Pharmaceutical
Outcomes Research Policy Program School of
Public Health and Community Medicine stergach_at_u.wa
shington.edu
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Forecast of Future Rx Dispensed Growth U.S.
Retail Market (Billion)
Compounded Growth 5.5
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Prescription Drug Expenditure Growth and Share of
National Health Expenditures
17.3
12.1
Growth
Percent
9.4
4.9
Share of NHE
Calendar Years
Source CMS, Office of the Actuary, National
Health Statistics Group.
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Prescription Drug Cost Increases
PMPM Cost Increases 1996-2004
20
18
17
17
18
16
16
15
15
15
16
14
14
12
Percentage Increase
10
8
6
4
2
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
Year
Source Express-Scripts Drug Trend Report
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Expenditures for Prescription Drugs by Source of
Funds

The financing of prescription drug expenditures
has rapidly shifted from consumer out-of-pocket
spending to private health insurance.
1988
2000
Out-of-pocket 32
Out-of-pocket 60
Private Health Insurance 46
Private Health Insurance 24
Public 16
Public 22
Note Data are Calendar Year. Source CMS,
Office of the Actuary, National Health Statistics
Group.
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Factors Affect Growth in Prescription Drug Costs,
1997-2001
24
28
Price Inflation (Manufacturer Price Increase)
26
Types of PrescriptionsUsed 27
Utilization (Number of Prescriptions Dispensed)
47
Source Prescription Drug Trends, May 2003.
Kaiser Family Foundation.
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Promotional Spending for Prescription Drugs,
1996-2001 (billions)
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A quick look at drug utilization for King County
employees

• AdvancePCS is the PBM for 77 of King County
  employees
• AdvancePCS data acquired from KC for 2003
  calendar year

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Top 10 drugs by utilization 2003Source
AdvancePCS
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Top 10 drugs by amount paid 2003Source
AdvancePCS
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Overall Drug Utilization 2003 for King County
Employees. Source AdvancePCS

• 10.04 prescriptions/year
• 69.58 per prescription
• 698.91 per member per year drug spend
• 58.24 per member per month drug spend
• 46.7 generic dispensing rate
• 91.6 formulary drugs

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Strategies Used by Prescription Benefit Managers

• Develop administer drug formularies
• Maximize use of generic drugs
• Utilize patient cost-sharing programs
• Negotiate drug manufacturer rebates
• Manage retail pharmacy network and mail-services
• Manage drug utilization, DUR
• Point-of-service programs, prior authorization,
  limits
• Medication therapy management services, DM
• Provider profiling and education programs

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Drug Formularies Preferred Drug Lists

• List of drugs evaluated by a review process
• Represents current clinical judgment
• Evidence-based
• Consideration of effectiveness, safety, need,
  cost
• Guides coverage decisions
• Vary by degree of restriction

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Maximize Generic Opportunities
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Developments to Watch

• Medicare prescription drug coverage
• New drugs, conventional and biological
• Patent expirations - new generic drugs
• Technology and patient safety
• Rx-to-OTC switches?
• Prescription drug re-importation?
• Bulk purchasing coalitions?

/ -
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Summary Prescription Drug Cost Drivers

• Escalation in Drug Spending
• Increased Utilization
• New Drugs Guidelines
• Direct-to-Consumer Advertising
• Consumer expectations

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Consumer Expectations?
I want more hair
I dont want wrinkles or blemishes
I want a better sex life
I want to eat whatever I want
And, I want my benefit plan to pay for it all
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Goals of Pharmacy Benefits

• Improve overall quality of care outcomes
• Control cost of drugs overall health care
• Promote safe, effective, efficient, accessible,
  and lawful pharmacy practice
• Achieve employee and employer satisfaction
• Provide data for analyses

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Strategies for Managing Prescription Drug Benefit
Plans

• Evidence-based drug formularies/preferred drug
  lists
• Maximize use of generic drugs
• Utilize patient cost-sharing programs - tiered
• Drug manufacturer rebates
• Manage drug utilization, e.g., DUR
• Point-of-service programs, prior authorization,
  limits
• Medication therapy management services, DM
• Provider profiling and patient education programs
• Consider health and economic benefits/offsets of
  Rx

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