The Xevant mid-year Drug Trend Report provides detailed insights into the key drivers of cost changes between the first half of 2019 and the first half of 2020. The independently derived report takes a novel approach to better understanding the impact of each of the following individually separated sources of increases and decreases in pharmacy claims cost:
- PBM Discounts
- Drug Inflation
- Drug Mix
- Utilizer Changes
Xevant’s extensive data warehouse is one of the largest independently maintained pharmacy claims datasets obtained from a wide range of claims administrators including PBMs, TPAs, Payers, and consultants representing employer plan sponsors of all sizes. This allows both Xevant and its customers to quickly and accurately solve cost and utilization issues as they happen.
That’s why the Drug Trend Report is so revealing; the analysis comprised within this report was derived from a broad spectrum of nationwide, commercial, and self-insured, de-identified pharmacy claims data. Additionally, the report is presented using “per utilizer per month” (PUPM) figures (unless separately noted) instead of using totals in order to normalize and deidentify the data.
During the first half of 2020 PBM discounts improved by 0.76%
The improvement of PBM discounts resulted in plan sponsor PMPM savings of $0.71 PUPM (or approximately $0.65 PMPM).
Drug cost inflation during the first half of 2020 is 2.08%
With 3.6% projected by the end of 2020, drug cost inflation is on par. A typical misconception of increased drug costs, pharma manufacturers only represented less than 25% of the actual full increase in drug costs.
One of the top drivers for increased cost continues to be an increase in the utilization of higher-cost specialty medications
Switching to higher cost specialty medications still continues to drive just under half of the overall increase in drug costs. With a long list of new drugs hitting the market to treat conditions in ways never considered before, patients are now switching to dramatically higher-cost medications in hopes of better managing difficult conditions.
As more and more patients opt towards higher-cost specialty biologic medications, an often-overlooked positive result is an expected decrease in medical spending.
The Antiviral class led an overall drop in drug costs due to a decrease in utilizers
A primary driver of the decrease in utilizers can be attributed to the disruption caused by both the Truvada lawsuit and the formulary status of Descovy. This is a major concern because decreased utilization, especially for specialty medications like Descovy, can create a major threat to patients’ overall health.
COVID-19 contributed to increased drug costs during the first half of 2020
Over half of the drug cost increase came at the hands of increased quantities of medications received. As the pandemic swept the United States, much like the rush to stock up on toilet paper and paper towels, we saw the same reaction to medication. There was a significant spike in 90-day prescriptions in March, April, and into May.
Interpretation of the Findings
Predictions are important to help us plan for the future, but then COVID-19 happens and throws everything to the wind. That’s why it’s important to focus on what we know, the changes that are occurring, and to identify why they are happening.
Specialty medication, for example, will continue to grow at an alarming rate. And that’s because taking a holistic approach to managing disease is more important and beneficial in the long run rather than solely focusing on managing the cost of drugs.
By utilizing medications that help manage or cure long-term, chronic illnesses, it saves on the cost of lifetime medical 2-3 times the cost of the medication. So while medications, like those for Hep C, are costly, it’s much lower than what the cost of medical would be for the patient over their lifetime.
Addressing Problem Areas
The Xevant Drug Trend Report may feel overwhelming, especially if you’re managing a large number of members, but it’s important to know that each of these areas can be addressed with the goal to help you garner the most savings while supporting employee health.
With Xevant’s platform, you’ll be able to pinpoint the problem so that you’re focusing on the right area rather than continuously attempting to fix an issue that’s already been solved.
Xevant can successfully separate drivers of cost to eliminate the need to pilfer through 1000 different approaches. They can shine a light on a small number of proven ways to make changes- whether that’s providing insights to negotiate a better PBM discount or mitigating higher drug costs for members over a long period of time.