Cancer Drug Use and Spending to Rise Sharply by 2013

What are the implications of increased drug use and spending?

In a recent report by Medco, while the overall drug trend in 2010 remained low at 3.7%, the costs for specialty drugs “accounted for 16.3% of plan costs but was responsible for a remarkable 70.1% of drug trend” with diabetes contributing the most to those numbers.

To combat these rising numbers, Medco plans to [my emphasis}:

Promote the use of generic drugs to take full advantage of the wave of trend-reducing first-time generics on the horizon. This should include advocating for generic alternatives, in addition to generic equivalents

Manage specialty spending through use of medical channel management, formulary and step therapy programs, prior authorization, and co-payment design that accurately reflects the true aggregate plan costs for these drugs

I have highlighted aspects of this plan to point out three key efforts to control expenses:

  • More generic usage
  • More therapeutic substitution
  • More fail first strategies

What are the implications of these strategies?

For insurers and their pharmacy benefit managers, it represents an even harder reputational battle with the public. As the recent Harris Poll concludes, health insurance is one of the industries “least likely to be thought of as honest and trustworthy”. Consequently, although rising healthcare costs are a national problem, how the health insurance deals with it will increasingly define whether that industry comes under greater regulatory scrutiny — for as the Harris Poll also found, health insurance is an industry “people believe should be more regulated”.

For pharmaceuticals, it means increased “steps” for physicians to prescribe their products for their patients. Interestingly enough, pharmaceuticals face the same problems as the health insurance industry, according to the Harris Poll — not “honest and trustworthy” and “should be more regulated”.

For patients and their healthcare providers, it means increased difficulties in getting recommended treatments.

Sounds like a loss-loss-loss scenario. What do you think?

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