Tuesday, April 20, 2021

Express Scripts 2020 Update: Utilization Drove Drug Spending Growth—While Maximizers Gained Further Traction

Cigna’s Evernorth business has recently released its 2020 Drug Trend Report. The results, which reflect the Express Scripts PBM business, are presented as a series of animated webpages. As you can see, Chief Innovation Officer Dr. Glen Stettin is newly cartooned.

For commercial plan sponsors, pharmacy benefit spending grew by 4.0%. However:
  • More than three-quarters of this spending growth was due to the growth in utilization—the number of people being treated and the number of prescriptions being dispensed.
  • The net, post-rebate costs of drugs rose by only 0.9%.
Details and comments about some therapeutic classes below. 

SaveonSP, the secretive copay maximizer partner of Express Scripts, apparently again drove big specialty savings for some plans in 2020. I wonder how many plan sponsors have probed the profits and operations of this business?


The chart below tracks trends for Express Script’s commercial clients for the past six years.

[Click to Enlarge]

As you can see:
  • For Express Scripts’ commercial plan sponsor clients, the overall weighted average increase in spending for 2020 was 4.0%. That’s the highest rate since 2015.
  • Spending on specialty drugs grew by 9.2%, which was comparable to specialty’s growth over the past few years. However, spending on traditional drugs dropped by only -0.8%. As I discuss below, the traditional trend figure appears to be driven by a product mix shift within the diabetes therapeutic class.
For a deep dive into U.S. drug spending data, see Chapter 4 of our new 2021 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.


Year-over-year changes in drug spending have two primary components:
  • Unit costs—the payer’s cost per unit of therapy. Unit costs vary with:
    • The rate of inflation in net, post-rebate drug prices
    • Shifts to different drug options within a therapeutic class
    • A shift in mix of therapeutic classes utilized by beneficiaries
    • The substitution of generic drugs for brand-name drugs
  • Utilization—the total quantity of drugs obtained by a payer’s beneficiaries. Utilization varies with:
    • The number of people on drug therapy
    • The degree to which they adhere to their drug therapy
    • The average number of days of treatment
The total change in spending equals the sum of changes in unit cost and changes in utilization. Understanding this mix of cost and quantity is crucial to understanding what drives drug spending. Unfortunately, many journalists and politicians conflate “spending” with “prices.”

Cigna provided Drug Channels with the underlying data that deconstructs the change in drug spending into these two primary components. (Evernorth’s online report did not include the aggregate values for these data.) 

As you can see below, growth in utilization exceeded growth in costs for both traditional and specialty drugs. These results are consistent with the figures for the past few years.

[Click to Enlarge]

Note that drug costs are reported net of rebates received by plans. They therefore reflect net (not list) prices paid by third-party payers. The cost figures include (1) retail and mail pharmacy dispensing margins, and (2) any PBM retail network spreads.

  • It's not just prices. For Express Scripts’ commercial clients, the 4.9% increase in specialty drug utilization accounted for more than half of the 9.2% increase in their specialty drug spending. Utilization growth can be considered a positive trend, because it is well established that pharmaceutical spending reduces medical spending and improves patients’ health.

    The slow growth in unit costs echoes the figures reported by brand-name drug manufacturers and the data from the government’s National Health Expenditures accounts. The other data sources do not distinguish between spending on traditional drugs and spending on specialty drugs.
  • These data do not imply that net costs for all drugs grew slowly or declined. The Evernorth website provides more detailed information about trend by therapeutic category. (These data appear on the Trend by plan type page and can be viewed by clicking the “Table” button for commercial plans.)

    For example, inflammatory conditions and oncology both experienced a double-digit increase in trend, driven by unit costs. Those two categories accounted for slightly more than 1% of adjusted prescriptions but 30% of spending.
  • Changes in product mix drove increases in net costs for diabetes medications. For 2020, Evernorth reported that unit cost trend for the diabetes category was a surprising +11.8%. That’s significantly higher than unit cost growth in recent years, which had averaged less than 1% annually for 2017 to 2019.

    The increase appears due to such non-insulin products as Trulicity, Ozempic, and Jardiance. Net prices for these product declined in 2020. For example, per SSR Health, net prices for the GLP-1s declined by -14% in 2020. Net prices for Jardiance dropped by -22%. However, a mix shift to GLP-1s and other non-insulin products within the diabetes therapeutic class raised non-insulin unit costs by 15.4%.

For 2019, Express Scripts reported that specialty trend was -5.2% for plans in its SaveonSP specialty patient assistance solution vs. +12.3% for nonparticipating plans. Cigna confirmed to me that the roughly 17 percentage point gap remained for 2020, but the company did not provide any specific figures.

As I see it, SaveonSP exploits a loophole in how manufacturers provide funds for patient support. Money designated to support underinsured patients or those with coinsurance is instead diverted to well-funded employer-sponsored plans.

I suspect that SaveonSP and Express Scripts profit mightily from this scheme. The evidence suggests that SaveonSP keeps up to 25% of the manufacturers’ copayment support funds. It’s not clear how much of these copayment support revenues is shared with Express Scripts.

For my research on the secretive SavonSP program and its unusual profit model, see Why Do CVS And Express Scripts Rely on Secretive Private Companies to Run Their Copay Maximizer Programs? For a more comprehensive overview on accumulators and maximizers, see Section 6.2.2. of our 2021 pharmacy/PBM report .

SaveonSP still has an amazingly uninformative, one-page webpage and refuses to publicly address the transparency issues raised on Drug Channels. I wonder why?

NOTE: This post was updated to clarify price changes for non-insulin products.

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