After outpacing all other health

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1 specil feture Projecting future drug expenditures 2012 Jmes M. Hoffmn, Edwrd Li, Fred Doloresco, Lind Mtusik, Robert J. Hunkler, Nily D. Shh, Lee C. Vermeulen, nd Glen T. Schumock After outpcing ll other helth cre expenditures for mny yers, the rte of phrmceuticl expenditure growth is now consistently similr to the growth of overll helth cre expenditures. The ongoing introduction of generic versions of widely used expensive medictions continues to moderte drug expenditures. However, from the ptient s perspective, svings from generics my not be relized, s the cost shring (deductibles nd copyments) required by insurnce plns continues to increse. Further, the growing use of expensive specilty medictions continues to drive mediction expenditures for select ptient popultions, nd the out-of-pocket costs to ptients for these medictions re prticulrly high. From policy perspective, the implictions of expnded mediction ccess, utiliztion, nd expenditures resulting from the introduction of Medicre Prt D prompt continued ssessment. For exmple, one recent study found tht Medicre Prt D ws ssocited with Purpose. Fctors likely to influence drug expenditures, drug expenditure trends in 2010 nd 2011, nd projected drug expenditures for 2012 re discussed. Summry. Dt were nlyzed to provide drug expenditure trends for totl drug expenditures nd the hospitl nd clinic sectors. Dt were obtined from the IMS Helth Ntionl Sles Perspectives dtbse. From 2009 to 2010, totl U.S. drug expenditures incresed by 2.7%, with totl spending rising from $299.2 billion to $307.5 billion. Drug expenditures in clinics grew by 6.0% from 2009 to Hospitl drug expenditures incresed t the moderte rte of 1.5% from 2009 to 2010; through the first nine months of 2011, hospitl drug expenditures incresed by only 0.3% compred with the sme period in The dominnt trend over the pst severl yers is substntil modertion in expenditure growth for widely used drugs, primrily due to the ongoing introduction nd wide use of generic versions of high-cost, frequently used medictions. At the end of 2010, generic drugs ccounted for 78% of ll retil prescriptions dispensed. Another pttern is substntil increses in expenditures for specilized medictions, prticulrly in the outptient setting s growth in prescription drug expenditures for clinic-dministered drugs consistently outpces growth in totl expenditures. Vrious fctors re likely to influence drug expenditures in 2012, including drugs in development, the diffusion of new drugs, generic drugs, drug shortges, nd biosimilrs. Conclusion. For 2012, we project 3 5% increse in totl drug expenditures cross ll settings, 5 7% increse in expenditures for clinic-dministered drugs, nd 0 2% increse in hospitl drug expenditures. Index terms: Ambultory cre; Costs; Drug distribution; Drugs; Economics; Hospitls; Prescriptions; Product development Am J Helth-Syst Phrm. 2012; 69:e5-21 decresed nondrug medicl spending for ptients who hd limited drug Jmes M. Hoffmn, Phrm.D., M.S., BCPS, is Associte Member, Phrmceuticl Sciences, Mediction Outcomes nd Sfety Officer, Phrmceuticl Services, St. Jude Children s Reserch Hospitl, Memphis, TN, nd Associte Professor of Clinicl Phrmcy, College of Phrmcy, University of Tennessee Helth Science Center, Memphis. Edwrd Li, Phrm.D., BCOP, is Associte Professor, Deprtment of Phrmcy Prctice, College of Phrmcy, University of New Englnd, Portlnd, ME. Fred Doloresco, Phrm.D., M.S., is Clinicl Assistnt Professor, Deprtment of Phrmcy Prctice, School of Phrmcy nd Phrmceuticl Sciences, nd Reserch Assistnt Professor, Deprtment of Socil nd Preventive Medicine, School of Public Helth nd Helth Professions, University t Bufflo, Bufflo, NY. Lind Mtusik, B.A., is Senior Dt Anlyst; nd Robert J. Hunkler, M.B.A., is Director, Professionl Reltions, IMS Helth, Plymouth Meeting, PA. Nily D. Shh, B.S.Phrm., Ph.D., is Assistnt Professor of Helth Services Reserch, Division of Helth Cre Policy nd Reserch, College of Medicine, nd Senior Associte Consultnt, Myo Clinic, Rochester, MN. Lee C. Vermeulen, B.S.Phrm., M.S., FCCP, is Director, Center for Clinicl Knowledge Mngement, UW Helth, nd Clinicl Professor, School of Phrmcy, University of Wisconsin, Mdison. Glen T. Schumock, Phrm.D., M.B.A., FCCP, is Professor, Deprtment of Phrmcy Prctice, nd Director, Center for Phrmcoeconomic Reserch, College of Phrmcy, University of Illinois Chicgo, Chicgo. Address correspondence to Dr. Hoffmn t the College of Phrmcy, University of Tennessee Helth Science Center, 262 Dnny Thoms Plce, MS 150, Memphis, TN (jmes.hoffmn@stjude.org). This rticle will pper in the Mrch 1, 2012, issue of the Americn Journl of Helth-System Phrmcy. Copyright 2012, Americn Society of Helth-System Phrmcists, Inc. All rights reserved /12/ e5$ DOI /jhp e5

2 coverge before the implementtion of Medicre Prt D. 1 From the helth-system phrmcy perspective, the Americn Society of Helth-System Phrmcists (ASHP) hs lunched the Phrmcy Prctice Model Inititive (PPMI). One of the objectives of this effort is to crete frmework for phrmcy prctice model tht ensures the provision of sfe, effective, efficient, ccountble, nd evidence-bsed cre for ll ptients in hospitls nd helth systems. 2 A component of the PPMI ws consensus summit, which produced five sttements relted to cost mngement. For exmple, there ws consensus tht in the next 5 10 yers, hospitls nd helth systems will be under incresing pressure to cut operting costs nd tht in the next 5 10 yers the expecttion of the hospitl nd helth-system executives nd medicl stff leders for phrmcists to help ensure costeffective use of medictions will increse. 3 These conclusions re supported by n nnul survey of helth cre chief executives; finncil chllenges were consistently cited s the top concern for 6 consecutive yers. 4 In hospitls, medictions re prominent operting expense nd thus mjor trget for cost continment. Undoubtedly, it remins essentil for phrmcists to understnd nd effectively mnge mediction expenditures. This rticle reviews fctors likely to influence drug expenditures, describes drug expenditure trends in 2010 nd 2011, nd projects drug expenditures for Our intent is to provide informtion nd nlyses tht will id helth cre professionls in determining how future chnges in mediction use will ffect drug expenditures in their prctice. Fctors tht my influence phrmceuticl expenditures in 2012, including drugs in development, the diffusion of existing drugs, the vilbility of generic drugs nd biosimilrs, nd drug shortges, re discussed. Trends in phrmceuticl expenditures, both generlly nd by setting, re lso reviewed, with focus on hospitls nd clinics. Finlly, drug expenditures by sector (totl, hospitl, nd clinic settings) for 2012 re projected. Totl drug expenditures combine ll sectors of prescription mediction use, including retil phrmcies, milorder phrmcies, clinics, nonfederl hospitls, long-term-cre fcilities, federl fcilities, home helth cre, nd other miscellneous sectors. The clinic setting comprises physicin s offices nd other clinics where medictions re purchsed nd dministered. The hospitl setting includes nonfederl hospitls. Dt in this rticle my not fully reflect events tht hve occurred fter November 2011, when the rticle ws finlized for publiction. Fctors tht my influence 2012 drug expenditures Drugs in development. To understnd nd pln for drug expenditures, it is importnt to monitor nd evlute medictions in development. New drug development continues to focus on personlized nd specilized drugs, which hve importnt implictions for phrmcists nd other helth cre professionls responsible for mnging drug expenditures. 5,6 Plnning for the fiscl influence of new drug costs must continue to shift from review of reltively smll number of widely used drugs to n ssessment of the impct of unique nd expensive therpies tht my be pplicble only to smll, specific ptient popultions. Further, the use of these specilized nd unique therpies will often be unpredictble, presenting dditionl chllenges for drug cost mngement. Recent pprovls. In 2011, six new moleculr entities were pproved by the Food nd Drug Administrtion (FDA) to tret vriety of oncologicl disorders (Tble 1). Since these drugs re new nd objective cost informtion (e.g., verge sles price) ws unvilble t the time this rticle ws prepred, the estimted price ws determined bsed on vrious news reports Four of these gents (birterone, crizotinib, vndetnib, nd vemurfenib) re orl gents unlikely to be initited during ptient s hospitl sty nd re not dministered by helth cre provider in the outptient setting; therefore, these gents my not significntly ffect hospitl or clinic expenditures. The remining two gents (brentuximb vedotin nd ipilimumb) re intrvenously dministered biologicls nd re likely to be dministered in hospitl outptient setting. As described further below, these two drugs hve the bility to significntly increse hospitl nd clinic drug expenditures becuse of their high cquisition costs. In fct, ipilimumb becme one of the top 20 clinicdministered ntineoplstics bsed on expenditures by November 2011, despite hving been pproved by FDA in lte Mrch To predict future expenditures, institutions should first ssess whether their oncology popultion includes Dvid Chen, M.B.A., nd Erin Fox, Phrm.D., re cknowledged for their contributions to this rticle. The ASHP Section of Phrmcy Prctice Mngers provided support for the development of this rticle. Dr. Hoffmn s contributions to this rticle were supported in prt by ALSAC nd by Cncer Center Core Grnt NIH CA Dr. Schumock hs consulted for or received reserch funding from Abbott Lbortories, AMAG Phrmceuticls, Amgen, Bxter, Boehringer Ingelheim, Genentech, Primus Phrmceuticls, nd Tked Phrmceuticl Compny in the pst three yers. Dr. Hoffmn, Dr. Shh, Mr. Vermeulen, nd Dr. Schumock re uncompensted members of the steering committee of the Helth Services Reserch Network of IMS Helth from which much of the dt for this rticle were obtined. Dr. Li, Dr. Doloresco, Ms. Mtusik, nd Mr. Hunkler hve declred no potentil conflicts of interest. e6

3 ptients requiring tretment for metsttic melnom, nplstic lrge-cell lymphom, or refrctory Hodgkin s lymphom. Expenditures cn be estimted by fctoring the predicted number of ptients, the estimted number of tretment courses, nd the cquisition cost of the new gents. Finlly, while the incresing number nd cost of orl chemotherpy gents my not directly ffect the hospitl or clinic drug budget, progrmmtic costs ssocited with mnging the cre of ptients receiving these therpies must be considered. These costs include ensuring ptient ccess through insurnce or ptient-ssistnce progrms, ptient monitoring, nd coordinting cre between specilty nd retil phrm- cies tht fill these prescriptions nd the hospitl or clinic prescribing the therpy. Potentil future pprovls. Selected novel gents tht my receive FDA pprovl in the United Sttes by the end of 2012 re listed in Tble 2. To provide further detils of the potentil timeline for pprovl, the tble lists FDA s review dedlines under Tble 1. Oncology Agents Tht Received FDA-Approved Lbeling in 2011 Drug Mnufcturer Indiction Route Approximte Price Abirterone (Zytig) Brentuximb vedotin (Adcetris) Crizotinib (Xlkori) Ipilimumb (Yervoy) Vndetnib (Cprels) Vemurfenib (Zelborf) FDA = Food nd Drug Administrtion. Jnssen Settle Genetics Pfizer Bristol-Myers Squibb AstrZenec Roche Prostte cncer Lymphom Non-smll-cell lung cncer Melnom Thyroid cncer Melnom I.V. I.V. $5,000/mo 9 $120,000/course (mximum of 16 cycles) 11 $10,000/mo 12 $120,000/course (4 doses) 7 $10,000/mo 8 $9,000/mo 10 Tble 2. Selected Drugs nd Biologicl Agents Tht My Receive FDA-Approved Lbeling in , Drug Mnufcturer Indiction Route PDUFA Dte b Tliglucerse lf Protlix Biotherpeutics/ Pfizer Gucher disese Injectble Februry 2012 Apixbn Bristol-Myers Squibb/Pfizer Mrch 2012 Lucinctnt Peginestide Crfilzomib Aclidinium bromide Axitinib Droxidop Vincristine sulfte liposomes injection Vismodegib Linclotide Pixntrone Ridforolimus Discovery Lbortories Affymx Onyx Phrmceuticls Almirll/Forest Lbortories Pfizer Chelse Therpeutics Tlon Therpeutics Roche Ironwood/Forest Lbortories Cell Therpeutics Merck/Arid Phrmceuticls Prevention of stroke nd systemic embolism in ptients with tril fibrilltion Respirtory distress syndrome in premture infnts Anemi secondry to chronic kidney disese Multiple myelom Chronic obstructive pulmonry disese Renl cell crcinom Symptomtic neurogenic orthosttic hypotension Acute lymphocytic leukemi, melnom Bsl cell crcinom Irritble bowel syndrome Non-Hodgkin s lymphom Srcom Inhltion Injectble Injectble Inhltion Injectble Injectble Mrch 2012 Mrch 2012 April 2012 April 2012 April 2012 My 2012 My 2012 My 2012 June 2012 August 2012 August 2012 FDA = Food nd Drug Administrtion. b Prescription Drug User Fee Act (PDUFA) dte extrpolted bsed on new drug ppliction submission dte nd review sttus (i.e., 10 months for stndrd review nd 6 months for priority review). e7

4 the Prescription Drug User Fee Act (PDUFA) nd mnufcturer submission dtes to FDA. The PDUFA dte is the dedline by which FDA must mke decision on drug s ppliction fter defined period of review. This my be decision to pprove or not pprove drug. The current review period is 10 months fter the mnufcturer submits new drug ppliction for stndrd review nd 6 months for priority review. 13 Diffusion of recently pproved drugs. The diffusion of new innovtions, including new medictions tht become widely used, is most commonly observed to follow sigmoid-shped curve. 28 The initil uptke of new drug cn be slow, but s fmilirity nd experience with the drug expnd, use increses rpidly until the drug is widely used nd growth stbilizes. 29 Use of the drug eventully reches plteu nd remins reltively stble unless influenced by specific event, such s new indiction, cost chnge, or sfety concern. Therefore, new drugs my not hve n immedite effect on drug expenditures, but, over time, use of the drug my increse such tht the drug hs importnt implictions for expenditures. The rte t which this occurs cn vry bsed on the perceived risk:benefit rtio of the drug. New nticogulnt nd ntipltelet drugs mrketed from 2009 through 2011 my ffect drug expenditures during The orl nticogulnt dbigtrn received FDA pprovl in October 2010 for stroke prophylxis in ptients with nonvlvulr tril fibrilltion. 30 Similrly, rivroxbn ws pproved in July 2011 for the prevention of deep venous thrombosis nd pulmonry embolism fter knee or hip replcement surgery. Lbeled indictions for rivroxbn were expnded in November 2011 to include prevention of stroke nd embolisms in ptients with nonvlvulr tril fibrilltion. 31 Use of these gents my extend beyond the current FDA-pproved indictions. For exmple, studies exmining the effectiveness of rivroxbn in symptomtic venous thromboembolism 32 nd cute coronry syndrome hve recently been published, 33 nd nother study is underwy compring the effectiveness of rivroxbn nd enoxprin for thromboprophylxis in the cute cre setting. 34 Dbigtrn hs lso been exmined in the tretment of cute venous thromboembolism nd ws found to be noninferior to wrfrin but cused more mjor bleeding. 35 Recently, FDA nnounced tht it is conducting sfety review of postmrketing dt for dbigtrn to determine if the drug increses the risk of serious bleeding more thn ws expected, nd the finl outcome of the FDA nlysis will influence the diffusion of this drug. 36 Becuse the purchse prices of these new orl nticogulnts re higher thn the purchse price of wrfrin, chnges tht increse the use of these new products will increse phrmceuticl expenditures. These new nticogulnts my lso hve role in the inptient setting where chnges in product mix could include low-moleculr-weight heprins. The vilbility of these gents my lso decrese the need for helth cre prctitioners, both in the inptient nd mbultory cre settings, who re responsible for monitoring nd mnging nticogultion therpy. 37 However, there is still considerble hesitncy bout the widespred use of these gents. The inbility to monitor these gents, prticulrly in ptients t risk for bleeding, is concern, s is the lck of n ntidote when overdoses occur or when periprocedurl reversl of nticogultion is necessry. 38 Emerging phrmcogenomic dt nd guidelines my lso led to better nd sfer methods for use of wr frin. 39,40 As result, the uptke of new orl nticogulnts my be slow, nd significnt new expenditures re not likely in Significnt chnges in the use of ntipltelet gents re lso possible. Prsugrel nd ticgrelor were pproved in July of 2009 nd 2011, respectively. A key study tht involved over 18,000 ptients with cute coronry syndrome found sttisticlly significnt reduction in the combined endpoint of myocrdil infrction, stroke, nd deth from vsculr cuses (hzrd rtio [HR] = 0.48; 95% confidence intervl [CI], ) in ptients receiving ticgrelor versus clopidogrel. 41 Another study compring prsugrel with clopidogrel in individuls with cute coronry syndrome reveled tht subjects receiving prsugrel hd similr reduction in the combined endpoint of deth from crdiovsculr cuses, nonftl myocrdil infrction, nd nonftl stroke (HR, 0.81; 95% CI, ). 42 However, both ticgrelor nd prsugrel hve higher rtes of bleeding thn does clopidogrel. Further, prsugrel is contrindicted in ptients with history of trnsient ischemic ttck or stroke, nd ticgrelor requires twice-dily dministrtion; these restrictions hve somewht limited the use of these gents. 43 Interestingly, the 2011 Europen Society of Crdiology s guidelines for cute coronry syndrome mngement fvor ticgrelor nd prsugrel over clopidogrel. 44 However, recent guidelines from the Americn Hert Assocition do not drw this much distinction between the products. 45 Two issues dd further complexity to ntipltelet use. First, generic version of clopidogrel hs been pproved by FDA nd will likely become vilble in Generic clopidogrel will be significntly less expensive thn the brnd-nme products in this clss. Second, recent dt suggest tht the use of genotyping cn identify ptients who re likely to respond or not respond to clopidogrel, nd guidelines to provide informtion on the clinicl use of genotype test results in ptients e8

5 requiring ntipltelet therpy were recently published. 46 For ptients deemed likely nonresponders, prsugrel or ticgrelor, which do not shre the sme metbolic pthwy s clopidogrel, cn be prescribed, nd ptients considered likely to respond cn be given generic clopidogrel. This strtegy could significntly reduce drug costs while improving crdiovsculr outcomes nd reducing bleeding events. It is too erly to tell how ntipltelet prescription expenditures in 2011 will be ffected by these new dt, but this is certinly drug clss to monitor. Oncology is nother re where diffusion of new gents my hve importnt implictions for 2012 drug expenditures. In oncology therpeutics, it is importnt to be vigilnt in monitoring these gents, s prctice chnges rpidly fter new evidence emerges. Antineoplstic gents re purposefully nd strtegiclly developed so tht their diffusion occurs in cler phses. Initil mrketing pprovls usully begin within the metsttic or lst-line settings for limited number of tumor sites. As prctitioners gin experience using drug nd revenue is generted through sles, the drug will usully be studied in the first-line or djuvnt settings nd in different tumor types. Thus, institutions must be mindful of new evidence nd new lbeling chnges fter n ntineoplstic gent is initilly pproved for mrketing. Pemetrexed is one exmple of this phenomenon; its clinicl utility hs migrted from the lst-line setting of non-smll-cell lung cncer into the first-line setting. 47 Follow-up regultory decisions fter drug pprovl through n ccelerted pthwy my lso influence diffusion. For exmple, bevcizumb is pproved for wide vriety of tumor types, including colon, kidney, nd non-smll-cell lung cncer. In 2008, it received ccelerted pprovl from FDA for the tretment of metsttic brest cncer (in combintion with other chemotherpy) bsed on preliminry evidence suggesting benefit in progression-free survivl. 48 However, follow-up confirmtory trils showed cliniclly less meningful progression-free survivl benefit nd did not demonstrte n dvntge in qulity of life or overll survivl with bevcizumb. 49,50 In July 2010, the FDA Oncology Drug Advisory Committee (ODAC) voted to withdrw the brest cncer indiction for bevcizumb. Subsequently, in December 2010, FDA notified the mnufcturer bout the proposl to withdrw bevcizumb s brest cncer indiction nd the opportunity of hering on this proposl. 51 At the hering, held in June 2011, the mnufcturer stted its cse for keeping bevcizumb s brest cncer indiction. Ultimtely, bevcizumb s ccelerted pprovl for brest cncer ws officilly revoked on November 18, ,53 As depicted in Figure 1, the expenditures for bevcizumb begn to decline round the time of the July 2010 ODAC decision nd continued to decline throughout Even though significnt decrese in monthly expenditures ws observed, bevcizumb remins Figure 1. Bevcizumb expenditures, , nd influence of Food nd Drug Administrtion (FDA) ctions. In July 2010 (rrow 1), the FDA Oncology Drug Advisory Committee voted to rescind bevcizumb s brest cncer indiction. In December 2010 (rrow 2), FDA notified Genentech bout its proposl to rescind the brest cncer indiction; this ws followed by Genentech requesting hering. In June 2011 (rrow 3), the hering ws held, nd in November 2011 (rrow 4, no expenditure dt vilble), the brest cncer indiction ws officilly revoked. Expenditure dt from reference U.S. Sles ($ Millions) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Qurter nd Yer e9

6 leding expenditure for hospitls nd clinics becuse of its use in other types of cncers. It is importnt to note tht bevcizumb is still considered n option for metsttic brest cncer bsed on clinicl prctice guidelines nd my still be used off lbel for this purpose. 55 Generic drugs. The growing vilbility nd subsequent rpid use of generic drugs continue to hve substntil moderting influence on prescription drug expenditures. At the end of 2010, generics ccounted for 78% of ll retil prescriptions dispensed. Three key gents tht hve recently lost ptent protection nd two key drugs tht re expected to lose ptent protection in 2012 re discussed below. In ddition to the ltter two discussed gents, significnt number of blockbuster drugs (nnul sles of more thn $1 billion) re expected to lose ptent protection in A more complete list of key products tht my fce generic competition in the coming yer bsed on IMS Helth dt nd other sources is provided in Tble 3. 13,56 Recently pproved generic drugs. Atorvsttin, key new generic drug tht entered the mrket in lte 2011, my led to unprecedented svings. The brnd-nme version chieved sles of $7.3 billion in the previous yer. 54,57 The relese of generic version of torvsttin ws nnounced on November 30, 2011; soon fterwrd, t lest three generic mnufcturers entered the mrket. 58 Rnbxy nd Tev reched n greement in which both mnufcturers will offer generic torvsttin during the 180-dy exclusivity period. Pfizer, the mnufcturer of brnd-nme torvsttin (Lipitor), hs implemented severl strtegies to mintin mrket shre. The compny hs introduced copyment-reduction pln tht will reimburse ptients ll but $4 of their copyment for the drug, up to $600 nnul limit. 59 The compny reched n greement with Wtson to sell the Pfizer product without the Lipitor brnding nd hs lso negotited dels with phrmcy benefit mnger, mnged cre orgniztion, nd helth insurnce provider which my llow the Pfizer product to mintin s much s 40% of the mix of the torvsttin mrket. 57 These moves led to projections of sles for the Rnbxy product of $300 million before Mrch A recent nlysis estimted tht generic torvsttin will hve 44% of the sttin mrket three yers fter mrket entry. 60 The finncil effect of generic enoxprin ws explored in previous nnul expenditure forecst. 61 Currently, both Amphstr nd Sndoz hve FDA pprovl to mrket this product, s does Snofi-Aventis, the mnufcturer of brnd-nme enoxprin (Lovenox). 62 Through September 2011, generic formultions of enoxprin ccounted for $165 million worth of expenditures in nonfederl hospitls or pproximtely one qurter of the totl ex- Tble 3. Selected Potentil Ptent Expirtions for 2011 or , Drug Mnufcturer Indiction Amlodipine torvsttin (Cduet) Atorvsttin (Lipitor) Clopidogrel (Plvix) Escitloprm (Lexpro) Exemestne (Aromsin) Fenofibrte (TriCor) Levlbuterol (Xopenex) Lidocine topicl ptch (Lidoderm) Montelukst (Singulir) Nevirpine (Virmune) Pioglitzone (Actos) Propfenone extended-relese formultion (Rythmol SR) Quetipine (Seroquel) Sildenfil (Vigr, Revtio) Tzrotene (Tzorc) Vlsrtn (Diovn) Vlsrtn hydrochlorothizide (Diovn HCT) Pfizer Pfizer Bristol-Myers Squibb Forest Lbortories Pfizer Abbott Sunovion Endo Merck Boehringer Ingelheim Tked GlxoSmithKline AstrZenec Pfizer Allergn Novrtis Novrtis Hypertension, dyslipidemi Dyslipidemi Acute coronry syndrome Depression Brest cncer Dyslipidemi Asthm Pin Asthm, llergies HIV infection Dibetes Arrhythmis Schizophreni, bipolr disorder Erectile dysfunction, pulmonry hypertension Psorisis, cne Hypertension, hert filure Hypertension 2010 Totl Sles ($ Thousnds) 371,906 7,251, ,699 6,138,308 2,814, ,267 1,346, ,345 1,153,404 4,076, ,425 3,539, ,014 5,175,899 1,951, ,288 1,894,396 Ptent expirtions listed were verified from multiple sources t the time of publiction. Drug ptent expirtions re subject to rpid chnge, nd ptent expirtion does not gurntee generic drug vilbility. e10

7 penditures for this gent in these hospitls. Enoxprin expenditure dt from nonfederl hospitls for the first nine months of 2010 were compred with those during the sme period in Expenditures for the brnd-nme product decresed from $801 million to $491 million ( 38.8% decrese), while expenditures for generic enoxprin incresed from $16.5 million to $165 million ( 900% increse). This led to 19.8% decrese in totl expenditures for enoxprin, from $818 million to $656 million. A totl expenditure reduction of $162 million during the nine-month spn ws relized. A generic version of Levquin (Ortho-McNeil-Jnssen) (levofloxcin) (2010 expenditures of $1.5 billion) ws pproved on June 21, Twelve mnufcturers received FDA pprovl to mrket the generic version t tht time, fter Tev nd Sndoz entered the mrket. With the 180-dy exclusivity period for Tev nd Sndoz expiring in lte 2011 nd numerous dditionl competitors witing to relese their products, competition should further reduce expenditures on this gent by incresing the use of generics in the fluoroquinolone clss nd decresing purchse price. Potentil future pprovls. As mny s 11 dditionl blockbuster drugs re projected to lose ptent exclusivity in 2012 (Tble 3). 14 Among these gents re clopidogrel nd quetipine. Six mnufcturers hve lredy received tenttive pprovl to mnufcture generic versions of clopidogrel, including Apotex, the mnufcturer tht ttempted to relese generic version of clopidogrel in 2006, while five mnufcturers hve received tenttive pprovl for quetipine. 64 Although the mjority of expenditures for these two gents occur in the community setting, these gents were responsible for over $227 million in expenses for nonfederl hospitls in the first nine months of Avilbility of numerous generic competitors could result in significnt reductions in expenditures in ech of these settings. Py-for-dely legisltion. Legisltion tht seeks to end py-fordely tctics my lso influence future generic drug expenditures. Mnufcturers of brnd-nme drugs hve reched settlements with generic drug mnufcturers to dely the relese of their products to resolve ptent lwsuits. 65 Legisltion brring this ction ws pssed in the U.S. House of Representtives in 2010 but hs not been pssed in the U.S. Sente. The Congressionl Budget Office estimtes tht blocking these tctics could led to svings for the federl government of pproximtely $3 billion over 10-yer period. 66 Should this legisltion be dopted, dditionl svings would be relized by other helth cre pyers, s generic products would enter the mrket erlier. Drug shortges. In 2011, drug shortges continued to be problem in the U.S. helth cre system. At the time this rticle ws prepred, the number of drugs in short supply ws expected to rech record levels, outpcing the number of shortges seen in While there re numerous issues relted to the economics of drug shortges, this discussion is limited to how drug shortges my influence drug costs nd expenditures (i.e., the economic effect of shortges, not the root cuses of them) for hospitls nd helth systems. Lst yer s forecst described some mechnisms by which drug shortges my increse expenditures. To summrize, expenditures my increse for hospitls due to personnel mngement nd worklod costs, increses in cquisition prices, nd the use of more-expensive lterntive therpies. 61 It is chllenging to comprehensively quntify the influence of drug shortges on hospitl drug expenditures, but emerging evidence suggests tht the cost is high. For exmple, recent survey of phrmcy directors ssessed the effect of drug shortges on U.S. helth systems nd found tht drug shortges cost helth systems pproximtely $216 million nnully in lbor due to time spent mnging these shortges. 68 The second mechnism by which drug shortges my increse helthsystem expenditures is price infltion. One driver of price infltion is the development of prllel, unofficil, gry mrket of drugs in short supply. A recent nlysis found tht over two-week period, 42 hospitls received over 1700 solicittions by 18 gry-mrket delers, resulting in n verge mrkup of 650% over the trditionl purchsing chnnel. 67 It is importnt to note tht there re concerns relted to drug storge, hndling, integrity, nd pedigree from gry-mrket distributers. Thus, not ll hospitls cquire drugs from these sources. Currently, n executive order issued by President Obm seeks to investigte instnces of price gouging of drugs on short supply by this prllel mrket. 69 Using lterntive, more-expensive drugs over those in short supply cn lso increse drug expenditures, nd the ongoing shortge of injectble leucovorin illustrtes how the use of lterntive drugs during drug shortges cn increse drug expenditures. Leucovorin, common nd integrl component of vrious fluorourcilbsed chemotherpy regimens used in the tretment of colon nd rectl cncers, is lso used in conjunction with high-dose methotrexte. Due to mnufcturing delys, ntionl shortge of injectble leucovorin ws first reported in November 2008 nd resolved in November Another shortge of injectble leucovorin occurred in June 2010, nd the drug is currently still considered to be in short supply (Fox ER, University of Uth Drug Informtion Service, personl communiction, 2011 Nov 29). 70,71 e11

8 Similr to mny shortges, when injectble leucovorin becomes unvilble, there is no consensus on the lterntive drug tht should be used. Substituting orl leucovorin or injectble levoleucovorin for injectble leucovorin re two options tht hve been recommended. 72,73 Injectble levoleucovorin contins only the ctive isomer of leucovorin. It ws first pproved in 2008 for high-dose methotrexte rescue nd in 2011 for the tretment of colorectl cncer in combintion with fluorourcil-bsed chemotherpy. However, the price of levoleucovorin is pproximtely 60 times higher thn tht of injectble rcemic leucovorin. 74 A shift towrd the use of the more-expensive product my result in lrge increse in expenditures. Expenditures for leucovorin (orl nd injectble) nd levoleucovorin over four-yer period re depicted in Figure 2. Clinic expenditures for injectble leucovorin decresed slightly nd expenditures for levoleucovorin incresed strting in November 2008 when the injectble leucovorin shortge ws first reported. Similrly, levoleucovorin expenditures within nonfederl hospitls incresed. In November 2009, when this initil shortge bted, expenditures returned to preshortge levels. Subsequently, levoleucovorin expenditures gin incresed beginning in June 2010, fter second shortge of injectble leucovorin. Levoleucovorin ws briefly in short supply beginning in Jnury 2011, but the shortge resolved in My 2011 (Fox ER, University of Uth Drug Informtion Service, personl communiction, 2011 Nov 29). This cse study demonstrtes tht drug shortges hve the bility to drive n increse in drug expenditures by forcing utiliztion of lterntive therpies. It will be interesting to continue to monitor levoleucovorin expenditures nd to describe future utiliztion ptterns fter n dequte supply of leucovorin is finlly chieved. A proportion of medicl oncologists my continue to prescribe levoleucovorin insted of leucovorin, now tht they hve experience utilizing the drug nd especilly if reimbursement for the drug remins dequte. Biosimilrs. As described in lst yer s forecst, biosimilrs (i.e., drugs tht re copies of biologicl gents nd re pproved through n bbrevited pthwy) hve the potentil to decrese hospitl nd helth-system drug expenditures. 61 However, the effect of these products on drug expenditures in 2012 remins uncler. FDA is expected to issue guidnce regrding biosimilrs, nd stkeholders continue to wit officil FDA ction on this mtter. While it is possible tht some biosimilrs could rech Figure 2. Expenditures for leucovorin nd levoleucovorin in clinics nd nonfederl hospitls, Arrow 1 indictes when the initil shortge of injectble leucovorin ws reported, nd rrow 2 indictes when tht shortge ws resolved. Arrow 3 indictes the onset of the second shortge of injectble leucovorin (currently unresolved). Arrow 4 indictes the onset of the levoleucovorin shortge, nd rrow 5 indictes the resolution of tht shortge. Expenditure dt from reference ,000 4 U.S. Sles ($ Thousnds) 10,000 8,000 6,000 4,000 2, Jn 08 Feb 08 Mr 08 Apr 08 My 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jn 09 Feb 09 Mr 09 Apr 09 My 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jn 10 Feb 10 Mr 10 Apr 10 My 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jn 11 Feb 11 Mr 11 Apr 11 My 11 Jun 11 Jul 11 Aug 11 Sep 11 Month nd Yer Injectble leucovorin, clinics Injectble leucovorin, nonfederl hospitls Levoleucovorin, clinics Levoleucovorin, nonfederl hospitls leucovorin, clinics leucovorin, nonfederl hospitls e12

9 the U.S. mrket in 2012, the uptke by prctitioners nd the diffusion of these gents remin uncertin. The uncertinty in uptke nd diffusion of biosimilrs is bsed on number of fctors, one of the most significnt being unfmilirity on the prt of prctitioners with use of biosimilrs. A recent survey by the Ntionl Comprehensive Cncer Network observed tht 39% of the 129 physicins surveyed were not t ll fmilir with the concept of biosimilrs, nd 21% responded tht they require more informtion on biosimilrs to mke decision regrding whether they would prescribe the products. 75 Furthermore, regultions must blnce the rigor of ensuring tht biosimilrs re sfe nd effective (i.e., through clinicl trils nd phrmcovigilnce progrms) with the needs of ptients nd prctitioners (lower-cost products nd ccess to medictions). 76 More meningful projections of the effect of biosimilrs on expenditures cn be mde once it is known how these vrious perspectives will be blnced in future regultions. Prescription drug expenditure trends Our nlysis of prescription drug expenditures trends is bsed on dt from the IMS Helth Ntionl Sles Perspectives (NSP) dtbse. 54 NSP is projected udit tht describes 100% of the sles in every mjor clss of trde nd distribution chnnel for prescription phrmceuticls, nonprescription products, nd select self-dministered dignostic products in the United Sttes, mesuring both unit volume nd invoice dollrs. The NSP smple is derived from over 1.5 billion nnul trnsctions from over 100 phrmceuticl mnufcturers nd more thn 700 distribution centers. In 2010, NSP trcked sles of 5,859 nonfederl hospitls, 131,491 clinics, 59,202 retil phrmcies, 391 mil-service phrmcies, 4,842 home helth fcilities, nd 2,840 long-term-cre outlets, in ddition to thousnds of other entities. When exmining drug expenditures, we report totl dollrs s well s growth, the ltter being the percentge chnge (increse or decrese) in expenditures from one yer to the next. We divide fctors tht drive chnges in phrmceuticl expenditures into three ctegories: (1) new products, (2) price infltion, nd (3) volume nd mix. The new products ctegory represents growth in expenditures ttributble to products tht were not on the mrket in the comprison time period (i.e., previous yer) primrily newly pproved nd mrketed gents. The growth in prescription drug expenditures ttributble to price infltion refers to chnges in the unit cost of drugs tht were previously on the mrket in the comprison time period (i.e., the chnge in price from one yer to the next). Lst, the volume nd mix ctegory combines chnges in volume of utiliztion of existing products (i.e., chnges in the number of users, number of dys of therpy, or number of doses of therpy per dy) nd chnges in utiliztion ptterns (i.e., from one product to nother). An exmple of mix is when prescribing moves from brnd to generic products, resulting in reduced expenditures. Overll trends in prescription expenditures. Prescription sles in the United Sttes for 2010 totled $307.5 billion, 2.7% chnge from Totl prescription sles in the United Sttes for the yer ending September 2011 were $314.3 billion, 3.3% increse from the previous 12 months. This increse resulted from combintion of decreses in the overll volume nd mix ( 5.6%) nd offsetting increses in prices (6.0%) nd incresed expenditures relted to the vilbility of new products (2.9%). The decrese in expenditures ttributble to volume nd mix reflects the continued trend of incresed use of generics over brnd products. The $314.3 billion in prescription drug spending tht occurred from September 1, 2010, to September 30, 2011, occurred cross vrious sectors of helth cre, s shown in Tble 4. The retil phrmcy sector ccounted for the lrgest portion of prescription expenditures ($170.4 billion, or 54.2% of totl expenditures), followed by mil-order phrmcy ($53.4 billion, 17.0%) nd clinics ($37.8 billion, 12.0%). Other sectors, including nonfederl hospitls ($27.9 billion, 8.9%), ech ccounted for less thn 10% of totl expenditures. The lrgest growth in prescription expenditures on percentge bsis occurred in the stff-model HMO sector (35.2%, representing expenditures by stff-model mnged cre orgniztions tht purchse nd dispense medictions directly to beneficiries). While this reltive chnge is lrge, this sector ccounts for less thn 1% of totl prescription drug expenditures, nd the bsolute difference from yer to yer is smll. Among the lrger sectors, overll growth in prescription expenditures ws highest in the mil-order phrmcy sector, which grew by 5.0%, compred to the clinics (4.7% growth), retil phrmcy (2.4% growth), nd nonfederl hospitls (0.8% growth). In the mil-order nd retil sectors, growth ws primrily result of price infltion (where 7.7% nd 7.5%, respectively, of growth in expenditures ws due to price infltion). In the clinics nd nonfederl hospitl sector, new products ccounted for greter percentge of growth (5.4% nd 3.2%, respectively). Volume nd mix hd negtive effect on growth ( 7.8%, 4.5%, nd 5.0% for retil, mil-order, nd nonfederl hospitls, respectively), except in clinics (0.6%). Figure 3 shows the trends in growth (nnul increse) of prescription drug expenditures in the United Sttes from 1998 to Overll growth in prescription drug e13

10 Tble 4. Prescription Drug Expenditures nd Growth by Sector 54 Sector Retil phrmcies Mil-order phrmcies Clinics Nonfederl hospitls Long-term cre Federl fcilities Home cre Stff-model HMO Other Totl Expenditures Percent of Totl ($ Millions) b Expenditures 170,416 53,369 37,756 27,890 14,990 4,153 2,284 2, ,341 Growth (%) c Retil phrmcies include licensed retil phrmcies including stndlone chin nd independent stores, s well s mss merchndisers nd food nd convenience stores with phrmcy. Mil-order phrmcies include licensed mil service phrmcies, including both privte-sector nd federl fcilities. Clinics include physicin offices nd outptient clinics, including generl, fmily medicine, nd specilty clinics covering oncology, nephrology, dilysis, fmily plnning, orthopedics, nd urgent cre centers. Nonfederl hospitls include ll nonfederlly-owned fcilities licensed s hospitls, including inptient tretment nd rehbilittion fcilities, in ddition to generl nd specilty cute cre institutions. Long-term cre includes nursing homes nd residentil cre fcilities, including Deprtment of Veterns Affirs (VA) institutions. Federl fcilities include VA, Public Helth Service, nd other federl hospitls; VA clinics nd phrmcies; nd U.S. ships t se. Home cre includes licensed home helth orgniztions nd visiting nurse entities. Stff-model HMO (helth mintennce orgniztion) includes closed-pnel HMO phrmcies nd hospitls, union clinics nd phrmcies, nd workers compenstion clinics. Other covers vriety of otherwise unclssified government ccounts, s well s entities such s jils, prisons, nd veterinry hospitls nd clinics. b Expenditures for September 1, 2010, through September 30, c Percent increse in expenditures compred with previous 12 months Figure 3. Annul growth in drug expenditures, Annul % Increse in Expenditures % 19.7% 14.8% 24.6% 15.3% 4.9% 26.8% 23.0% 18.1% 21.4% 9.7% 22.5% 12.4% 12.6% 6.2% 13.5% 12.8% 9.3% 20.9% 8.7% 5.9% 6.4% 5.9% 3.8% 9.9% 4.0% 2.1% 5.1% 6.0% 5.4% 5.2% 2.7% 4.1% Yer % % 1.5% 1.8% 1.0% 0.3% YTD Sep Totl expenditures Nonfederl hospitls Clinics e14

11 expenditures hs generlly declined over the pst 15 yers, from high of 19.7% between 1998 nd 1999 to low of 1.8% between 2007 nd Between 2010 nd 2011, totl prescription expenditures grew 2.7%. However, for the nine months ending September 2011, totl prescription expenditures grew 4.1% compred with the sme period in Also shown in Figure 3 re trends in the growth of expenditures for clinicdministered drugs nd for drugs used in nonfederl hospitls. In most yers, growth in prescription drug expenditures for clinic-dministered drugs outpced growth in totl expenditures, wheres growth in nonfederl hospitls hs been less thn growth in totl drug expenditures. Tble 5 shows the top 15 drugs bsed on expenditures cross ll sectors. As expected, most of the drugs on the list re widely used in the retil sector nd re brnd-nme products. As discussed bove, torvsttin, which recently becme vilble in generic version, ws the top drug in both 2010 nd for the first nine months of Clopidogrel, which is lso expected to be vilble in generic version soon, ws rnked second for the first nine months of 2011 (third in 2010). Trends in prescription drug expenditures for clinics. The trends in prescription drug expenditures for clinic-dministered medictions in the United Sttes from 1998 to 2011 re presented in Figure 3. Growth in prescription drug expenditures in clinics hs been errtic but hs generlly declined over the pst 15 yers, from high of 26.3% between 1998 nd 1999 to low of 1.0% from 2007 to Since 2008, growth hs leveled off between 5.0% nd 6.0%. Prescription drug expenditures for clinic-dministered medictions incresed by 6.0% from 2009 ($34.7 billion) to 2010 ($36.7 billion), s shown in Tble 6. Clinic drug expenditures in 2011 through September (9 months) totled ($28.6 billion), 5.4% chnge compred with the sme months in For the 12-month period tht ended September 30, 2010, expenditure growth from new products ws 5.4% nd volume nd mix in clinics incresed 0.6%, but price infltion decresed ( 1.3%). The top 15 products bsed on expenditures in 2011 (nine months through September 30, 2011) in the clinic setting re listed in Tble 6. In 2010 the top three clinic-dministered drugs in terms of expenditures were epoetin lf, bevcizumb, nd infliximb. Among the top 15, the drug with the biggest chnge in expenditures from 2009 to 2010 ws oxlipltin, for which expenditures decresed 34.4%. This chnge ws lrgely due to cheper generic versions of the product becoming vilble tht yer. Drbepoetin lf, vricell vccine, nd docetxel lso hd decresed expenditures in 2010 compred with 2009, while expenditures for pneumococcl vccine nd rnibizumb incresed by 100% nd 30.8%, respectively. For the ninemonth period ending September 30, 2011, the top three clinic drugs in terms of expenditures were epoetin lf, pegfilgrstim, nd infliximb. Agin, the drug with the biggest Tble 5. Top 15 Drug Expenditures Overll in Drug 2010 Expenditures ($ Thousnds) Percent Chnge from Expenditures Percent Chnge ($ Thousnds) from 2010 b Atorvsttin (Lipitor) 7,251, ,011, Clopidogrel (Plvix) 6,138, ,140, Esomeprzole (Nexium) 6,359, ,683, Quetipine (Seroquel) 5,175, ,243, Aripiprzole (Abilify) 4,555, ,865, Fluticsone, slmeterol (Advir) 4,971, ,698, Montelukst (Singulir) 4,076, ,414, Rosuvsttin (Crestor) 3,762, ,274, Erythropoietin lf (Epogen, Procrit) 4,790, ,031, Olnzpine (Zyprex, Zydis) 3,304, ,880, Pioglitzone (Actos) 3,539, ,753, Duloxetine (Cymblt) 3,156, ,676, Infliximb (Remicde) 3,302, ,629, Insulin glrgine (Lntus) 3,044, ,618, Etnercept (Enbrel) 3,291, ,605, All others 240,778, ,784, Totl 307,500, ,311, Bsed on dt collected between Jnury 1 nd September 30, b Percent chnge compred with sme period in 2010 (dt not shown in tble). e15

12 chnge in expenditures in 2011 ws oxlipltin, with 58.7% increse in expenditures, followed by rnibizumb (26.6% increse) nd bortezomib (17.8% increse). Expenditures for docetxel decresed 17.3% compred with the sme period in 2010, while expenditures decresed 16.8% for bevcizumb, 16.3% for epoetin lf, nd 13.3% for drbepoetin lf. The FDA mndte in 2010 tht mnufcturers implement risk evlution nd mitigtion strtegy (REMS) for erythropoiesisstimulting gent use in ptients with cncer my hve contributed to the reduction in expenditures for epoetin lf nd drbepoetin lf, s could hve chnges in reimbursement procedures from the Centers for Medicre nd Medicid Services (CMS). As discussed previously, oncology drugs ccount for significnt proportion of expenditures in the clinic setting. 61,77 The top 20 clinicdministered ntineoplstic gents re highlighted in Tble 7. It ppers tht growth in ntineoplstic drug expenditures hs moderted slightly in the pst yer. From 2008 to 2009, expenditures in this clss grew 9.5% to $11.8 billion; however, from 2009 to 2010, clinic-dministered ntineoplstic drugs grew just 2.4% (to $12.1 billion). In the first nine months of 2011, expenditures for ntineoplstics grew 3.2% compred with the sme period in Bevcizumb, rituximb, nd trstuzumb represent the top 3 oncology drugs bsed on expenditures for clinic-dministered drugs in 2011, just s they did in Trends in prescription drug expenditures for hospitls. Figure 3 shows the trend in prescription drug expenditures for nonfederl hospitls in the United Sttes from 1998 to Growth in prescription drug expenditures in hospitls hs declined significntly since its pek of 26.8% in ; since , growth hs verged 2.0%. Prescription drug expenditures for hospitls incresed by 1.5% from 2009 ($27.7 billion) to 2010 ($28.1 billion), s shown in Tble 8. Hospitl drug expenditures in 2011 through September totled $21.0 billion, 0.3% chnge compred with the sme months in This is the lowest level of growth in the pst 15 yers. For the 12-month period tht ended September 30, 2010, prescription expenditure growth in hospitls ws 0.8% nd cn be ttributed to new products (3.2%), price infltion (2.6%), nd volume nd mix ( 5.0%). The top 15 products bsed on expenditures during the first nine months of 2011 in the hospitl setting re listed in Tble 8. In 2010, the top 3 drugs in terms of expenditures were immune globulin, enoxprin, nd infliximb. From 2009 to 2010, the drugs with the lrgest increse in expenditures were dptomycin (15.2%), bivlirudin (14.3%), nd immune globulin (10.8%), wheres oxlipltin ( 19.5%) nd pipercillin tzobctm ( 13.0%) hd the biggest decreses in expenditures. For the nine-month period ending Tble 6. Top 15 Drug Expenditures in Clinics in Drug 2010 Expenditures ($ Thousnds) Percent Chnge from Expenditures Percent Chnge ($ Thousnds) from 2010 b Epoetin lf (Procrit, Epogen) 3,733, ,373, Pegfilgrstim (Neulst) 2,164, ,789, Infliximb (Remicde) 2,184, ,719, Bevcizumb (Avstin) 2,455, ,567, Rituximb (Rituxn) 1,969, ,553, Rnibizumb (Lucentis) 1,291, ,173, Trstuzumb (Herceptin) 1,243, , Oxlipltin (Eloxtin) 665, , Pemetrexed (Alimt) 762, , Zoledronic cid (Zomet, Reclst) 836, , Docetxel (Txotere) 904, , Vricell vccine (Vrivx) 700, , Pneumococcl vccine (Prevnr, Prevnr 13) 654, , Drbepoetin lf (Arnesp) 732, , Bortezomib (Velcde) 447, , All others 15,989, ,095, Totl 36,736, ,653, Bsed on dt collected between Jnury 1 nd September 30, b Percent chnge compred with sme period in 2010 (dt not shown in tble). e16