Michael D. Dalzell

Prescription drug spending in the United States has been tempered in recent years by patent expirations and corresponding patient conversions to generic drugs. Rapid growth in spending on biologics, however, threatens to send pharmacy budgets soaring.

A new report by Evaluate Pharma indicates that by 2018, biologics will account for one quarter of all drug spending worldwide — double the share they commanded less than a decade ago. Moreover, for the world’s top 100 selling drugs, slightly more than half of sales will be for biologic products. Evaluate Pharma does not break out this growth by market, but economic troubles and fiscal austerity in Europe suggest that U.S. spending on biologics may contribute disproportionately to this trend.

Conventional vs. biologic sales, worldwide

Percentage of sales attributable to each

In the United States, spending growth on biologic therapies generally mirrors the trend of increased approvals over the previous decade. In 2004, the Food and Drug Administration approved 7 new biologics; since then, new approvals have reached double digits annually, including 10 last year. With even more biologics in the pipeline, Evaluate Pharma expects them to come to dominate U.S. drug sales. Among the top 25 drugs sold in the United States, the number of biologics is projected to climb from 10 last year to 15 by 2018.

Top-selling drugs, U.S.A.

Changing ratio of conventional drugs to biologics

The unknown factor of biologics on pharmacy budgets, of course, is biosimilars. The degree to which biosimilars might mitigate expenditures on biologics is unclear. Evaluate Pharma says the consensus of equity analysts it interviewed suggests that sales erosion resulting from the emergence of biosimilars, possibly late this decade, will be significant.

Source: “Returning to Growth,” Evaluate Pharma, London, June 2013

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.