Despite rising prices for prescription medicines, Express Scripts released data today showing spending for its health plans rose 5.2 percent in 2015, roughly half of what was seen the year before.
The pharmacy benefits manager — which negotiates drug prices for companies and government agencies, among others — was able to keep costs down by negotiating with drug makers and managing the list of medicines it covers, said Dr. Glen Stettin, a senior vice president and chief innovation officer.
The company, which manages drug plans for approximately 85 million Americans, cited data that the average price of brand-name drugs rose 16.2 percent in 2015 and 98.2 percent since 2011. And last year, prices for one-third of all brand-name medicines increased more than 20 percent.
Most of the increased spending was for specialty medications — such as those for hepatitis C, cancer, and other hard-to-treat diseases. Spending for these drugs rose nearly 18 percent, compared with a 0.1 percent drop for traditional drugs for chronic conditions, such as high cholesterol and high blood pressure. Moreover, usage rose nearly 7 percent for specialty medicines, compared with 2 percent for other drugs.
Among the types of medicines where big price hikes were seen — on a unit cost basis — were treatments for diabetes, heartburn, and skin conditions. One of the larger purveyors of skin treatments is Valeant Pharmaceuticals, which angered benefits managers by using a mail-order pharmacy to manipulate insurance reimbursement. Stettin said Express Scripts no longer covers several of its drugs.
Express Scripts boasted that it has successfully used various techniques to manage drug costs. These include formularies with various so-called tiers, which are lists of preferred drugs that require consumers to pay varying amounts. Another tactic is prior authorization, which involves requiring consumers to try different treatments before a more expensive medicine.
Another move, by the way, that Stettin said produced savings was a decision to curtail coverage of many compounded medications — which are generally, but not always, custom-made for patients. Total spending on compounded treatments for pain and skin conditions fell 54 percent as usage dropped 56 percent.
Last month, CVS (CVS) Caremark, its big rival, also released data indicating its health plans spent about 5 percent more on prescription drugs last year using these tactics, which also included negotiating with drug companies. Stettin, in fact, pointed to extracting rebates and discounts from drug makers, which he claimed lowered spending by 2.7 percent for Express Scripts customers.
“Rebates are getting bigger, so manufacturers don’t even get to keep most of the price increases” that Express Scripts reported, said Adam Fein of Pembroke Consulting, who tracks pharmaceutical distribution and pricing.
Another consultant, however, maintained that the reported savings may not tell the full story.
“Nowhere does Express Scripts state that it is passing through all discounts, and rebates, and other price reductions that it has negotiated and is receiving on hepatitis C drugs, or on any other specialty drugs for that matter,” said Linda Cahn, an attorney who represents companies and unions in contract talks with pharmacy benefits managers. “Therefore, it’s impossible to know to what extent the increased costs … in 2015 were actually necessary.”