U.S. prescription drug sales hit $300 bln in 2009

This article provides benchmarks for drug spend 2008/2009. Be aware that you can find different benchmarks depending on the source. For example, the IMS figures come from sterilized ambulatory prescription data, while AARP and the National Association of Chain Drug Stores (NACDS) often provide different information from other sources. It is a good practice to ask for the source of data before quoting the results.



(Reuters) - U.S. prescription drug sales climbed by 5.1 percent to $300.3 billion in 2009, easily outpacing the 1.8 percent growth rate seen in 2008, according to data collected by IMS Health.

HEALTH

While the growth rate was far stronger than that seen the previous two years, it still represents historically low levels, said IMS, a leading provider of prescription drug data.

Over the past 50 years, the U.S. prescription growth rate dipped below 5 percent only three times, including in 2007 and 2008.

"Despite the severity of the economic environment, the demand for prescription pharmaceuticals remained strong," Murray Aitken, senior vice president of IMS Healthcare Insight, said in an interview.

"Patients continued their therapies, perhaps more than many had expected, and as a result we saw an increase in spending, taking the market to $300 billion," Aitken added.

Helping to fuel the growth was a 7.5 percent rise in demand for specialty pharmaceuticals used to treat complex, chronic conditions that now make up 21 percent of U.S. market value.

Sales of targeted biotechnology medicines, such as Roche's cancer drugs Avastin and Herceptin, grew by 9 percent in 2009.

Prescriptions dispensed through retail channels, such as pharmacies, through mail-order and at long-term care facilities, grew 2.1 percent - twice as fast as in 2008 - to 3.9 billion prescriptions.

Tempering the total dollars spent on U.S. prescriptions was a rise in the use of cheaper generic medicines, which in 2009 accounted for 75 percent of all dispensed prescriptions, up from 57 percent five years earlier. Despite their relatively inexpensive cost, generics still accounted for $74 billion in 2009 sales.

The total number of generic prescriptions dispensed in the United States increased 5.9 percent in 2009, while those for branded drugs fell by 7.6 percent

The shift toward generics is likely to accelerate by 2012, when several major products, including the world's two biggest-selling medicines - the cholesterol fighter Lipitor and the blood clot preventer Plavix - face competition from cheap generics. Lipitor is sold by Pfizer Inc and Plavix by Bristol-Myers Squibb Co and Sanofi-Aventis.

"We still see that when a product goes generic almost all of the prescriptions, 90 percent or so, are dispensed in their generic form," Aitken said.

Antipsychotics remained the top-selling class of medicines in the United States with $14.6 billion in sales, about equal to 2008 revenue.

Acid reflux drugs, such as AstraZeneca's Nexium, were the second-biggest therapeutic class by sales at $13.6 billion, with prescriptions up 5 percent.

Lipid regulators, which include cholesterol and triglyceride lowering drugs, were still the largest class by prescriptions, growing 5 percent to 212 million prescriptions dispensed. But U.S. sales declined 10 percent to $13.6 billion as the majority of cholesterol fighters are now available as generics, pushing the class to third in sales.

Antidepressants ranked fourth in 2009, growing 3 percent to $9.9 billion, IMS said.

"The thing that surprised us compared with what we might have expected a year ago was how the overall demand held up during a year that in many other parts of the economy we saw declines in demand," Aitken said.

"The higher growth than the prior year we think is notable and underscores the resilience of pharmacotherapy in today's healthcare equation."



COMMENTS

Apr 01, 2010 2:54pm EDT

Consumers of health and life insurance should understand that prescriptions purchased at the drugstore could harm your chances of getting insurance coverage.

According to BusinessWeek, an untold number of people have been rejected for medical coverage for a reason they never could have guessed: Insurance companies are using huge, commercially available prescription databases to screen out applicants based on their drug purchases.

https://www.annualmedicalreport.com/prescription-analytics-corporate-databases-track-whats-in-your-medicine-cabinet/

Health experts, like Doctor Kate Atkinson of Amherst, worry that insurance companies make incorrect assumptions by analyzing prescription records, because many drugs have multiple uses. Dr. Atkinson told the Washington Post, “I had a patient on Amitriptyline for migraines and they were denied life insurance because it’s also an antidepressant. I had to explain it wasn’t being used for depression.” Another patient was on Prozac — not for depression, but for menopausal hot flashes. “I wrote an appeal letter, and they still wouldn’t give it to her.”

“When an insurer makes an online query about an applicant, Ingenix or Milliman’s servers scour the data and within minutes or less return reports to a central server at the company. The server aggregates the information going back as far as five years, including the drugs and dosages prescribed, dates filled and refilled, the therapeutic class and the name and address of the prescribing doctor. Then comes the analysis. One software tool provides insurers a “pharmacy risk score,” or a number that represents an “expected risk” for a group of people, such as 30- to 35-year-old women who have taken prescription drugs…Higher scores imply higher medical costs.”

We commonly receive questions about average pricing contract language. The following is a response to the usual contract language.

PBM contract language often refers to the use of average, rather than per-claim, pricing for drugs. The average pricing issue does not preclude the fact that there are other pressing and relevant issues that need to be addressed from both the contract and audit/accounts payable screening of invoices pre-payment. These issues are the plan/purchaser’s (“plan”) responsibility, and are not open to the discretion of the PBM, but rather to how the plan/purchaser requires implementation of the business rules for claim adjudication. The following summarizes those issues that are not resolved regarding the average pricing language.

Ø Average pricing does not address contract requirements for –

o Situations where the AWP is inflated above Medicaid, above manufacturer published AWP, and above the reference database published AWP – all of these lead to both individual and average higher costs while discount guarantees are met.

o Situations where the generic MAC price is inflated above the FUL and the Medicaid MAC. This makes the average a larger number, but allows for the discount guarantees to be met.

o Drugs coded as brand that should be generic, generic drugs that should be on the MAC, multisource that don’t exist in benefits – these all implicate generic pricing as they are incorrectly priced so they affect all generic average prices.

o Situations where the U&C (e.g., $4 programs) is inflated above pharmacy published prices. This results in the plan paying more than a cash paying patient and improves the average making it easier to meet the AWP guarantee.

Ø Formulary coding, quantity limits, early refills, and COB for Medicare are responsibilities assigned to the plan. The amendment for average pricing does not implicate these benefit issues. The responsibility for benefit definition and what the PBM should use as business rules for claim adjudication are also assigned to the plan. As a result, the PBM cannot modify or apply rules that are other than what the plan requires without plan approval.

Ø Invalid claim administration where claims include invalid identifiers for doctors, pharmacies, drugs, and expired drugs

Ø Retrospective audits do not remove the responsibility for reviewing and remedying plan ongoing issues with the above listed items. Further, issues identified in the bimonthly/monthly invoices require reconciliation at each invoice period, and do not allow for future settlements for claim history outside of the invoice period. The plan has the discretion and the authority to define and ensure that the PBM is complying with plan current business rules for claim adjudication. This is not applicable to average versus per-claim pricing. As the fiduciary, the contract does not allow the PBM to make those decisions without the express approval of the plan.

Ø The retrospective audit process does not address the following issues that are not applicable to average pricing – reconciliation of each invoice, performance guarantees and applicable financial penalties (e.g., level of satisfaction with account client management, pharmacy network training to Count benefits and business rules), rebate reconciliation, network pharmacy audit results, and review of pharmacy network agreements for validation of pass-through pricing.

Note: The lack of oversight of average pricing allows a Pharmacy in the retail network to be paid at different AWP discounts and dispensing fees for brand drugs. This applies across the retail network and disadvantages a pharmacy for some drugs and advantages them for others. While this is not a direct contract with the plan, this is the source for potential pharmacy complaints and lack of compliance with the COB claims. This results in a decision for the plan to determine what parity rules they require for management of their retail network.

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.