What’s driving rapid drug spend increases — and what you can do about it

In 2014, plan sponsors across the country saw the biggest increase in pharmacy benefit spending in recent history. This upsurge wasn’t a surprise — the “perfect storm” had been mustering strength for some time. However, the rate of acceleration was faster than anyone had anticipated.

Sizable drug spend increases were seen across the industry for a variety of reasons:

  • New, expensive specialty drugs were available and in demand.

New hepatitis C drugs offered a cure to many members. But with price tags of more than $100,000 per course of therapy, plans sponsors saw a significant impact to per member per month (PMPM) costs. Medicines for HIV, diabetes and inflammatory disorders also contributed to spend increases.

  • Inflation drove higher prices overall, and generics saw significant increases.

Inflation drove the majority of drug spend increases in 2014. Both traditional and specialty drug prices rose much faster than in recent years. Generic increases were staggering, resulting from an increased focus on manufacturer profitability, consolidation and drug shortages. Pricing for some generics soared more than 8,000 percent.[1]

  • Generic growth leveled out.

Over the last decade, rapidly increasing generic use has helped to keep spending increases low. With generic use reaching an all-time high, the untapped potential for additional savings has decreased.

  • Overall use of medicines soared.

More members used more medicines in 2014. Use accelerated much more rapidly for both specialty and traditional drugs than in years past.

Higher spending is here to stay — but we can help you plan, prepare and control it.

We don’t anticipate a slowdown in pharmacy benefit spending anytime soon. An aging workforce and high prevalence of chronic conditions will drive higher use of traditional drugs. As new, expensive and highly targeted specialty drugs emerge, so will higher costs. And innovation will continue to thrive, setting a path for prolonged spend increases.

The good news is that Prime has an edge when it comes to managing costs. Our unique connections with you and other Blue Cross and Blue Shield (Blue) Plans help us see the bigger picture. Our goal is to drive better outcomes and lower overall costs, not drive up prescription volume. And our approach works.

Although drug trend can be a useful gauge to measure how costs change from year to year, it doesn’t tell the whole story. Net ingredient cost measures the true cost of prescriptions, after network discounts and manufacturer rebates are applied. It’s a clear way to compare effective control of drug costs.

When it comes to net ingredient costs, Prime continues to lead the industry. In 2014, we helped clients save nearly $4.50, on average, per prescription.[1] 

Prime’s unique connections lead to unmatched savings of nearly $4.50 per prescription, when compared to competitors’ net drug costs.1

We will continue to help you address rising pharmacy benefit costs while maximizing health return for members. We offer a wide variety of strategies to address cost drivers, as well as promote improved safety and health outcomes, including:

  • Employing research-driven benefit designs
  • Focusing on preferred drugs and utilization management
  • Actively managing networks
  • Addressing the costs and use of compound drugs
  • Educating and preparing clients for blockbuster drugs

To learn more about prescription drug cost drivers or opportunities that can help you better manage pharmacy benefit spend, call your Prime representative.

Prime can help support members with chronic conditions: click here

[1] Prime Therapeutics internal data. (2015).

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