The Formulary Files

Specialty meds will put pressure on overall costs

Krishna Rutvij Patel, PharmD

Health spending is climbing steeply this year, but the rate of increase should start to slow beginning in 2015, according to a recent report by the Centers for Medicare & Medicaid Services (CMS). The combination of an improving economy and previously uninsured gaining coverage helped to cause the increase this year.

Don’t expect another spike for at least a decade, says CMS, but don’t expect Shangri La, either. Spending will continue to rise. In addition to economic and political factors, other contributors include the country’s aging population and greater use of specialty medications.

Additionally, with the first biosimilar expected to hit the market in the first quarter of 2015 and many more to follow, health plans should assume that the market will never be the same. Historically, generic approvals provided relief to offset cost of expensive branded products. However, biosimilars will not have the same cooling effect as generics: They’ll cost only slightly less than the branded products.

Furthermore, the age-old problem of nonadherence is here to stay unless payers put a brake on it. Health plans are paying for more than half the prescriptions that are not taken correctly. If payers can correct that problem CMS might be compelled to revise these predictions of spending growth.

The amount of time formulary decision makers spend on deciding which drugs to put on their formularies could be balanced with the amount of time they spend on determining what services they can offer to ensure proper medication use by their beneficiaries.

To that end, there is expected to be a decreased growth of beneficiary utilization of health care resources because they will have to bear a greater burden of the cost. And with the health care culture shifting away from quantity and toward quality, all stakeholders will be more cognizant of health care utilization.

Average annual spending growth (%)

Source: Sisko A, Keehan S, Chuckler G, et al. Faster growth expected with expanded coverage and improving economy. Health Aff. 2014;ePub ahead of print.

Factors Driving Up Spending

  • Improving economy
  • Previously uninsured gaining coverage
  • Aging population
  • Greater use of specialty medications
  • Biosimilar savings will be less than that of generics
  • Nonadherence

Factors Moderating Spending

  • Lower beneficiary utilization growth because of greater cost sharing
  • Greater emphasis on quality vs. quantity

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