Tuesday, April 24, 2012

Insights from the 2011 Express Scripts Drug Trend Report

Express Scripts just released its 2011 Drug Trend Report. (Free with registration.) I find PBM drug trend reports to be incredibly useful for understanding patient behavior, pricing, utilization, and therapeutic competition.

The divergence between traditional and specialty drugs was bigger than ever. In 2011, spending on traditional drugs was essentially flat (up only 0.1%), while spending on specialty drugs grew by 17.1%. Below, I discuss the factors behind these figures and look at the new forecasts.

As always, the Express Scripts report also reveals a lot about the future strategic directions of the biggest PBMs. Tune in tomorrow for my thoughts.


Every PBM computes trend in a different way using different samples. (See Is Caremark really better at managing drug trend?) So, it's worth noting how Express Scripts defines two key concepts:
  • Drug trend is defined to be “growth in the year-over-year spend per member per year (PMPY).” Express Scripts computes trend based on “a random sample of approximately four million members who had prescription-drug coverage in 2010 or 2011.” Thus, the results may not reflect the results of any individual plan. The 2011 sample is about the same size as last year’s report.
  • "Cost" includes ingredient costs, taxes and administrative fees minus rebates. This broad measure includes member costs, the plan sponsor’s costs to use a PBM, and the actual net pharmaceutical costs. It's a more accurate representation of how payers experience drug spending, compared to simple computations of list prices or manufacturer sales.

Specialty trend was 17.1%—just a wee bit higher than the negligible 0.1% trend for traditional drugs. Specialty trend dropped a bit, but remained in the same range as the past few years. Traditional trend hit a new low. (Click the chart to enlarge it.)

Here’s how Express Scripts breaks down the factors behind the 2011 drug trend. (See page 35 of the report for definitions.)

Put simply, traditional trend was depressed because people took more generics (“patent expiration”), switched to lower cost therapies (“mix”), and were less adherent (“intensity”). None of these factors are positive news for brand-name manufacturers. See Exhibit 10 (page 37) for a look at the top 15 traditional drug therapeutic categories.

Specialty trend was the mirror image. Specialty drugs saw greater cost increases, higher adherence, and a shift to higher-cost therapies. In 2011, four specialty classes—inflammatory conditions, multiple sclerosis (MS), cancer and HIV—accounted for nearly 70% of spend for specialty drugs covered by pharmacy benefits. Note the growth in share of people taking a specialty medication (“prevalence”). See Exhibit 11 (page 39) for the top 10 specialty drug therapy classes.


In 2012, traditional drug trend is projected to be negative (-0.9%) for the first time ever, due in large part to the generic monster. (See Pfizer's Lipitor Strategy and the 2012 Generic Monster.) However, Express Scripts expects trend to start rising again in 2013 and 2014.

Specialty drug trend is projected to rise 17.1% in 2012, 19.0% in 2013, and 22.0% in 2014. Curiously, these growth rates are far below the 26% to 28% forecasts from last year’s report.

There’s lots of good data in the report, especially the therapy class reviews on pages 47-89. Tune in tomorrow for my interpretation of what the other material says about where PBMs will be going in the future.


  1. Whle ESI provides a clear definition of the factors on which their trend is based, this global approach combines data for managed care plans and employers, actives and retirees, and various degrees of clinical management, all of which impact trend. Specific ESI payor groups will want to compare their own trend with a subset of ESI's trend that is comparable to their circumstances.

  2. Yes, there is certainly aggregation in the data. However, note that the figures above exclude Medicaid recipients as well as Medicare beneficiaries receiving prescription-drug benefits through Medicare Part D plans, managed Medicare Prescription Drug Plans (PDPs) or Medicare Advantage Prescription Drug Plans (MAPDs). The report provides separate cost and utilization trends for Medicare and Medicaid. 

    Nonetheless, I find drug trend reports to provide useful, data-based insights that are unavailable elsewhere.

  3. Can't help but to wonder what trend would be if spread pricing was eliminated and the generic MAC was a fixed cost schedule that eliminates ingredient cost trend on 85% of the drugs dispensed in the market?  What a concept.