No Fireworks as Specialty Pharmacy Breaks the 50% Milestone

Were there fireworks to mark the event?
Was there a parade to commemorate the long-awaited day?
In short, NO!

Annual Drug Trend Reports from Express Scripts (Evernorth) and CVS were recently released as they have been for many years. As in prior years we attempt to point out the important details that are pertinent to the specialty pharmacy industry. After all, these two giants represent upwards of 70% of all specialty pharmacy spend.

So, what big event are we talking about?
After hearing for a decade that specialty pharmacy spend would soon top 50% of all pharmacy spend it has finally happened, as confirmed by both PBMs. ESI set it at 51% while CVS suggests 52%. So much for a long-awaited benchmark to arrive.

You can read the trend reports by clicking below. Don’t set aside much time, however. There is even less detail in the 2020 reports than in the already lean 2019 report.

Unit cost trend was up by less than 1%. However, 2020 specialty pharmacy utilization spiked about 300% at 3+%. Average SP utilization trend for 2017-2019 averaged a very low 1% annually. Neither report offers much explanation of the drivers behind these trend numbers.

There is little explanation as to why specialty pharmacy utilization spiked in 2020 in spite of the pandemic and numerous analyst assessments that specialty utilization would be negatively impacted especially with expected drop in new diagnoses (fewer doctor office visits). CVS offers some comment on the swing in utilization in 2020 as noted below….. but not much in the specialty pharmacy category.

Lastly, neither organization offered much detail of their specialty pharmacy management programs to drive down utilization through limited networks, tighter formularies, and cost shifting to patients (e.g., copay accumulators, etc.)

2020 Drug Trend Reports

ESI / Evernorth
For the first time, spending on specialty drugs accounted for more than half of total drug spend (51%). This was largely due to the introduction of costly treatments for inflammatory conditions and cancer with no real competition. Evernorth moved to mitigate specialty costs in 2020 and beyond with:

The industry’s first solution for affording incredibly expensive, potentially curative gene therapies
New, comprehensive and cost-effective solution to make fertility treatment more accessible
Strategic formulary management, including plan-level customization by therapeutic category
Value-based care solutions for inflammatory conditions, cancer, HIV, multiple sclerosis, complex neurological conditions and more

Specialty treatments continue to grow as a portion of pharmacy spend. They now account for more than half of pharmacy spend — 52 percent in 2020 — and are concentrated in relatively few therapeutic categories. Specialty trend has continued to remain high over recent years, but that spend is now largely driven by members new to treatment. Utilization is now the main driver of specialty drug trend as we have successfully implemented approaches to mitigate manufacturer driven price inflation.

CVS Caremark’s overall drug spend trend was 2.9% in 2020 and about one-third of its clients had a negative trend, the PBM announced today. Utilization increased just 1.7% and price growth was 1.2%, according to its 2020 Drug Trend Report.

The report from the PBM unit of CVS Health includes a graph that shows the steep drop in healthcare utilization in April 2020 as the COVID-19 pandemic took off and lockdowns ensued had a similar effect on patients starting new drugs. The number of CVS Caremark prescriptions for a new drug for depression, diabetes, dyslipidemia (high cholesterol) and heart failure fell precipitously in April, the graph shows. By September, new starts for depression, diabetes, and dyslipidemia had recovered somewhat so they were roughly 10% higher than new starts in 2019. But for heart failure, the new starts continued to lag behind 2019 and were about 10% lower in September 2020 than in September 2019.

The drug trend report also updates the long-term trend in the growth of the specialty drug spend as a share of the overall pharmacy spend. In 2020, specialty drugs accounted for 52% of the CVS Caremark drug spend, according to this report. Five therapeutic area — autoimmune, oncology, cystic fibrosis, atopic dermatitis, HIV — accounted for 90% of that spend.

The report acknowledges the specialty trend but touts CVS Caremark’s ability to manage it. “Ensuring appropriate utilization, avoiding waste and maximizing cost reduction programs helped us keep specialty trend in check for clients who used our services,” the report says, citing figures that show that more than 40% of clients had single-digit specialty trend and 18% had a negative trend

Click here to access the ESI / Evernorth Trend Report
Click here to access the CVS Trend Report


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