Branded prescription drugs were 17% of total prescriptions filled by Blue Cross Blue Shield commercial plans in 2017, but they accounted for 79% of the payers' $100 billion drug spend.
Spending on branded specialty and patent-protected drugs is up 4% since 2016 and continues to outstrip spending on generic drugs by nearly $80 billion a year, the Blue Cross Blue Shield Association says in a new report.
Nationally, BCBS commercial plans spend more than $100 billion each year on drugs, which account for 20% of overall healthcare spending for the payers. Branded prescription drugs represent 17% of the total prescriptions filled by BCBS commercial plans, but they account for nearly $80 billion of the total spend, BCBSA said.
"The report findings underscore the underlying cost drivers in the prescription drug market and identify potential surges in overall drug costs in the future," Maureen Sullivan, chief strategy and innovation officer for BCBSA, said in remarks accompanying the study.
The report reviews eight years of drug use, price changes and overall spending to determine why the rising use of generic drugs has been unable to contain the overall cost increase for branded prescription drugs.
The study found that:
- More expensive branded prescription drug spending is up 4% since 2016. Branded prescription drugs are 17% of total prescriptions filled but account for 79% of overall drug spending at $79.5 billion.
- Steady annual increases in branded patent-protected prescription costs drive the majority of spending in the branded drug space, growing 5% in the past year.
- The growing market share of inexpensive generic drugs continued to slow the increase in total drug spending. While generic drug spending has declined 3% since 2016, it hasn't kept pace with the rapid rise in specialty branded drugs.
Horizon Blue Cross Blue Shield of New Jersey said spending on branded specialty drugs used to treat complex, chronic health conditions grew by 62% between 2013 and 2017. Those specialty drugs represent no more than 6% of prescriptions issued for branded drugs, but account for between 32% and 44% of the total spend on branded drugs.
Horizon CEO Kevin P. Conlin says prescription costs account for 29% of Horizon's total healthcare spending and are rising faster than any other component of claims, which he said is driven by the substantial increase in spending on these branded specialty drugs.
"Horizon has devoted considerable resources to programs designed to manage and contain overall drug spending, but this challenge requires that everyone who plays a role in health care join the effort to lower drug costs," Conlin said.
"Just as we are collaborating with our value based providers to improve quality and lower costs, effectively addressing the cost of prescription drugs requires a multi-stakeholder approach that includes pharmaceutical companies, policymakers, payers, doctors, employers, and patients," he said.
BCBSA published a list of the top five medications by spending in 2017 across the BCBS system, the top three of which are used to treat autoimmune disorders.
- Humira
- Remicade
- Enbrel
- Novolog
- Neulasta
The Health of America Report is a collaboration between BCBSA and Blue Health Intelligence, and relies on a claims database to find trends in healthcare affordability and access.
“Effectively addressing the cost of prescription drugs requires a multi-stakeholder approach that includes pharmaceutical companies, policymakers, payers, doctors, employers, and patients.”
Horizon Blue Cross Blue Shield Of New Jersey CEO Kevin P. Conlin
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Annual increases in branded patent-protected prescription costs drive the majority of spending in the branded drug space.
Generic drug spending has declined 3% since 2016, but it hasn't kept pace with the rapid rise in specialty drugs.