Wednesday, July 14, 2021

PBMs and Drug Spending in 2020: Data from CVS Health (sort of), Express Scripts, Navitus, and WellDyne (Plus: The Demise of PBM Reporting)

Since 2012, Drug Channels has examined commercial drug spending using the annual trend reports published by the largest PBMs.

This year, we review 2020 data on commercial plan sponsor clients of CVS Health and Express Scripts along with two smaller PBMs—Navitus and WellDyne. As you will see below, plan sponsors experienced another year of single-digit growth in overall pharmacy benefit drug spending.

For specialty drugs, utilization—more people taking more prescriptions—remained the driving force behind this higher spending. Specialty drug costs grew slowly—or even declined.

I’m sad to report that this year’s analysis is skimpier than usual. CVS Health has published only a bare bones summary, while Prime Therapeutics, MedImpact, and other large PBMs have stopped publishing trend reports. I document this disappointing state of affairs below.

Read on as I spread all the the k-poppin' details.


As always, I encourage you to review the source materials for yourself. Here are links to the PBMs’ 2020 drug trend reports:
  • Navitus (Navitus is a small PBM with about 7 million covered lives, of which 2.5 million are commercial lives. Navitus Health Solutions is owned by SSM Health, a not-for-profit health system, and the retailer Costco.)
  • WellDyne (WellDyne is a small, independent PBM with about 2.5 million covered lives, of which about 700,000 are commercial lives.)
A few comments on these data:
  • Our comparison focuses only on commercial payers: employers and health plans. Those are the only data reported by all four PBMs.
  • Many large PBMs either do not publish—or have ceased publishing—trend reports. At the bottom of this article, I address CVS’s slimmed-down approach along with the lack of reporting by other large PBMs.
  • This year marks the first appearance for two smaller PBMs—Navitus and WellDyne—in our annual roundup. Both companies were kind enough to provide me some additional information beyond what appears in their reports.
  • These reports are full of interesting numbers, but they’re primarily marketing documents, not peer-reviewed research studies. I believe that the data are roughly comparable among the reports, despite some methodological differences.
For a more comprehensive look at drug spending in the U.S. healthcare system, see Chapter Four of our 2021 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.


The chart below summarizes the reported 2020 commercial drug trend figures from the four PBMs. As I explain below, CVS declined to provide certain details for 2020.

[Click to Enlarge]

As you can see, drug spending continues to grow more slowly than every other part of the U.S. healthcare system. Spending growth at CVS and Express Scripts was somewhat higher in 2020 compared to the 2019 figures, due primarily to faster utilization growth.

These results continue the 2019 trends that I document in PBMs and Drug Spending in 2019: CVS Health and Express Scripts Outperform Prime Therapeutics and Latest CMS Data Reveal the Truth About U.S. Drug Spending.

Treat the unweighted average with caution, because Navitus and WellDyne are much smaller than other PBMs.


The chart below shows specialty drugs’ share of plan sponsors’ pharmacy benefit costs after rebates. For 2020, specialty drugs accounted for about half of payers’ pharmacy benefit spending at the clients of all four PBMs. Compare that to only 24% in 2013. Note that specialty drugs’ share of plan sponsors’ pharmacy benefit costs is higher than these drugs’ share of dispensing revenues of specialty drugs from retail, mail, long-term care, and specialty pharmacies.

[Click to Enlarge]

Specialty drugs’ share growth reflects multiple factors, including:
  • Higher levels of generic substitution for traditional drugs
  • Deeper rebates on traditional drugs
  • Faster utilization growth for specialty drugs

Year-over-year changes in drug spending have two primary components:
  • Unit costs—the payer’s cost per unit of therapy
  • Utilization—the total quantity of drugs obtained by a payer’s beneficiaries
The total change in spending equals the sum of changes in unit cost and changes in utilization.

The chart below deconstructs changes in spending on specialty drugs for the three PBMs that provided sufficient data. (CVS also declined to provide these data for 2020.)

[Click to Enlarge]

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. For Navitus’s client, utilization accounted for nearly all of the spending growth for specialty medications. Utilization growth can be considered a positive trend, because it is well established that pharmaceutical spending reduces medical spending and improves patients’ health.

For 2020, WellDyne’s clients experienced a notably butter -9.8% decline in specialty drug costs. That means more than 100% of drug spending growth resulted from growth in the number of people being treated and the number of prescriptions being dispensed. The company pointed to multiple factors behind this surprising result, including:
  • Aggressive utilization management around prior authorization and dose escalation. For example, a smaller proportion of patients using WellDyne’s specialty pharmacy had weekly dosing of Humira compared to other specialty pharmacies. (See page 9 of its trend report.)
  • Greater use of oral JAK inhibitors over anti-TNF products for inflammatory conditions. WellDyne told me that its average net costs for the JAK products were about 45% below the anti-TNF products’ costs.
  • Aggressive promotion of generic specialty versions of such drugs as Copaxone and Tecfidera.
  • A decrease in net costs for such specialty drugs as PCSK9 inhibitors.

Let's churn through the state of trend reports from the other PBMs:
  • CVS Health. Unfortunately, CVS Health’s 2020 report eliminated most of the valuable information that had been included in previous years. There was no information on traditional vs. specialty spending and no breakdown of therapeutic categories. That’s a significant loss for our collective understanding of the U.S. healthcare system. Here’s how a spokesperson for CVS Health explained its non-disclosure:
    “With the increasing variability in specialty cost management approaches, an overall number that wouldn’t be representative for many clients did not seem like the most relevant data point particularly in a year when there were a lot of other developments.”
    Hmm. It sounds like CVS Health had trouble explaining to its clients that not everyone can be above average.
  • Humana Pharmacy Solutions, the PBM of the health insurer Humana, derives a majority of its business from Medicare drug plans. Most of its commercial business is in the small to mid-market. Therefore, the company does not publish a drug trend report covering its individual and employer group business. In 2021, Humana began sourcing formulary rebates for its commercial health plans via Ascent Health Services, Express Scripts’ Switzerland-based purchasing organization
  • IngenioRx, the PBM that the health insurer Anthem formed in 2017, has published trend reports that combine medical and pharmacy benefit drug spending. These computations are not comparable to reports from other PBMs, so we excluded the figures from our prior analyses. IngenioRx has not yet released its report for 2020.
  • OptumRx, the PBM within UnitedHealthGroup, has never published a trend report and rarely discloses any information about drug spending trends at its customers. OptumRx’s largest customer is UnitedHealthcare, UnitedHealth Group’s health insurance business. This business accounts for about 55% to 60% of OptumRx’s revenues.
  • Magellan Rx Management publishes an annual Medical Pharmacy Trend Report, which contains some useful data on provider-administered medical benefit drugs. However, the figures exclude rebates—a crucial omission that is not clearly disclosed in the report. Consequently, the report can be highly misleading, especially for highly competitive categories and for drugs that face biosimilar competition. Caveat lector!
  • MedImpact, the largest privately held PBM, published trends reports from 2015 to 2019. However, the company will no longer release them. A spokesperson told me that its policy is to “no longer publicly provide detailed business information.” I speculate that this decision is linked to the decline in MedImpact’s commercial PBM business and the company’s business shift toward discount cards.
  • Prime Therapeutics operates as a pass-through PBM for 23 Blue Cross and Blue Shield health plans as well as subsidiaries and affiliates of those plans. For the first time in at least 10 years, Prime will not release a trend report analyzing the previous year’s data. This outcome was probably inevitable once Prime began outsourcing many crucial PBM functions to Cigna’s Evernorth business. Less of Prime’s performance is under its own control.

    FWIW, the company told me a different story. Apparently, it now believes that “trend is not the true reflection of a PBM’s performance or success; it’s simply how one PBM performed compared to its own previous year’s performance.” I’ll let you puzzle out that paradox.
Hopefully, I've accurately captured each company's rationale. BTS's hit song suggests there's only a small margarine for error.

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